OPINION OF ADVOCATE GENERAL

delivered on 27 October 2011 (1)

Case C-72/10

Criminal proceedings

(Reference for a preliminary ruling from the Corte Suprema di Cassazione, Italy)

Case C-77/10

Criminal proceedings

(Reference for a preliminary ruling from the Corte Suprema di Cassazione, Italy)

‛Freedom to provide services — Freedom of establishment — Collection of sports bets — Requirement of a licence and police authorisation — Policy of ‘controlled expansion’ in the betting and gaming sector — Combating illicit betting and gaming — Minimum distances between outlets — Withdrawal of a licence because of cross-border activity — Withdrawal of a licence because of the adoption of interim protective measures or the initiation of criminal proceedings’

I – Introduction

1.The evolution of the Italian legislation on betting and gaming has been marked by a number of judgments of the Court of Justice, which form the starting point for the analysis of the question now referred for a preliminary ruling by the Corte Suprema di Cassazione (Supreme Court of Cassation, Italy).

2.The judgments in Zenatti (2), Gambelli and Others (3) and Placanica and Others (4) addressed in turn the problem of national legislation which provided for a numerus clausus system of licences and police authorisation for the organisation of betting and gaming, making capital companies ineligible to apply for such licences and permits. In Placanica, the Court ruled in particularly direct terms on the various objectives pursued by the Italian legislature, leaving little latitude for the national court to hold that the Italian legislation was compatible with European Union (‘EU’) law. That degree of detail in the reply was made necessary by the wide discrepancies to which the application of Gambelli had given rise in Italian case-law. (5) Despite the clarity of Placanica, significant differences of opinion appear to persist between the Italian courts as regards the compatibility with EU law of the new Italian betting and gaming legislation, which was adopted against the background of that judgment. Some of those courts, in line with the arguments put forward by Mr Costa and Mr Cifone in the cases before the referring court, maintain that, by creating new forms of discrimination, the new legislation has frustrated the effects of Placanica. Others, in line with the position of the Italian Government, maintain that the restrictions introduced can be justified by overriding reasons in the public interest.

3.This reference accordingly provides the Court with a fresh opportunity to clarify its already extensive case-law on betting and gaming in a context which is partially familiar: the Italian betting and gaming sector. Placanica will be an essential tool for those purposes because it takes into account the specific features of that context and, in particular, the clear choice made by the Italian legislature to adopt a policy in the gaming sector which is markedly expansionist, no matter how much it is presented as ‘controlled expansion’. In my view, that factor influences the assessment of the present reference, but without calling into question what is now settled case-law, which leaves Member States considerable room for manoeuvre in the betting and gaming sector.

II – Legal framework: the Italian legislation

A – The administrative legislation: the rules governing licences and authorisations

4.The Italian legislation provides that the collecting and managing of bets are activities which may be engaged in only by the holder of a licence, granted under a public tendering procedure, and police authorisation.

5.In July 2006, the Italian betting and gaming sector was reformed by means of the ‘Bersani Decree’ (Decree-Law No 223 of 4 July 2006, converted into Law No 248 of 4 August 2006), (6) the aim of which was to continue the work of bringing the sector into line with Community law, thereby anticipating the outcome of Placanica.

6.Paragraph 1 of Article 38 (‘Measures to counter unlawful betting and gaming’) provides that a series of provisions are to be adopted by 31 December 2006‘in order to counter the spread of irregular and illicit betting and gaming, tax evasion and avoidance in the betting and gaming sector and to ensure the protection of gamblers and players’.

7.Article 38(2) of the Bersani Decree (7) lays down ‘the new rules governing the marketing of gambling on events other than horse racing’, of which attention should be drawn to the following:

— at least 7 000 new outlets are to be opened (Article 287(d)) and a maximum number per municipality will be set (Article 287(e));

— a minimum distance must be observed between the new outlets and existing outlets (Article 287(f) and (g));

— lastly, a definition is laid down of ‘measures for the protection of holders of licences for the collecting of bets at fixed odds on events other than horse racing governed by Decree No 111 of the Minister for the Economy and Finances of 1 March 2006’(Article 287(l)).

