Are EU politicians backing away from “free movement” principle?

There are indications that some European Union politicians are not averse to seeking “exceptions” to the core EU principle of “free movement of goods and services between member nations.” Specifically there are those who have tried to fly the idea that online gambling is an “economic activity of a particular nature” – a possible thin-end-of-the wedge approach to hamstring the enforcement activities of the European Commission and thereby shield state monopolies anxious to preserve their priveleged and protected status.

This week the European Parliament and the EU Council of Ministers called on the European Commission to ‘initiate a dialogue’ with a view to reaching political agreement on the legal status of gambling in Europe.

The Commission, under the energetic and respected Charlie McCreevy, is charged with safeguarding and enforcing the core EU principles, and it has been active in warning and guiding exclusive state monopolies on the path to compliance, sometimes with the threat of an appearance before the European Court of Justice. The activity has resulted in European Court of Justice (ECJ) rulings on the issue and several Commission infringement procedures against member states to verify whether national measures limiting the cross-border supply of online gambling services are compatible with Article 49 of the EC Treaty, which guarantees the free movement of services.

However politicians with perhaps national interests front-of-mind rather than the true spirit of EU membership have been debating the issue at some length, and there is little doubt that some EU sports ministers want games of chance excised from the services directive, allowing the state monopolies to maintain the status quo.

Both the European Parliament and the Council have taken non-legislative initiatives in recent months on this highly sensitive issue, which clearly impacts both taxation and the continued non-competitive prosperity of state-owned monopolies within national boundaries, without preventing them from branching out into the international market.

In December last year, the French EU Presidency presented a review of the legal framework and policies in EU member states on gambling and betting, apparently to stimulate debate at EU political levels on related cross-border issues. Shortly after, and following extensive discussion and amendment, the Parliament’s internal market and consumer protection committee adopted an own-initiative report by a Danish MEP on the integrity of online gambling.

The publication EurActiv opines that once the EU Parliament adopts the report in plenary next week, despite the opposition of Britain and Malta, the Commission will have been sent two political signals. As the Finnish permanent representation counsellor Harri Syväsalmi told EurActiv this week: “A smart listener will act accordingly.”

However, McCreevy’s office remains unintimidated, with a spokesman responding to a EurActiv request for comment, saying that the only initiative related to gambling she knew of was “the next round of infringement cases!”

EurActive reports that legal expert Philippe Vlaemminck of Vlaemminck & Partners has taken a view on the issue, favouring a political rather than judicial solution. “Even the European Court of Justice has said it does not want to rule on something that is political,” he told the publication.

Vlaemminck suggests that one way forward could be to first recognise that “gambling is an economic activity of a particular nature” and that member states must be able to maintain their own objective criteria on what is acceptable and, while respecting EU law, decide upon a taxation and operational structure: be that prohibition, monopoly or licensing.

Any political solution to gambling should be based on the four fundamental principles of the European architecture: subsidiarity, solidarity, integrity and precaution, Vlaemminck opined. “These principles need to be taken into account so that a political solution can be found,” the lawyer said.

Online gambling operators currently pay taxes to the country in which they are domiciled, even though their services and therefore profits may be made in another country. The main host countries of cross-border online gambling service providers are thus heavily opposed to any move towards taxing gambling activities in the country where it takes place, reports EurActiv. The French have apparently made provision for collecting taxes from online gambling companies operating in the soon-to-be-liberated French gambling market.

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