The Court of Justice of the European Union (CJEU) has ruled that the EUropean Commission (EC) must investigate whether the 2016 reissuing of lottery licences to incumbent operators in the Netherlands constitutes ‘state aid’.
This goes against a previous decision by the EC in 2021, which opted not to investigate the reissued licences upon request from the European Gaming and Betting Association (EGBA) – which subsequently appealed the decision in March 2021.
In its ruling this week, the CJEU has sided with EGBA’s protests that the licences warranted an investigation by the Commission. This is due to an EU law that stipulates that, if there is suspicion of state aid, an EC investigation must be conducted.
The CJEU’s statement explained that “the fact that this issue was not examined in the contested decision does not make it possible to rule out the existence of serious difficulties in that connection”.
There was a ‘complete absence of appropriate investigation by the Commission’ into whether the ‘bodies’ in question – i.e. the lottery operators – had benefited from an indirect advantage.
Ruling in favour of EGBA, the CJEU has instructed the Commission to begin an investigation into the possibility of state aid in the issuing of the licences, and also to repay the legal costs of the pan-European trade association’s appeal.
EBGA understandably reacted positively to the announcement, with Secretary General, Maarten Haijer, remarking: “We welcome the CJEU’s ruling to annul the Commission decision, and find in EGBA’s favour, but frankly speaking we are not surprised by it.
“The facts and data of this case raised serious doubts about the compliance of the Dutch licensing procedure with EU law, which should have warranted the Commission to open a formal state aid investigation to address those doubts.
“We are confident the Commission will now carry out a thorough investigation, and we are ready to provide any necessary information and data. It is crucial for the Commission to uphold EU law consistently across all sectors, without fear or favour, including the gambling sector. The selective enforcement of EU law undermines the Commission’s institutional role as the guardian of the Treaties.”
It is important to note that there has beenn significant changes to the Netherlands gambling framework since the issuing of lottery licences in 2016, with a new regulatory regime introduced in October 2021 under the KOA Act.
Initially launching with 10 licensed online betting and gaming operators, the market has expanded to 24 over the subsequent two years, with the latest regulatory figures suggesting the sector is beginning to mature.
Meanwhile, the ruling comes at a time of wider regulatory and market changes which EGBA has become increasingly vocal on in recent months – for example, the association has released several statements welcoming changes in Ireland and Finland.