Sporting Odds (Freedom to provide services - Judgment) [2018] EUECJ C-3/17 (28 February 2018)

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(Reference for a preliminary ruling — Freedom to provide services — Article 56 TFEU — Article 4(3) TEU — Charter of Fundamental Rights of the European Union — Restrictions — Betting and gaming — National legislation — Operation of certain kinds of games of chance by the State — Exclusivity — Licensing system for other kinds of games of chance — Requirement of a licence — Administrative penalty)

REQUEST for a preliminary ruling under Article 267 TFEU from the Fővárosi Közigazgatási és Munkaügyi Bíróság (Administrative and Labour Court, Budapest, Hungary), made by decision of 4 October 2016, received at the Court on 3 January 2017, in the proceedings

composed of C.G. Fernlund, President of the Chamber, J.-C. Bonichot and S. Rodin (Rapporteur), Judges,

– the Belgian Government, by L. Van den Broeck and M. Jacobs, acting as Agents, and by P. Vlaemminck, R. Verbeke and J. Auwerx, avocats,

– the Portuguese Government, by L. Inez Fernandes and M. Figueiredo and by A. Silva Coelho and P. de Sousa Inês, acting as Agents,

– the European Commission, by H. Tserepa-Lacombe and L. Havas, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

1 This request for a preliminary ruling concerns the interpretation of Article 4(3) TEU, Article 56 TFEU and Articles 41, 47 and 48 of the Charter of Fundamental Rights of the European Union (‘the Charter’).

2 That request has been made in a dispute between Sporting Odds Ltd and the Nemzeti Adó- és Vámhivatal Központi Irányítása (Central Directorate of the National Tax and Customs Administration, Hungary) (‘the Tax Authority’) concerning a decision by which the latter imposed a fine of 3 500 000 Hungarian florints (HUF) (approximately EUR 11 306) on Sporting Odds (‘the contested decision’) for having organised online games of chance without having either a concession or a licence required for that purpose.

3 Article 2(2) of the szerencsejáték szervezéséről szóló 1991. évi XXXIV. törvény (Law XXXIV of 1991 on the organisation of games of chance), in the version in force at the material time (‘the Law on games of chance’), is worded as follows:

‘The pursuit of the activity of organising games of chance requires — except as provided by this Law — the authorisation of the national tax authorities …’

‘(1) With the exception of the organisation of online games of chance and the organisation of online casino games, the organisation of non-liberalised games of chance

(a) may be carried out by an economic entity wholly owned by the Hungarian State, established to carry out on a regular basis an activity of organising games of chance (“State operator of games of chance”), or by a commercial company owned exclusively by the State operator of games of chance, or by an economic operator in which the State has a majority holding;

(b) by a concession agreement, the State may temporarily assign to third parties the right to carry on this activity by means of a concession agreement.

(a) only by the szerencsejáték Zrt. which is wholly owned by the Hungarian State, except as concerns horse race betting,

(b) in the case of horse race betting by Magyar Lóversenyfogadást-szervező Kft., which is wholly owned by the Hungarian State.

(1b) The right to organise online casino games is exclusively reserved to persons holding a concession relating to the operation of a casino situated on Hungarian territory, which may organise online casino games through the concessionary company created for the purposes of online casino games.

(3) Organisation of lotteries and betting — except betting on horses, online games of chance and bet brokerage — shall be reserved exclusively to the State operator of games of chance.’

‘(1) For the conclusion of concession contracts, the Minister shall issue a public call for tenders in accordance with Article 5(1) of the [koncesszióról szóló 1991. évi XVI. törvény (Law No XVI of 1991 on concessions)]. The issue of a public call for tenders for the award of a concession requires — except as regards a national calls for tenders — the approval of the body representing the local authorities where the casino is situated (in Budapest, the assembly of the metropolitan area. Where the right to a concession is granted by way of national call for tenders, the State Tax Authorities shall issue the licence with regard to places where the casinos are situated in the municipal areas whose representative bodies — in Budapest, the Assembly of the Metropolitan Area — have given their consent to the pursuit of such an activity in their territory.

(6) Pursuant to Article 10/C(2) of the Law [No XVI of 1991] on concessions, the Minister may, without issuing a public call for tenders, conclude a concession contract with a trustworthy operator of games of chance within the meaning of the present Law.’

‘In the event of a public call for tenders being issued in accordance with Article 5(1) of Law [No XVI of 1991] on concessions, the Minister may conclude the concession contract with the successful tenderer.’

