HomeInsightsThe impact of the ECJ ruling against Hungary’s online gambling laws

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Gambling co-head Steve Ketteley has analysed what the industry can expect to happen following the landmark ECJ decision for EGR Global (paywall)

The key points of the article are as follows:

  • As signatories to the Treaty for the Functioning of the European Union (TFEU), all European Member States need to observe certain fundamental principles.
  • Article 56 of the TFEU allows commercial enterprises in one Member State the “freedom to provide services” into another Member State.
  • This freedom has been eroded by ECJ rulings which now permit a Member State to make changes to gambling regimes provided they do in a proportionate, consistent, transparent and non-discriminatory way.
  • The ECJ has stated no penalties may be imposed on the basis of rules held to be contrary to the fundamental principles and enshrined in the TFEU.
  • When a Member State decides to sanction legislation which is not proportionate, consistent, transparent nor non-discriminatory, it should be prevented from enforcing such legislation.
  • Last week, the ECJ ruled against the Hungarian requirement that online gambling operators must have a land-based licence in order to offer online gambling services to Hungarian citizens.
  • This is discriminatory against operators that do not have any land based enterprises, as well as to operators that have no presence in Hungary.
  • This comes at an important time – three months ago, the European Commission said that they would withdraw all ongoing infringement proceedings against Member States whose regulations had been considered incompatible with their TFEU obligations.
  • It is fair to assume that the ECJ will continue to uphold the essential TFEU freedoms, even if the European Commission will not.
  • The issues discussed in the ECJ will now be referred back to the Hungarian courts for them to either follow the ECJ guidance or ignore it.