8.Article 38(4) (8) lays down very similar provisions in relation to bets on horse racing.

9.That system of betting and gaming licences is linked to a police authorisation mechanism, governed by Royal Decree No 773 of 18 June 1931, (9) in such a way that authorisation to engage in the organising or management of betting or gaming is granted only to licence holders or persons delegated by them for those purposes.

B – The criminal legislation

10.In Italy, the organisation of betting or gaming — including electronically or by telephone — without the required licence or authorisation is a criminal offence punishable by a custodial sentence of up to three years (Article 4 of Law No 401 of 13 December 1989). (10)

III – The cases before the referring court and the question referred for a preliminary ruling

A – Stanley International Betting Ltd and its position in Italy following the Bersani Decree and the 2006 tendering procedures

11.Stanley International Betting Ltd (‘Stanley’) is a company governed by English law which is authorised to act as a bookmaker in the United Kingdom under a licence issued by the City of Liverpool.

12.Stanley operates in Italy through more than 200 agencies, commonly called ‘Data Transmission Centres’ (‘DTCs’). The DTCs supply their services in premises open to the public in which a data transmission link is placed at the disposal of bettors so that they can access Stanley’s server in the United Kingdom. In that way, bettors are able to forward sports bets proposals to Stanley electronically (chosen from lists of events, and the odds on them, supplied by Stanley); to receive notice that their proposals have been accepted; to pay their stakes; and, where appropriate, to draw their winnings.

13.The DTCs are run by independent operators who have contractual links to Stanley. Mr Costa and Mr Cifone are DTC operators for Stanley in Italy.

14.In 1999, the Italian authorities issued a call for tenders for the award of 1 000 licences for the marketing of sports bets, to be valid for a period of six years and renewable for a further six years. In accordance with the provisions concerning the transparency of share ownership in force at that time, operating companies which, like Stanley, were listed on regulated markets were excluded from such calls for tenders.

15.Following the criticism of those provisions by the Court in Zenatti and Gambelli, the Italian legislature allowed all capital companies, regardless of their legal form, to participate in public procurement procedures for the award of betting and gaming licences (Article 22(11) of Law No 289 of 27 December 2002) (11) and abolished the prohibition on licence holders operating via third parties authorised for that purpose (Article 14b of Decree-Law No 35 of 14 March 2005, converted into Law No 80 of 14 May 2005). (12)

16.Those amendments were followed by the reform implemented by the Bersani Decree, pursuant to which the Independent Authority for the Administration of State Monopolies (‘AAMS’) published two invitations to tender with a view to the grant of more than 16 000 new licences for the marketing of bets on sporting events, including horse racing. The procurement procedures were concluded in December 2006 with the grant of 14 000 new licences to national and foreign operators.

17.Stanley informed the Italian authorities of its interest in taking part in the new procurement procedures in 2006, asking the AAMS for a number of explanations regarding the terms of the invitation to tender. In particular, Stanley requested clarification of Article 23 of the model contract between the AAMS and successful tenderers, under which licences were to be withdrawn on the following grounds, among others:

— where, in relation to ‘licensees, their legal representatives or directors, interim protective measures have been adopted, or a decision has been taken to remit a matter to the court with jurisdiction to rule on the substance, in connection with any of the offences referred to in Law No 55 of 19 March 1990 or any other offence liable to breach the relationship of trust with the AAMS, or in the case of serious or repeated infringements of the rules in force governing public gaming, including failure on the part of third parties which the licensee has entrusted with the supply of services ancillary to the distance collection of sports bets to comply with the legislation in force’ (paragraph 2); and

— where the licensee markets, either itself or through a company linked to it — whatever the nature of that link — on Italian territory or by means of data transmission sites located outside Italian territory, games analogous to public games or to other games operated by the AAMS, or games which are prohibited under Italian law’ (paragraph 3).

18.In accordance with Article 23(6) of the model contract (designed to govern the licence contractually), revocation or withdrawal of a licence is to entail forfeiture to the AAMS of the guarantee arranged by the licensee, ‘without prejudice to the right to seek compensation for any further loss’.