‘“A trustworthy operator of games of chance” means an operator of games of chance which is a transparent body within the meaning of Article 3(1)(1) of the nemzeti vagyonról szóló 2011. évi CXCVI. törvény (Law No CXCVI on national resources) and

(a) which has fulfilled all obligations to declare and pay, tax and parafiscal charges of more than HUF 500 000, registered by the national tax authority, without ever falling into arrears for more than 90 days in the fulfilment of those obligations;

(b) against whose bank account the tax authority has not issued an order to recover a debt of more than HUF 500 000 and which, in the conduct of its business, has not been the subject of enforcement proceedings for an amount exceeding HUF 500 000;

(c) which has never committed, in the conduct of its business and in the context thereof, any infringement for which a fine exceeding HUF 5 000 000 could have been imposed …;

(d) which has carried on the activity of organising games of chance in Hungary for at least 10 years; and

(e) which has fully complied with the rules concerning identification of players and the associated data processing, when it is subject to such an obligation.’

8 Paragraph 10/C(1) and (2) of Law No XVI of 1991 on concessions provides as follows:

‘(1) The concession contract may also be concluded, in accordance with the present article, with a trustworthy operator of games of chance as defined in the Sectoral Law.

(2) The Minister for the sector may decide not to issue a public call for tenders for the award of a concession if the concession contract can be concluded with a trustworthy operator of games of chance.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

9 Sporting Odds is a British company which holds a licence for the organisation of online games of chance in the United Kingdom. That company offers online casino games in Hungary without, however, having a concession or a licence for the organisation of such games in that Member State.

10 Following an investigation of the internet site ‘hu.sportingbeteuro.com’, carried out between 6 and 12 January 2016, the Tax Authority established that Sporting Odds had organised sports betting without having the concession or licence for that purpose required by Hungarian law. Taking the view that, pursuant to national law, there was no need to give Sporting Odds prior notice of the investigation or the procedure, the Tax Authority established the existence of an infringement solely on the basis of the findings made in the course of the investigation of Sporting Odds’ website. As a consequence, by the contested decision, the Tax Authority imposed a fine of HUF 3 500 000 on Sporting Odds.

11 Taking the view that the Hungarian law on the games of chance sector was contrary to EU law, Sporting Odds decided to bring an action against the contested decision before the Fővárosi Közigazgatási és Munkaügyi Bíróság (Administrative and Labour Court, Budapest, Hungary).

12 The referring court is unsure, first, whether the award procedure for concessions for the organisation of games of chance was organised in a way which enabled Sporting Odds to make an application in that regard and, second, whether an effective judicial review of the award procedure of such concessions was ensured. In that connection, it states that no public call for tenders was organised by the Minister for the Economy, and that Sporting Odds had no opportunity to submit an unsolicited tender in order to obtain the concession for the organisation of games of chance which is reserved for operators of games of chance considered to be ‘trustworthy’, on account of the fact that that category consists exclusively of operators which have organised games of chance in Hungary for 10 years.

13 Furthermore, that court points out that national law does not indicate whether the Minister for the Economy is required to accept unsolicited tenders and that a decision of that minister is not subject to review by the national courts, since it does not constitute an administrative act performed in the exercise of governmental authority.

14 Furthermore, the referring court is concerned about the points of comparison to be taken into consideration in the examination of whether the restrictions are consistent and systematic with regard to Article 56 TFEU, as regards the State monopoly system for certain kinds of games of chance and the system of concessions. In that connection it observes, as regards casino games and online casino games, that contrary to the objectives of consumer protection and public health contained in the relevant legislation, consumers have been encouraged to indulge in those kinds of games of chance.

15 Furthermore, according to that court, it is clear from register of the Szerencsejáték Zrt. (the company responsible for organising games of chance, 100% owned by the Hungarian State) and special company registers that only companies which have their registered office in Hungary have a casino concession. In that connection, it is unsure whether a provision according to which only companies having a concession for a casino in Hungary can organise online games of chance constitutes an unjustified restriction.

16 The referring court is also unsure as to the rules on which the examination of the consistency and systematic nature of the measures restricting the freedom to provide services is to be based. In that connection, it asks whether, in the examination of proportionality, it is required of its own motion to seek evidence or whether it must allocate the burden of proof between the parties to the proceedings or to other persons.

17 Furthermore, it asks whether a national measure which provides that a party may raise the issue of the compatibility of national law with EU law only at the stage of legal proceedings infringes the right to sound administration guaranteed by the Charter, specifically the right to be heard and the duty to state reasons.

18 In those circumstances, the Fővárosi Közigazgatási és Munkaügyi Bíróság (Administrative and Labour Court, Budapest) decided to stay proceedings and refer the following questions to the Court for a preliminary ruling:

‘(1) Must Article 56 of the TFEU, the prohibition of discrimination and the requirement that the restriction of gambling activities by the Member States be carried out consistently and systematically — a legal objective which the Member State justifies essentially by reference to combating compulsive gambling and the protection of consumers — be interpreted as meaning that the national State monopoly over online and offline sports betting and betting on horse racing is contrary to those rules if, in addition, in the Member State, since the reorganisation of the market carried out by the latter, private service providers with casinos situated in Hungary operated under a concession may organise — both online and offline — other games of chance (casino games, card games, slot machines, online casino games, online card games) which entail a considerable risk of addiction?

