CJEU Declares Hungary’s Online-Gambling Regs Violate EU Trade Freedom

Add Hungary to the list of European Union member nations to have its online-gambling rules and regulations slapped down by the Court of Justice of the European Union. In a case involving Unibet that goes back to 2014, the CJEU has ruled that the country’s “authorisation of online games of chance is not compatible with the principle of the freedom to provide services” by online operators.

First, a bit on the kerfuffle between Unibet and Hungarian regulators. Malta-based Unibet was targeted by those reguators after it was determined that Unibet was offering a Hugarian-language site to that country’s punters, even though Unibet did not specifically hold one of the Hungary-issued operator licenses.

On June 25th, 2014, Hungary’s authorities ordered that Unibet’s online sites serving that country be blacklisted and blocked. Two and a half months later, on August 29th, Hungary’s regulators then fined Unibet over the suit.

Unibet sued, first filing a case in Hungary, in the Fővárosi Közigazgatási és Munkaügyi Bíróság (Administrative and Labour Court, in Budapest) toi try to have the blocking and fine removed. As happened across the EU n numerous similar cases, Hungary said no way, which led to Unibet to take the case to the CJEU.

Unibet made its arguments that the Hungarian regulations virtually barred international online operators out of course, due to such definitions of being “trustworthy”, which turned out to include a requirement that to be licensed, such an operator already had to have provided such services for at least ten years somewhere to be considered, at least three of those years in Hungary. Add on some frosting to this cake: Hungary never issued any public for international operators to apply for such online licenses anyway.

Wrote the CJEU: “The Court considers that such a requirement constitutes a difference in treatment because it places at a disadvantage operators of games of chance established in other Member States in comparison with national operators, who may more easily meet that condition. For that reason, the Court rules that the
legislation being challenged is discriminatory and, therefore, contrary to the principle of the freedom to provide services.”

The CJEU further noted that while the rule on trustworthiness might be legally justifiable out of desire to serve consumer-protction purposes, the country itself had not met suitable standards for ensuring equal access to international operators in its opaque — err, nonexistant — licensing process.

The CJEU then ruled that Hungary may not impose penalties in such a situation, those penalties including the fine, blacklisting, and blocking imposed upon Unibet.

The European Gaming and Betting Association quickly issued a statement hailing the CJEU ruling. Said Maarten Haijer, the Secretary General of EGBA, “The Court reiterated that Member States must guarantee that national regulation on online gambling services meets objective, transparent, non-discriminatory and proportionate criteria. Only a properly regulated and transparent online gambling market can ensure that the consumer is channelled to the regulated offer.”

Haijer added, “The Court’s ruling is a clear message to other Gaming Authorities, including the Dutch Gaming Authority, that they must not enforce regulation that does not comply with basic EU law. We expect these Member States to reconsider and lift these enforcement measures as they are acting in violation of EU law. Their actions do not serve the interest of consumers, they fail to channel the consumers to reliable providers, instead they merely prop up failed regulation.“

Hungarian officials did not provide immediate comment, though it’s likely they’ll go down one of the two paths already trodden by other EU countries who’ve lost the same legal fight. They’ll be forced to create an equitable licensing regime, with the decision ultimately to be made on whether it will be open to all EU-licensed operators, or whether it can be firewalled or otherwise limited in a manner similar to that in Western European countries such as France and Spain.

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