Arjan van ‘t Veer, European Lotteries: Fighting illegality should be high-priority for regulators

The European Commission (EC) will have to commence an investigation into the possibility of illegal state aid in the issuing of lottery licences in the Netherlands after a long-running legal process.

The licences were first issued in 2016, and a request from the European Gaming and Betting Association (EGBA) to the EC for an investigation was rejected by the EU’s executive body.

An appeal against this was subsequently launched by EGBA in 2021 and, in its ruling this week, the Court of Justice of the European Union (CJEU) has sided with EGBA’s protests that an investigation should be launched. This is due to an EU law that stipulates that, if there is suspicion of state aid, an EC investigation must be conducted.

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.”

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.

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.

Initially launched with 10 licensed online betting and gaming operators, the market has expanded to 24 over the following 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.