(2) Must Article 56 TFEU, the prohibition of discrimination and the requirement that the restriction of gambling activities by the Member States be carried out consistently and systematically be interpreted as meaning that that article is infringed and that requirement is not fulfilled if it is established that the reorganisation of the market, on the grounds of combating compulsive gambling and pursuing the statutory objective of protecting consumers, has, since the market reorganisation carried out by the Member State, effectively had as its consequence, or given rise to, a continuous increase in the number of casinos, the annual tax on the casinos’ games of chance, the national budget forecast of revenue from casino concession fees, the amount of gambling chips bought by players and the amount of money needed to be entitled to play slot machines?

(3) Must Article 56 TFEU, the prohibition of discrimination and the requirement that the restriction of gambling activities by the Member States be carried out consistently and systematically be interpreted as meaning that that article is infringed and that requirement is not fulfilled if it is established that the establishment of a national State monopoly and the authorised organisation of games of chance by private service providers, essentially on the grounds of combating compulsive gambling and pursuing the statutory objective of protecting consumers, have, in addition, the economic policy objective of obtaining increased net revenue from gambling and generating an exceptionally high level of revenue from the casinos market in the least amount of time possible, with the aim of financing other budgetary expenses and State public services?

(4) Must Article 56 TFEU, the prohibition of discrimination and the requirement that the restriction of gambling activities by the Member States be carried out consistently and systematically be interpreted as meaning that that article is infringed and that requirement is not fulfilled, and that there is an unjustified discrimination between the service providers, if it is determined that the Member State, invoking the same public policy ground, reserves certain online gambling services for the national State monopoly whilst it allows access to other gambling services by granting an increasing number of concessions?

(5) Must Article 56 TFEU and the prohibition of discrimination be interpreted as precluding a situation in which only service providers with casinos (and a concession) in Hungary may obtain a licence to offer online casino games, since service providers which do not have a casino in Hungary (including service providers with a casino in another Member State) cannot access the licence to offer online casino games?

(6) Must Article 56 TFEU and the prohibition of discrimination be interpreted as precluding a situation in which the Member State — through the possible initiation of a tender procedure in order to award concessions for casinos and through the possibility, for those with the status of trustworthy operators of games of chance, of submitting an unsolicited tender in order to obtain a concession in respect of a casino — provides the theoretical possibility that any service provider that fulfils the legal requirements, including a service provider established in another Member State, may obtain a concession to operate a casino in Hungary and, once in possession of that concession, a licence to operate an online casino, but, in reality, the Member State in question does not initiate any public and transparent tender procedure to award concessions, and the service provider does not, in practice, have the possibility of submitting an unsolicited tender, and, nevertheless, the authorities of the Member State declare that the service provider acted illegally by providing the service without a licence and impose an administrative penalty on it?

(7) Must Article 56 TFEU, the prohibition of discrimination and the requirement that the licence procedure be transparent, objective and public be interpreted as meaning that the Member State is precluded from establishing a system of awarding concessions in respect of certain gambling services while, at the same time, the body that decides on concessions may also, rather than initiating a tender procedure to award the concessions, conclude concession contracts with certain persons considered to be trustworthy operators of games of chance, instead of giving all the service providers the possibility of participating in the tender procedure under the same conditions, by initiating a single tender procedure?

(8) If the answer to the seventh question is in the negative, and a Member State may validly establish a plurality of procedures for the award of the same concession: must the Member State ensure, under Article 56 TFEU, the equivalence of those procedures, in the interests of the effectiveness of EU law on fundamental freedoms, taking into account the requirement that the licence procedure be transparent, objective and public and the requirement of equal treatment?

(9) Are the answers to the sixth to eighth questions affected by the fact that in neither case is judicial review or any other effective remedy against the decision awarding the concession available?

(10) Must Article 56 TFEU, the sincere cooperation clause in Article 4(3) TEU and the institutional and procedural autonomy of the Member States, in conjunction with Articles 47 and 48 of the Charter, as well as the right to effective judicial review mechanisms and the rights of defence laid down in those provisions, be interpreted as meaning that, in examining the requirements of EU law deriving from the case-law of the Court of Justice, and the necessity and proportionality of the restriction adopted by the Member State in question, the national court ruling on the dispute may order and carry out of its own motion the examination and the taking of evidence, even if this is not provided for under the national procedural legislation of the Member State?

(11) Must Article 56 TFEU, in conjunction with Articles 47 and 48 of the Charter, as well as the right to effective judicial review mechanisms and the rights of defence laid down in those provisions, be interpreted as meaning that in examining the requirements of EU law deriving from the case-law of the Court of Justice, and the necessity and proportionality of the restriction adopted by the Member State in question, the national court ruling on the dispute cannot place the burden of proof on the service providers affected by the restriction, but that rather it is for the Member State — and, in particular, for the State authority that adopts the contested decision in question — to justify and demonstrate the compliance with EU law, as well as the necessity and proportionality of the national legislation, and that failure to do so has, by itself, the consequence that the national legislation breaches EU law?

