Ban on advertising of foreign casinos is not contrary to EU law, says the CJEU

Andrew will have to be careful
when planning the new
EU-wide ad campaign for his casinos 

A few days ago the Court of Justice of the European Union published an intriguing decision which may be of some interest to European Mad Men and those dealing with advertising law. This was case C-176/11 HIT hoteli, igralnice, turizem dd Nova Gorica, and HIT LARIX, prirejanje posebnih iger na srečo in turizem dd v Bundesminister für Finanzen, a reference for a preliminary ruling from Verwaltungsgerichtshof (Austria).

The Austrian court had reverted to the CJEU for guidance as to the proper interpretation of Article 56 TFEU on the freedom to provide services, in the context of limitations to the advertising of casinos operating in other Member States.

The CJEU held that a Member State may prohibit the advertising of casinos located in another Member State when the protection for gamblers is not equivalent there (the press release is available here).

Background

The need for a reference to the CJEU arose in the context of proceedings brought by HIT and HIT LARIX against the Austrian Federal Minister for Finance concerning the latter’s rejection of their applications for authorisation to carry out advertising in Austria for casinos which they operate in Slovenia.

Pursuant to Paragraph 56 of the Federal Law on gaming, 

(1) Licensees and permit holders under this Federal Law shall maintain a responsible attitude in their promotional activities. Compliance with this requirement for a responsible attitude shall be ensured exclusively through supervision by the Federal Minister for Finance and shall not be amenable to enforcement by actions brought under Paragraph 1 et seq. of the Federal Law against unfair competition. The first sentence of the present subparagraph shall not constitute a protective law for the purposes of Paragraph 1311 of the Civil Code.

(2) Casinos from Member States of the European Union or European Economic Area States may promote in Austria visits to their establishments located outside Austria in Member States of the European Union or of the European Economic Area in accordance with the principles established in subparagraph 1 if the casino operator has been granted a permit to that effect by the [ministry]. Such a permit shall be granted where the casino operator demonstrates to the [ministry] that:

1.    the licence to operate the casino conforms to the requirements of Paragraph 21 and the casino operates under that licence in the State granting it, that State being a Member State of the European Union or of the European Economic Area, and

2.    the legal provisions for the protection of gamblers adopted by that Member State at least correspond to the Austrian provisions.

If the promotional measures do not satisfy the requirements of subparagraph 1, the [ministry] may prohibit advertising by the operator of the casino located outside Austria.’

By two decisions adopted in 2009, HIT and HIT LARIX’s applications were rejected by the ministry on the ground that these had not proved that the Slovenian legal provisions concerning games of chance ensured a level of protection for gamblers comparable to the level provided for in Austria, in compliance with Paragraph 56(2)(2) of the Austrian law.

Also the Kats enjoy some IP-related
gambling from time to time

HIT and HIT LARIX were left disappointed by this outcome, and challenged the decisions of the ministry. In particular, they contended that such decisions had been adopted in breach of their right freely to provide services, as per Article 56 TFEU.

The referring court agreed that in principle Paragraph 56(2) of the Federal Law on gaming constitutes a restriction on the freedom to provide services. However, such a restriction might be justified by overriding reasons in the public interest (such as the protection of the recipients of the services concerned and, more generally, consumers and social order). In addition, any restriction must be proportionate [this means to be suitable for ensuring attainment of the objective pursued and not go beyond what is necessary in order to achieve that objective].

The Austrian Court wished to clear things up and so referred the following question to the CJEU:

“Is legislation of a Member State which permits the domestic advertising of casinos located abroad only where the legal provisions in those foreign locations for the protection of gamblers correspond to the domestic provisions compatible with the freedom to provide services?”

The response of the CJEU

The Court first recalled the rationale underlying Article 56 TFEU. In particular,

"Article 56 TFEU requires the abolition of all restrictions on the freedom to provide services, even if those restrictions apply without distinction to national providers of services and to those from other Member States, when they are liable to prohibit, impede or render less advantageous the activities of a service provider established in another Member State where it lawfully provides similar services. Moreover, the freedom to provide services is for the benefit of both providers and recipients of services ... More specifically, in the area of advertising for games of chance, ... national legislation whose effect is to prohibit the promotion in a Member State of gambling organised legally in other Member States constitutes a restriction on the freedom to provide services ..."

However, 

Francis is rather depressed,
having squandered all his money on roulette

"restrictions on gaming activities may be justified by overriding reasons in the public interest, such as consumer protection and the prevention of both fraud and incitement to squander money on gambling ..."  

The Court found that the restrictions to the freedom to provide services resulting from the Federal Law on gambling were both proportionate and applied without discriminations. 

In particular, as legislation on games of chance is one of the areas in which there are significant moral, religious and cultural differences between the Member States, it is for national legislation to determine what is required to protect the interests in question. Therefore,

"the mere fact that a Member State has opted for a system of protection which differs from that adopted by another Member State cannot affect the assessment of the proportionality of the provisions enacted to that end. Those provisions must be assessed solely by reference to the objectives pursued by the competent authorities of the Member State concerned and the level of protection which they seek to ensure" 

This said, the authorisation scheme provided by Austrian law

"is in principle capable of fulfilling the condition of proportionality if it is limited to making authorisation to carry out advertising for gaming establishments established in another Member State conditional upon the legislation of the latter providing guarantees that are in essence equivalent to those of the national legislation with regard to the legitimate aim of protecting its residents against the risks connected with games of chance ... The position would, however, be different, and the legislation would have to be regarded as disproportionate, if it required the rules in the other Member State to be identical or if it imposed rules not directly related to protection against the risks of gaming."

The decision of the CJEU sounds quite sensible, but what do readers think?