56 PUBLIC GAMING INTERNATIONAL • SEPTEMBER/OCTOBER 2023 increasing its attractiveness by means of eye-catching advertisements which hold out the promise of large prizes, and that these can be compatible with EU law and the theory of controlled expansion as developed by the Court. An important public policy objective that is now being recognized by lawmakers and the Courts is the importance of providing a safe and secure alternative to illegal gambling. So today it is clear that application of monopoly protection for lotteries and attracting people to play lottery games for the benefit of society is considered to be an appropriate way to address illegal activities in a market. The prohibition or limitation of private profit has been part of the way in which lotteries can be operated in the Member States of the European Union since the Courts started to render judgments on the different kinds of regulatory frameworks for games of chance. This was further explicitly confirmed by the Court of Justice in the judgments in the Finnish Läärä case and later also in the Swedish Sjöberg and Gerdin cases. A prohibition/limitation of private profit therefore can serve both consumer protection and public order. This is also the opinion of the European Court’s Advocate General in the recent Admiral case. The Court confirmed way back in 1999 in a Finnish case that a monopoly regime under direct State control may be more effective in managing the risks and social costs associated with the gaming sector and in achieving the legitimate objective of preventing incitement to excessive gambling expenditure and combating addiction to gambling, than under a nonexclusive legislative framework. Moreover, the Court even considers a model of allocating the proceeds of the state lottery to charitable purposes more favourable than a licensing model with the taxation of profits: “Although the sums thus received by the State for public benefit purposes could also be obtained by other means, for example through taxation of the various entrepreneurs who would be allowed to carry out the activities in question under a non-exclusive system, the obligation imposed on the licensed body to transfer the proceeds of its business is certainly a more effective means of setting strict limits on the profits resulting from those activities, in view of the risks of fraud and other criminal acts.” So within a context of controlling gambling in a responsible way and protecting society against crime and illegal gambling, EU Member States are permitted to grant the exclusive right holders of Lotteries more extensive powers to maximise the return to society. The current discussion on the Future of the EU is providing us with an interesting forum to put the role of Lotteries in Europe on the table. Innovation, social justice, access to education, a healthy lifestyle including sport, social rights & employment, protection of cultural heritage, access to broad cultural events, empowerment of diversification, attention to disabled , a greener world and a future oriented economy based upon the principle of good governance are all themes that require attention in this context and are all integral to the DNA of the Lotteries. The conferral of exclusive rights to operate gambling to a single public body is an adequate measure in order to reach the objectives of limiting exploitation of the human impulse for gambling and to avoid the risk of crime and fraud related to games of chance. It has been upheld, both by the EFTA Court and the Court of Justice of the EU, that a monopoly system can serve the aim of fighting addiction related to gambling more effectively than a system of multiple operators in the context of a non-exclusive legislative framework. When seeking a particularly high level of protection, a Member State is entitled to take the view that it is only by granting exclusive rights to a single entity – which is subject to strict control by the public authorities – that it can tackle the risks connected with the gambling sector, thereby pursuing the objective of preventing incitement to squander money on gambling and effectively combating addiction to gambling. Within this context of a restrictive market approach, the theory of ‘controlled expansion’ developed in the Placanica judgment came as an important clarification. The objective of drawing players away from clandestine betting and gaming – and, as such, activities that are prohibited – to activities that are authorised and regulated, may be entirely consistent with a policy of controlled expansion. But, in order to make the operators active in the sector subject to control and channeling the activities of betting and gaming into the systems thus controlled, authorised operators must be able to represent a reliable, and at the same time attractive, alternative to a prohibited activity. As such, this may necessitate the offer of an extensive range of games, advertising on a certain scale, and the use of new distribution techniques. This was later confirmed in the case of Pfleger. The Court later confirmed the possibility of controlled expansion with a view to protecting consumers to the extent that there is a large illegal market. This was previously also held, but in a slightly different way, by the EFTA Court. So why does the government of Finland want to walk away from this “EU acquis” to which it contributed so much? The reason given is that there is a large and growing illegal market which obliges the government to open the market and provide more licenses. What does this argumentation demonstrate other than that the lottery did do its part of the job in a strong, innovative and effective manner, and that it is the Government who failed in its tasks of law enforcement and its obligations under EU law. In my article for Public Gaming Magazine (January/February 2023) “Fighting illegal lotteries, gambling & betting: urgent time for governmental action” I mentioned the following : “Illegal operators use a similar strategy everywhere. They enter markets where governmental authorities have other bigger priorities than to enforce laws against illegal gambling. They build market-share with little regard for making a profit. Once they have a strong customer base of players, they petition the government for license to operate legally and turn the underground economy into taxable revenues. Governments should not accede to this blackmail as that simply reinforces the incentive to operate illegally.” In Finland, as everywhere, the illegal market is growing rapidly. Action is indeed required and urgent, but must also be well researched, economically assessed, responsible, and consistent. The Court of Justice of the EU does not say that a licensed market or a hybrid market (i.e. combining a monopoly with licensed operators) is not legal. The Court simply states that the policy must be consistent with the idea of protecting consumers and public order and requires a government to enforce its laws against illegals. Indeed, countries who did or intended to sign up to the Macolin Convention have a Philippe Vlaemminck, continued from page 58
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