(12) Must Article 56 TFEU be interpreted, in the light also of the right to a fair procedure under Article 41(1) of the Charter, the right to be heard under Article 41(2)(a) thereof, and of the obligation to give reasons under 41(2)(c), as well as the sincere cooperation clause laid down in Article 4(3) TEU, and the institutional and procedural autonomy of the Member States, as meaning that those requirements are not fulfilled if the competent authority of the Member State does not notify the operator of games of chance of the initiation of administrative penalty proceedings in accordance with national law, and does not subsequently, in the course of the administrative proceedings, obtain that operator’s views on the compliance of the Member State’s legislation with EU law, and — without explaining in detail, in the reasons stated for the decision, that compliance and the evidence supporting it — imposes, in a single-instance procedure, a penalty classified as administrative under national law?

(13) In the light of Article 56 TFEU, Article 41(1) and (2)(a) and (c) of the Charter and Articles 47 and 48 thereof, as well as the right to effective judicial review mechanisms and the rights of the defence that those provisions entail, are the requirements laid down in those provisions fulfilled if the operator of games of chance may question the compatibility of the national legislation with EU law for the first time only before the national court?

(14) May Article 56 TFEU and the obligation for the Member States to justify and state reasons for the restriction of the free movement of services be interpreted as meaning that the Member State has not fulfilled that obligation if the relevant impact assessment on which the public policy objectives of the restriction are based was not available at either the time it adopted the restriction or at the time of the examination?

(15) Having regard to the framework laid down by the law for setting the amount of the administrative penalty that may be imposed, the nature of the activity penalised by the penalty, and, in particular, the extent to which the activity affects public policy and public security, as well as the punitive purpose of the penalty, may the administrative penalty in question be regarded as being “of a criminal nature”, for the purpose of Articles 47 and 48 of the Charter? Does this influence the answers to be given to the 11th to 14th questions?

(16) Must Article 56 TFEU be interpreted as meaning that if, by virtue of the answers given to the foregoing questions, the court ruling on the dispute declares the legislation and its application unlawful, must it also declare that the penalty based on the national legislation that does not comply with Article 56 TFEU infringes EU law?’

19 By Questions 1 to 4, the referring court asks essentially whether Article 56 TFEU must be interpreted as meaning that it precludes a dual system of organisation of the market for games of chance under which certain types of games of chance fall within the State monopoly system, while others fall within the system for concessions and licences for the organisation of games of chance.

20 First, it must be recalled that the legislation on games of chance is one of the areas in which there are significant moral, religious and cultural differences between the Member States. In the absence of European Union harmonisation in the field, it is for each Member State to determine in those areas, in accordance with its own scale of values, what is required in order to ensure that the interests in question are protected (judgment of 8 September 2009, Liga Portuguesa de Futebol Profissional and Bwin International, C‑42/07, EU:C:2009:519, paragraph 57 and the case-law cited).

21 Next, it is common ground that, in the context of legislation which is compatible with the FEU Treaty, the choice of methods for organising and controlling the operation and playing of games of chance or gambling falls within the margin of discretion which the national authorities enjoy (see, to that effect, judgment of 8 September 2010, Carmen Media Group, C‑46/08, EU:C:2010:505, paragraph 59).

22 Finally, the Court has held that, in the matter of games of chance, it is in principle necessary to examine separately for each of the restrictions imposed by the national legislation whether, in particular, it is suitable for achieving the objective or objectives invoked by the Member State concerned and whether it does not go beyond what is necessary in order to achieve those objectives (judgment of 8 September 2010, Carmen Media Group, C‑46/08, EU:C:2010:505, paragraph 60).

23 Thus, it is clear from settled case-law that the fact that some types of games of chance are subject to a public monopoly whilst others are subject to a system of authorisations granted to private operators cannot, in itself, deprive of justification, having regard to the legitimate aims which they pursue, measures which, like the public monopoly, appear at first sight to be the most restrictive and the most effective. Such a divergence in legal regimes is not, in itself, capable of affecting the suitability of such a public monopoly for achieving the objective of preventing citizens from being incited to squander money on gambling and of combating addiction to the latter, for which it was established (judgment of 8 September 2010, Carmen Media Group, C‑46/08, EU:C:2010:505, paragraph 63).

24 However, a system of dual organisation of the market for games of chance may be contrary to Article 56 TFEU if it is found that the competent authorities pursue policies seeking to encourage participation in games of chance other than those covered by the State monopoly rather than to reduce opportunities for gambling and to limit activities in that area in a consistent and systematic manner so that the aim of preventing incitement to squander money on gambling and of combating addiction to the latter, which was at the root of the establishment of the said monopoly, can no longer be effectively pursued by means of the monopoly (see, to that effect, judgment of 8 September 2010, Carmen Media Group, C‑46/08, EU:C:2010:505, paragraph 68).

