A lot is going on in the world of games of chance in the Netherlands at the moment. After State Secretary Teeven of Security and Justice had announced his plan for a more liberal games of chance policy on 19 March, the Administrative Law Judicial Division of the Council of State (the highest administrative court) rendered a long-expected ruling in the Betfair case on 21 March. In this ruling the Council of State rapped former Justice Minister Donner on the knuckles for the way in which he had granted licenses for the organizing of sports and horse racing bets.
Under the Act on Games of Chance (Wet op de Kansspelen, “WoK”), the Netherlands have a restrictive games of chance policy, in principle only allowing the organization of games of chance with a government license. Organizing games of chance through the internet is prohibited altogether at present, and licenses for sports and horseracing bets can only be granted to one party. In the years 2004 and 2005, the Minister granted such licenses to De Lotto and Scientific Games Racing (SGR), respectively. In 2005 the British enterprise Betfair, a provider of online games of chance, objected to these granted licenses and applied for a license itself to organize sports and horse racing bets (including through the Internet). However, the Minister turned Betfair’s application down with a reliance on the single-license system and the ban on online games of chance under Dutch law.
Betfair did not leave it at that. After the Court had rejected its appeal against the Minister’s decision, Betfair appealed to the Council of State. Betfair argued that the Minister’s decisions were contrary to the free movement of services in the EU, and that Betfair would not even need a Dutch license to offer online games of chance, because it already had valid licenses to do so in other European Member States.
The Judgment of the Council of State
Before deciding on this mater, the Council of State asked the European Court of Justice (ECJ) questions of interpretation concerning the principle of free movement of services. The answer to these questions came on 3 June 2010, simultaneously with the ECJ’s ruling in the Ladbrokes case in which the restrictive Dutch games of chance policy was also the subject of dispute (but was not rejected). In the Betfair case, the ECJ did not reject the Dutch single-license system as such. The ECJ did find that the few licenses available for games of chance should be granted in a transparent and non-discriminatory (read: fair) manner, unless the license is granted to (in brief) an operator whose activities are subject to strict control by the public authorities.
The ECJ concluded that the licenses to De Lotto and SGR had not been granted in a transparent manner, and left it to the Council of State to determine whether De Lotto and SGR could qualify as operators whose activities are subject to control by the public authorities, as mentioned above, so that no transparency in the licensing procedure would have been required at all. The Council of State has now answered this question negatively. This means that there was no justification for the Minister to grant the games of chance licenses rashly to De Lotto en SGR, without subjecting them to competition. Betfair should have been given the chance to compete for these licenses.
Furthermore, the Council of State ruled in accordance with the Bwin/Santa Casa and the Betfair judgments of the ECJ that the fact that Betfair has a British license for online games of chance does not mean that it may organize online games of chance in the Netherlands too.
The Council has set aside the decisions of the Minister on the objections of Betfair against the granting of licenses to De Lotto and SGR. The Minister will now have to render a new decision on these objections, and hardly has any other choice but to declare them well-founded, because of the non-transparent procedure that has been followed. A new licensing procedure is ahead, in which the licenses of De Lotto and SGR may not stand up. All in all, finally a victory for a foreign provider of games of chance that has been trying for years to enter the Dutch games of chance market.
However, the ruling of the Council of State (still) does not mean that: 1) the licenses should not have been granted to De Lotto and SGR in the first place; 2) the Dutch games of chance policy is generally not permissible – we still have to await a final ruling in the Ladbrokes case from the Supreme Court; 3) Betfair can now legally offer online games of chance in the Netherlands, to which the licenses of De Lotto en SGR do not extend, and which is still illegal at present.
The developments in the games of chance field are to be continued; not only in the settlement of this issue with Betfair, but especially also in the Ladbrokes case and the elaboration of Mr Teeven’s policy vision.