Legalities of gambling in Europe

Europe is a conglomeration of several nation states. Nations (called Member States) which joined the European Union agreed that they would not keep out the goods and services of other Member States. But, the European Court of Justice has consistently ruled that Member States of the EU do not have to allow in legal gambling from other members. Gambling is one of the unique areas where local customs and morals makes it necessary to have separate laws for separate states. These led to much friction among member countries regarding the interpretation of the laws.

The first major conflict came in the Schindler case. The Court of Justice had to decide whether the United Kingdom could keep out advertisements and tickets of legal German lotteries. The ruling is a remarkable declaration of a states power to control all forms of gambling within its borders. The Court held that lotteries are services within the meaning of article 60 of the constitution of the European union. Article 59 prohibits a Member State from putting obstacles on cross-border services. But the Court declared that given the peculiar nature of lotteries, the government ok united kingdom. could restrict or even prohibit lotteries from other European union member States, provided those restrictions were not discriminatory .More recent cases have reaffirmed the right of Member States to decide for themselves how they will handle legal gambling.
The Laara case also had a problem similar to the schindler case. Finland had a law allowing only state-licensed games of chance for charities; criminal proceedings were brought against Mr. Laara for operating slot machines without a license. Because the case involved gaming devices, the Court had to decide whether Member States could exclude goods as well as services. More importantly for purposes of analyzing the holding as an example of Internet gambling, at the time Schindler was decided, the U.K. had forbidden all lotteries. Finland allowed slot machines, but allowed them only for a public enterprise holding a license. Still, the Court focused on holdings from Schindler, drawing attention to the moral, religious and cultural considerations which attach to lotteries, like other forms of gambling, in all Member States. The Court held that Finland was not discriminating against non-Finnish citizens. It ended its Judgment with a ruling that the EC Treaty did permit restrictions which are justified by virtue of a connection, even on an occasional basis, with the exercise of official authority or on grounds of public policy, public security or public health. As for the case of gambling: the court told
“the legislation at issue in the main proceedings responds to the concern to limit exploitation of the human passion for gambling, to avoid the risk of crime and fraud to which the activities concerned give rise and to authorize those activities only with a view to the collection of funds for charity or for other benevolent purposes”

The most recent gambling case before the Court of Justice the Zenatti cases the Court stated that the considerations set out in the Schindler were applicable to other forms of gambling - namely, the provision of slot machines and sports betting , Zenatti, actually involved, in tiny part, Internet gambling. The question for the Court was whether the police prosecuting authority of Verona could prohibit Mr. Zenatti from acting as an intermediary in Italy for a U.K. company which accepted bets on sporting events. Zenatti sent the forms to the U.K. by fax and Internet. In Italy, licenses are issued only for accepting bets on races, regattas, ball games and similar contests and only for limited purposes. The Court held the Italian legislation, like the U.K. laws in Schindler, was designed to prevent gambling from being a source of private profit, as well as to avoid risks of crime and fraud and the damaging individual and social consequences of the incitement to spend money gambling. The Court, however, remanded the case back to the national court of Italy to verify whether, in fact, the limited issuing of gambling licenses was really to achieve those desirable social objectives, or whether gambling had been legalized merely to raise money for government Advocate General Fennelly opined that restrictions on the provision of betting services could be justified on the grounds of public interest concerns; which, he said, should reflect the diverse characteristics of each Member State, including their social and cultural attitudes to gambling A Member State has the right to protect its citizens from the perceived evils of widespread gambling; it does not have the right to give itself a monopoly on legal gambling principally to make money. In the judgment of the case the Court confirmed the views that had been expressed in the Laara case. The Court also addressed the issue of whether there were no "less restrictive" means to reach these objectives. It also stated that Member States could use other means, such as taxation, to pursue these objectives. 

In another interesting case that revolved around a Finnish national Diane Lindman, who had won £78,000 in a Swedish lottery, whilst in Sweden, and the decision of the Finish Government to tax her on those winnings. The Finish Government had argued that the restriction was justified on the grounds that it would assist in the control of both compulsive gambling and money laundering. Stix-Hackl, however, relying upon the proportionality test laid down in Zenatti, concluded that the measure was disproportionate to the objectives being pursued

The Advocate General concluded, that in so far as the winnings would have been tax free if they had been won on a Finish Lottery, a decision to tax them in Finland, simply on the grounds that they had been won in Sweden, ran contrary to the spirit of the freedom to provide services, and indeed, restricted this fundamental freedom, without any justification. 
. The European Court of Justice understands the limited power of a federation, a lesson that has not sunk into the federal legislatures of the United States and Australia. These two federations, which are basically governments of governments, are trying to stop the entire political process while they consider what to do about Internet gambling. But, while federal governments have great power, states have almost always been the chief guardians of morality, including the control of gambling.