25 In the present case, the Hungarian Government relies on reasons of public order, public health and public security and overriding reasons of consumer protection, prevention of addiction to gambling and the prevention of fraud in order to justify the dual system of regulation of games of chance.

26 It must be held that such reasons may justify restrictions on gaming and betting activities both as regards the State monopoly system for certain types of such games and as regards the concessions and licence system for the organisation of games of chance.

27 In order to demonstrate the inconsistency of the Hungarian system of organisation of games of chance, Sporting Odds claims, however, that, in reality, the main purpose of the national legislation is to increase budgetary revenue from taxes levied on casinos, by raising the forecasts of revenue from the concession fees and licence fees for casinos and by the value of chips purchased by players. It adds that the liberalisation measures for certain types of games of chance have aided an expansion of casino betting and gaming activities, contrary to the objectives of consumer protection and the prevention of addiction to gambling.

28 In that connection, while it is common ground that the objective of maximising public revenue alone cannot permit a restriction of the freedom to provide services, the fact that a restriction on gambling activities incidentally benefits the budget of the Member State concerned does not prevent that restriction from being justified in so far as it actually pursues objectives relating to overriding reasons in the public interest (see, to that effect, judgment of 11 June 2015, Berlington Hungary and Others, C‑98/14, EU:C:2015:386, paragraphs 60 and 61).

29 Furthermore, as regards the policy of liberalising certain types of games of chance, which may be part of the controlled expansion of games of chance, the Court has held that such a policy may be consistent both with the objective of preventing the use of gambling activities for criminal or fraudulent purposes and with that of preventing incitement to squander money on gambling and of combating addiction to gambling, by directing consumers towards the offer emanating from authorised operators, that offer being deemed to be protected from criminal elements and also designed to safeguard consumers more effectively against squandering of money and addiction to gambling (judgment of 11 June 2015, Berlington Hungary and Others, C‑98/14, EU:C:2015:386, paragraph 69 and the case-law cited).

30 In order to achieve that objective of channelling into controlled circuits, the authorised operators must provide a reliable, but at the same time attractive, alternative to a prohibited activity, which may necessitate, inter alia, the use of new distribution techniques (judgment of 11 June 2015, Berlington Hungary and Others, C‑98/14, EU:C:2015:386, paragraph 70 and the case-law cited).

31 However, a policy of controlled expansion of gambling activities can only be regarded as being consistent if, first, criminal and fraudulent activities linked to gambling and, secondly, addiction to gambling could have been a problem in Hungary at the material time and if the expansion of authorised and regulated activities could have solved that problem (judgment of 11 June 2015, Berlington Hungary and Others, C‑98/14, EU:C:2015:386, paragraph 71 and the case-law cited).

32 It is for the referring court to determine, in the context of the case before it, whether those conditions are satisfied and, if applicable, whether the expansion in question is on such a scale as to make it impossible to reconcile with the objective of curbing addiction to gambling (judgment of 11 June 2015, Berlington Hungary and Others, C‑98/14, EU:C:2015:386, paragraph 72 and the case-law cited).

33 Having regard to the foregoing considerations, the answer to Questions 1 to 4 is that Article 56 TFEU must be interpreted as meaning that it does not, in principle, preclude a dual system of organisation of the market for games of chance under which certain types of those games fall within the State monopoly system, while others fall within the system of concessions and licences for the organisation of games of chance, if the referring court establishes that the rules restricting the freedom to provide services in fact pursues in a consistent and systematic manner the objectives relied on by the Member State concerned.

34 By Question 5, the referring court asks essentially whether Article 56 TFEU must be interpreted as meaning that it precludes a national provision, such as that at issue in the main proceedings, under which the grant of an licence for the organisation of online gaming is reserved exclusively to operators of games of chance running a casino under a concession in national territory.

35 In order to answer that question, it should be born in mind that the freedom to provide services entails, inter alia, the abolition of any discrimination against a person providing services on account of his nationality or the fact that he is established in a Member State other than the one in which the service is provided. The requirement that an undertaking create a permanent establishment or branch in the Member State in which the services are provided runs directly counter to the freedom to provide services since it renders impossible the provision of services, in that Member State, by undertakings established in other Member States (judgment of 21 January 2010, Commission v Germany, C‑546/07, EU:C:2010:25, paragraph 39 and the case-law cited).

36 Although the Court has held that Article 56 TFEU does not preclude national legislation which prohibits operators established in other Member States where they legally provide similar services from offering online casino games on the territory a Member State (see, to that effect, judgment of 8 September 209, Liga Portuguesa de Futebol Profissional and Bwin International, C‑42/07, EU:C:2009:519, paragraph 73), it must be recalled that the national law examined in the case which gave rise to that judgment introduced a monopoly over games of chance giving exclusive rights to operate games to a body under the actual supervision of the State.

