The European Court of Justice has ruled that elements of Austria's gaming laws do not comply with EU competition laws.

The existing Austrian legislation established a state monopoly over games of chance, effectively ensuring that the state is able to supervise and take the maximum amount of revenue from them.

The Federal Minister of Finance is permitted to grant a total of 12 concessions entitling their holders to operate gaming establishments. These concessionaires must be public limited companies based in Austria. Casinos Austria holds all 12 concessions, which were granted and renewed without a public tender.  

The ECJ found that the obligation on persons holding concessions to operate gaming establishments to have their seat in Austria “constitutes a restriction on freedom of establishment.”

That obligation, it said, discriminates against companies that have their seat in another member state and prevents them from operating gaming establishments in Austria through an agency, branch or subsidiary. As such, the court stated that the exclusion of operators from other member states is “disproportionate” as it goes beyond what is necessary to prevent crime.

“In addition, any undertaking established in a member state can be supervised and have sanctions imposed on it, regardless of the place of residence of its managers,” the ECJ said in its statement. “Moreover, there is nothing to prevent supervision being carried out on the premises of the establishments in order, in particular, to prevent any fraud being committed by the operators against consumers.”

Although it agreed that limiting the number of concessions can be justified by the need to limit the opportunity to gamble, the court ruled that the absence of “a degree of publicity to enable a service concession to be opened up to competition” when the concessions were granted to Casinos Austria does not comply with EU regulations related to freedom of establishment and freedom to provide services.

Sigrid Ligne, secretary general of the European Gaming and Betting Association, said: “Today’s ruling against the Austrian gambling laws confirms clearly that member states cannot require EU licensed online operators to be physically present on their territory. In the digital age there are obviously other more efficient means available to monitor the activities of the operators.

“The European Commission has been given new legal arguments to pursue infringement procedures against several member states that have similar provisions.”

However, responding to the ruling, Casinos Austria’s Dietmar Hoscher said that the existing licences are not affected.

“The subject of the criticism are the modalities of the past award, whereas all these points have been adjusted during the amendments to the Austrian Gaming Act in 2008 and 2009,” he remarked. “These amendments were confirmed by the European Commission, which means that all criticism raised by the European Court of Justice were completely solved according to the European Commission. Regarding the conditions of the future award of concessions, the ECJ demands an ‘adequate publicity standard’. Also this request has been laid down in the new Gambling Act. Thus, major points of the references for a preliminary ruling such as numeral and temporal limitation of concessions, were rejected by the ECJ.”