The subject matter of this post is not necessarily related to Information Technology or Intellectual Property. Arguably, it could be deemed to be somewhere in the orbit of regulatory matters, but…”wait a moment” – might some of you ask – “what is the name of this guy’s blog again?”, and that is true – it reads “From Vegas To Legal”! So, in recognition of my blog’s name, I consider the time ripe to risk a dive into gambling’s deep waters.

In the instant case of criminal proceedings against Ernst Engelmann that was filed with the Regional Criminal Court in Linz, Austria, said court referred three questions to the European Court of Justice (ECJ) and asked the latter for a preliminary ruling. In particular, the court in Linz wanted to know whether

- Article 43 EC derogates a national provision mandating that only corporations established in a member state may there operate games of chance in casinos, thereby necessitating the establishment or acquisition of a corporation in that member state?

- Articles 43 and 49 EC derogate a national monopoly on games of chance in casinos, if the member state  in question maintains an inconsistent policy to limit gaming, inasmuch as national licensed organisers encourage participation in gaming – such as public sports betting and lotteries – and advertise such gaming, for instance, on TV?

- Articles 43 and 49 EC derogate a national provision under which a member state may exclude Community competitors (that do not belong to that member state) from a tender where a license to organise games of chance in casinos are granted.

In his today delivered opinion on the above questions, Advocate General Jan Mazak starts with a very good introduction into the federal gambling law of Austria, followed by a dissection of the same. From my perspective it is a must-read for all those interested in the matter.

Having come to the first question referred to the ECJ, the Advocate General opines that the Austrian legislation is incompatible with the freedom of establishment to the extent it reserves the operation of games of chance in casinos exclusively to corporations which have their seat in Austria. Companies registered in other member states of the European Union thus suffer a direct discrimination as they are excluded from the license grant to operate a casino in Austria. Such discrimination would be justifiable only if it grounded on deliberations with respect to public policy, public security or public health and a genuine and sufficiently serious threat affecting a fundamental interest of society existed. In Mr Mazak’s view the latter condition was not satisfied since Austrian authorities would not face a “genuine and sufficiently serious threat affecting a fundamental interest of society”, if the had to administer and supervise gaming operators which reside in other member states. Unfortunately, the Advocate General remained silent as to whether the operation of games of chance in casino should be reserved solely to corporations.

With regard to the second question, the Advocate General states that encouraging of participants in games of chance and advertising undertaken by operators does not necessarily mean that the national policy of limiting games of chance lacks consistency. Moreover, the Advocate General is of the opinion that it is the referring court to determine whether the said advertising is consistent with the objectives of the member state, since, among the various objectives which it pursues, the Austrian legislation seeks to combat fraud and criminality in the games of chance sector, by orienting demand for gaming towards an offer controlled and supervised by the State. Such determination, however, should be limited only to a sector where there is a gaming monopoly which would develop disproportionate and inconsistent advertising.

As to the third question, the Advocate General finds that the exclusion of non-residential Community competitors contradicts the freedom to provide services. Furthermore, and – in the absence of a genuine and sufficiently serious threat affecting a fundamental interest of society – the instant case’s restriction is discriminatory and unjustifiable on the grounds of public policy, public security or public health.

Put it all together, this Advocate General’s opinion has the potential to cause a ruling that would strengthen the principles framing the European Union. By the same token, it could deprive member state of the few sinecures they still possess in the realm of, say, gambling.

As regards the Austrian gambling monopoly, I personally believe that it will survive a ruling (almost) untouched.