37 In the case in the main proceedings, the provisions at issue restrict the organisation of online games of chance to operators managing a casino on national territory and which have a concession and a licence for that purpose.

38 In that connection, the Court has consistently held that a system of concessions and licences for the organisation of games of chance must be based on objective, non-discriminatory criteria which are known in advance, in such a way as to circumscribe the exercise of the national authorities’ discretion so that it is not used arbitrarily (judgment of 22 June 2017, Unibet International, C‑49/16, EU:C:2017:491, paragraph 41 and the case-law cited).

39 Therefore, a restriction such as that which has been found to exist in the present case is discriminatory. It is compatible with European Union law only if it is covered by an express derogating provision, such as Article 52 TFEU, namely public policy, public security or public health (judgment of 9 September 2010, Engelmann, C‑64/08, EU:C:2010:506, paragraph 34 and the case-law cited).

40 The Hungarian Government relies on reasons of public order and public health, arguing that State control of online gaming is limited and that the national law ensures that online gaming, which involves higher risks than traditional games of chance, is reserved to trustworthy operators running a casino on national territory which satisfy the requirements of consumer protection and public order.

41 Although it is common ground that, because of the lack of direct contact between consumer and operator, games of chance accessible via the internet involve different and more substantial risks of fraud by operators against consumers compared with the traditional markets for such games (judgment of 8 September 2009, Liga Portuguesa de FutebolProfissional and Bwin International, C‑42/07, EU:C:2009:519, paragraph 70), the provision at issue must nevertheless satisfy the conditions laid down in the case-law of the Court as regards their proportionality (see, to that effect, judgment of 6 March 2007, Placanica and Others, C‑338/04, C‑359/04 and C‑360/04, EU:C:2007:133, paragraph 48).

42 More precisely, if a restriction, such as that at issue in the main proceedings is to be accepted, according to which an operator of online casino games must obtain a concession for a casino situated in Hungary in order to offer online games of chance, it must be shown that it constitutes a condition which is indispensable for attaining the objective pursued (see, to that effect, judgment of 9 July 1997, Parodi, C‑222/95, EU:C:1997:345, paragraph 31and the case-law cited).

43 It is clear that such a restriction, which amounts to reserving access to the market for online games of chance to casino operators situated on national territory, goes beyond what may be considered necessary as proportional, since less restrictive measures exist which enable the objectives relied on by the Hungarian Government to be attained.

44 Having regard to all of the foregoing considerations, the answer to Question 5 is that Article 56 TFEU must be interpreted as meaning that it precludes a national measure, such as that at issue in the main proceedings, according to which the grant of a licence to organise online games of chance is reserved exclusively to operators of games of chance holding a concession for a casino situated on national territory, since that rule does not constitute a condition indispensable to the achievement of the desired objectives, and that there are less restrictive measures which are capable of attaining them.

45 By Questions 6 to 8, the national court asks essentially whether Article 56 TFEU must be interpreted as meaning that it precludes legislation, such as that at issue in the main proceedings, which establishes a system of concessions and licences for the organisation of online games of chance pursuant to which operators may conclude a concession agreement for a casino and, on the basis of that concession, obtain the licence for the organisation of online games of chance either by taking part in a call for tenders for the purpose of concluding a concession contract organised by the Minister for the Economy or by submitting an unsolicited tender to that minister for the purpose of concluding a concession agreement, that possibility being open to operators of games of chance deemed to be ‘trustworthy’ for the purposes of national law.

46 As a preliminary point, it must be recalled that the Court has already answered questions on the detailed rules for granting concessions and licences for the organisation of games of chance in Hungary in the judgment of 22 June 2017, Unibet International (C‑49/16, EU:C:2017:491). The only difference between Question 6 and those which the Court has already answered concerns the type of concession which must be obtained for the grant of a licence to organise online games of chance to an operator.

47 It is clear from the order for reference that the procedures for granting concessions, namely the call for tenders for the purpose of concluding a concession agreement organised by the Minister for the Economy, and the possibility to submit an unsolicited tender to that minister for the conclusion of a concession agreement reserved to operators of games of chance deemed to be ‘trustworthy’, remain unchanged. Furthermore, it is also clear from that decision that a call for tenders falling within the competence of the Minister for the Economy still has not been organised, and that the condition that an operator of games of chance deemed to be ‘trustworthy’ must have organised games of chance in Hungary for 10 years is still in the national law in the version applicable to the facts of the case in the main proceedings.

48 Therefore, without there being any need to examine the system at issue in the main proceedings, it is clear from paragraph 48 of the judgment of 22 June 2017, Unibet International (C‑49/16, EU:C:2017:491), that that system is contrary to Article 56 TFEU.

