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New Limits on Operator Penalties? - by Dr Alan Littler, Kalff Katz & Franssen Attorneys at Law, Amst

Updated: Feb 5, 2021

Both the remote gaming bill and casino reform bill live to fight another day. Following the general election for the House of Representatives on 15 March 2017 there was the danger that the bills would be declared controversial by the Senate, and parked until the new cabinet effectively takes up government. Whilst the two bills were amongst those on a longer list of pending legislation which could have met such a fate on 4 April 2017, ultimately the necessary voting process was not held. The Senate can now proceed with both bills.

For many operators the following day, 5 April 2017, saw the Advocate General of the Court of Justice of the European Union bring some welcome news, in Case C-49/16. It has long been established that a Member State cannot apply penalties against an operator if it has been unlawfully excluded from a particular market, for example, where exclusion flows from the lack of a transparent licence allocation procedure. In the realm of gambling services reference should be made to the March 2007 decision in Placanica. Not all sanctions are criminal penalties however, indeed, the Gaming Authority favours the use of administrative fines in the enforcement actions it has taken to date.

AG Szpunar delivered his Opinion on 5 April 2017, addressing precisely this matter, following a preliminary reference from a Hungarian court. A Maltese licensed operator offered remote games of chance in Hungary without a local licence, resulting in administrative penalties (temporary blocking of access to the website and the imposition of a fine in case of repeated infringements). The operator claimed that the requirements to obtain a licence were so exclusionary that the law breached the freedom to provide services enshrined in Article 56 TFEU. The Advocate General characterised the Hungarian system as one which breaches Article 56 TFEU, because, whilst it offered the “theoretical possibility” of obtaining a licence, that possibility was impeded by a system which was discriminatory or failed to fulfil the requirements of proportionality or transparency.

With such a system in place, could Hungary then fine the operator for offering services locally? The Advocate General categorically stated that where a system is incompatible with Article 56 TFEU, not only does this prevent the application of criminal penalties, but also administrative penalties.

Given that national regulatory authorities use sanctions of an administrative law nature, rather than solely those available under criminal law, this approach, should the Court follow the Advocate General, will offer some comfort to operators in similar circumstances. This is particularly true in jurisdictions where (past) administrative penalties will hinder the award of a licence once an EU law compliant regime has subsequently been introduced.


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