49 Having regard to all of the foregoing considerations, the answer to Questions 6 to 8 is that Article 56 TFEU must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which introduces a system of concessions and licences for the organisation of online games of chance, if it contains discriminatory rules with regard to operators established in other Member States or if it lays down rules which are not discriminatory but which are applied in a manner which is not transparent or are implemented in such a way as to prevent or hinder an application from certain tenderers established in other Member States.

50 It must be stated that, as is clear from the request for a preliminary ruling that Sporting Odds has neither applied for or obtained a concession, the answer to that question, which concerns the remedies available against decisions relating to the award of concessions is hypothetical.

52 By that question, the referring court asks essentially whether Article 56 TFEU and Article 4(3) TEU, read in conjunction with Articles 47 and 48 of the Charter, preclude a national law, such as that at issue in the main proceedings, which makes no provision for the examination by the court of its own motion of the proportionality of measures restricting the freedom to provide services, within the meaning of Article 56 TFEU, and which places the burden of proof on the parties to the proceedings.

53 In that connection, it has been established that it is for the national courts to carry out a global assessment of the circumstances in which restrictive legislation was adopted and implemented on the basis of the evidence provided by the competent authorities of the Member State, seeking to demonstrate the existence of objectives capable of justifying a restriction of a fundamental freedom guaranteed by the FEU Treaty and its proportionality (see, to that effect, judgment of 14 June 2017, Online Games and Others, C‑685/15, EU:C:2017:452, paragraph 65).

54 While those courts may be required, under national procedural rules, to take the necessary measures in order to encourage the production of such evidence, they cannot, in contrast, be required to substitute themselves for those authorities in setting out the justifications which it is the duty of the latter to provide. Should such justifications not be provided through absence or passivity of those authorities, the national courts must be able to draw all inferences which result from such failure (judgment of 14 June 2017, Online Games and Others, C‑685/15, EU:C:2017:452, paragraph 66).

55 Furthermore, the Court has held that EU law does not preclude a national system according to which the court called upon to rule on the compliance with EU law of legislation restricting the exercise of a fundamental freedom of the European Union is required to examine of its own motion the facts of the case before it, provided that such a system does not have the consequence that that court is required to substitute itself for the competent authorities of the Member State concerned, whose task it is to provide the evidence necessary to enable that court to determine whether that restriction is justified (judgment of 14 June 2017, Online Games and Others, C‑685/15, EU:C:2017:452, paragraph 67).

56 It follows that EU law does not require that Member States provide for an ex officio examination of measures restricting fundamental freedoms and, therefore, does not preclude a national law which puts the burden of proof on the parties.

57 Having regard to all of the foregoing considerations, the answer to Question 10 is that Article 56 TFEU and Article 4(3) TEU, read in conjunction with Articles 47 and 48 of the Charter, must be interpreted as meaning that they do not preclude national legislation, such as that at issue in the main proceedings, which does not provide for the ex officio examination of the proportionality of measures restricting the freedom to provide serves within the meaning of Article 56 TFEU and which puts the burden of proof on the parties to the proceedings.

58 By Question 11, the referring court asks essentially whether Article 56 TFEU, read in conjunction with Articles 47 and 48 of the Charter, must be interpreted as meaning that it is for a Member State, which has put in place restrictive rules, to produce the evidence establishing the existence of objectives able to legitimate a restriction on a fundamental freedom guaranteed by the FEU Treaty and its proportionality, or whether it may impose that obligation on the other party to the proceedings.

59 On one hand, as is clear from paragraphs 52 and 53 of that judgment, it is for the competent authorities of a Member State which have implemented such legislation to produce evidence establishing the existence of objectives capable of justifying a restriction on a fundamental freedom guaranteed by the FEU Treaty and its proportionality. On the other hand, should such justifications not be provided through absence or passivity of those authorities, the national courts must be able to draw all inferences which result from such failure.

60 Having regard to the foregoing considerations, Article 56 TFEU, read in conjunction with Articles 47 and 48 of the Charter, must be interpreted as meaning that it is for a Member State which has put in place restrictive legislation to provide evidence to prove the existence of objectives capable of justifying a restriction on a fundamental freedom guaranteed by the FEU Treaty and its proportionality, in the absence of which the national court must draw all the inferences which result from such a failure.

61 By Question 14, which it is appropriate to examine after Question 11, the referring court asks essentially whether Article 56 TFEU must be interpreted as meaning that a Member State has failed to satisfy its obligation to justify a restrictive measure because it has failed to provide any analysis of the effects of that measure on the date on which it was introduced into national legislation or the date of the examination of such a measure by the national court.

62 In that regard, it should be borne in mind that it is the Member State wishing to rely on an objective capable of justifying the restriction of the freedom to provide services which must supply the court called on to rule on that question with all the evidence of such a kind as to enable the court to be satisfied that the measure does indeed comply with the requirements deriving from the principle of proportionality (judgment of 30 April 2014, Pfleger and Others, C‑390/12, EU:C:2014:281, paragraph 50 and the case-law cited).

63 It cannot, however, be inferred from that case-law that a Member State is deprived of the possibility of establishing that an internal restrictive measure satisfies those requirements, solely on the ground that that Member State is not able to produce studies serving as the basis for the adoption of the legislation at issue (judgment of 30 April 2014, Pfleger and Others, C‑390/12, EU:C:2014:281, paragraph 51 and the case-law cited).

64 It is for the national court to carry out a global assessment of the circumstances in which restrictive legislation, such as that at issue in the main proceedings, was adopted and implemented (judgment of 30 April 2014, Pfleger and Others, C‑390/12, EU:C:2014:281, paragraph 52) and not to state solely that a preliminary study of the effects of legislation has not been carried out.

65 Having regard to all of the foregoing considerations, the answer to Question 14 is that Article 56 TFEU must be interpreted as meaning that it cannot be held that a Member State has failed to satisfy its obligation to justify a restrictive measure because it has failed to provide an analysis of the effects of that measure on the date on which that measure was introduced into national law or the date of the examination of such a measure by the national court.

66 By Question 16, which it is appropriate to examine before Questions 12, 13 and 15, the referring court asks essentially whether Article 56 TFEU must be interpreted as meaning that it precludes a penalty, such as that at issue in the main proceedings, imposed on account of an infringement of national rules introducing a system for concessions and licences for the organisation of games of chance in a situation in which such national rules are contrary to that article.

67 In that connection, it suffices to state that where a restrictive system has been established for games of chance and that system is incompatible with Article 56 TFEU, an infringement of the system by an economic operator cannot give rise to penalties (judgment of 22 June 2017, Unibet International, C‑49/16, EU:C:2017:491, paragraph 50 and the case-law cited).

68 Having regard to the foregoing considerations, the answer to Question 16 is that Article 56 TFEU must be interpreted as precluding a penalty, such as that at issue in the main proceedings, imposed for the infringement of national rules introducing a system of concessions and licences for the organisation of games of chance, if such national legislation proves to be contrary to that article.

69 In view of the answer given to that question, there is no need to answer Questions 12, 13 and 15.

70 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

1. Article 56 TFEU must be interpreted as meaning that it does not, in principle, preclude a dual system of organisation of the market for games of chance under which certain types of those games fall with the State monopoly system, while others fall within the system of concessions and licences for the organisation of games of chance, if the referring court establishes that the rules restricting the freedom to provide services do, in fact, pursue the objectives relied on by the Member State concerned in a consistent and systematic manner.

2. Article 56 TFEU must be interpreted as meaning that it precludes a national measure, such as that at issue in the main proceedings, according to which the grant of a licence to organise online games of chance is reserved exclusively to operators of games of chance holding a concession for a casino situated on national territory, since that rule does not constitute a condition indispensable to the achievement of the desired objectives, and that there are less restrictive measures which are capable of attaining them.

3. Article 56 TFEU must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which introduces a system of concessions and licences for the organisation of online games of chance, if it contains discriminatory rules with regard to operators established in other Member States or if it lays down rules which are not discriminatory but which are applied in a manner which is not transparent or are implemented in such a way as to prevent or hinder an application from certain tenderers established in other Member States.

4. Article 56 TFEU and Article 4(3) TEU, read in conjunction with Articles 47 and 48 of the Charter of Fundamental Rights of the European Union, must be interpreted as meaning that they do not preclude national legislation, such as that at issue in the main proceedings, which does not provide for the ex officio examination of the proportionality of measures restricting the freedom to provide serves within the meaning of Article 56 TFEU and which puts the burden of proof on the parties to the proceedings.

5. Article 56 TFEU, read in conjunction with Articles 47 and 48 of the Charter of Fundamental Rights, must be interpreted as meaning that it is for a Member State which has put in place restrictive legislation to provide evidence to prove the existence of objectives capable of justifying a restriction on a fundamental freedom guaranteed by the FEU Treaty and its proportionality, in the absence of which the national court must draw all the inferences which result from such a failure.

6. Article 56 TFEU must be interpreted as meaning that it cannot be held that a Member State has failed to satisfy its obligation to justify a restrictive measure because it has failed to provide an analysis of the effects of that measure on the date on which that measure was introduced into national law or the date of the examination of such a measure by the national court.

7. Article 56 TFEU must be interpreted as precluding a penalty, such as that at issue in the main proceedings, imposed for the infringement of national rules introducing a system of concessions and licences for the organisation of games of chance, if such national legislation proves to be contrary to that article.

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	Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Sporting Odds (Freedom to provide services - Judgment) [2018] EUECJ C-3/17 (28 February 2018) URL: http://www.bailii.org/eu/cases/EUECJ/2018/C317.html Cite as: [2018] EUECJ C-3/17, EU:C:2018:130, ECLI:EU:C:2018:130

Court of Justice of the European Communities (including Court of First Instance Decisions)