19.According to the explanations provided by the AAMS, Stanley withdrew from participation in the tendering procedures. Despite that, Mr Costa and Mr Cifone applied for the appropriate police authorisation to engage in their activity as betting intermediaries.

20.On 27 November 2006, Stanley brought an action before the Tribunale amministrativo regionale del Lazio ((Lazio Regional Administrative Court), contesting various acts of the tendering procedure; that action is still pending. (13)

B – Case C-72/10 Costa

21.On 20 October 2008, the Public Prosecutor asked the Tribunale di Roma (Rome District Court) to convict Mr Costa of ‘the offence under Article 4(4a), and the first subparagraph of Article 4(1), of Law No 401/89’, on the grounds that, without holding the required licence and police authorisation, he had illicitly engaged in the organised activity of accepting or collecting sports bets on behalf of a foreign company and had electronically transmitted data to that company, thereby acting as an intermediary for that company, which — without the necessary licence — accepted the bets.

22.In his decision of 27 January 2007, the Giudice delle indagini preliminari (judge responsible for preliminary investigations) of the Tribunale di Roma held that the Italian legislation had to be left unapplied, since the Corte Suprema di Cassazione, in applying the principles laid down by the Court of Justice, had declared that the relevant Italian legislation was inconsistent with the principles laid down in the EC Treaty. Accordingly, it was held that there was no requirement to proceed against Mr Costa ‘because the facts no longer constitute an offence’.

23.The Public Prosecutor appealed against that decision to the Corte Suprema di Cassazione, contending that the new Italian legislation, laid down in the Bersani Decree, is compatible with EU law and that Stanley had not participated in the tendering procedures organised in accordance with that new legal framework. In the absence of a decision on the part of the Italian authorities refusing to grant Stanley a licence, against which an appeal could be brought before an administrative court, Mr Costa could not legitimately claim that an irregularity had been committed by the Italian betting and gaming authorities and seek the non-implementation of legislation from which he had chosen of his own free will to remain aloof.

C – Case C-77/10 Cifone

24.On 26 May 2008, at the request of the Public Prosecutor, the Giudice delle indagini preliminari del Tribunale di Trani issued an order against Mr Cifone for the seizure of his premises and equipment for infringement of Article 4(4a) and (4b) of Law No 401/89 and Articles 106 and 132(1) of Legislative Decree No 385 of 1983.

25.Mr Cifone challenged that order before the Tribunale del Riesame di Bari (Review Court, Bari) which, by order of 10 July 2008, confirmed the seizure but solely in respect of the offence under Article 4 of Law No 401/89, that is to say, in relation to the fact that Mr Cifone had engaged in the collecting of bets without holding any licence or authorisation from the AAMS and without police authorisation.

26.On 9 September 2008, Mr Cifone appealed against that order on a point of law, seeking its annulment and the non-implementation of the national legislation. In that connection, Mr Cifone claims that, by confirming the validity of the old licences and laying down restrictions on the location of new outlets, and in providing for the withdrawal of licences in circumstances which are seriously discriminatory, that legislation is contrary to EU law. Mr Cifone accordingly requested the Corte Suprema di Cassazione to refer a question to the Court of Justice for a preliminary ruling.

D – The question referred

‘The Court of Justice is requested to interpret Articles 43 EC and 49 EC with reference to freedom of establishment and freedom to provide services in the sector of betting on sports events in order to establish whether or not those Treaty provisions permit national rules establishing a State monopoly and a system of licences and authorisations which, within the context of a given number of licences:

(a) tend generally to protect holders of licences issued at an earlier period on the basis of a procedure that unlawfully excluded some operators;

(b) in fact ensure the maintenance of market positions acquired on the basis of a procedure that unlawfully excluded certain operators (by … prohibiting new licensees from locating their kiosks within a specified distance of those already in existence); and

(c)provide cases in which the licence may be withdrawn with forfeiture of very large guarantee deposits, including the case in which the licensee directly or indirectly carries on cross-border betting or gaming activities analogous to those under the licence.

IV – The procedure before the Court of Justice

28.The references for a preliminary ruling were lodged at the Court Registry on 9 February 2010.

29.Written observations were lodged by Spain, Belgium, Portugal, Italy, the Commission, Mr Costa and Mr Cifone.

30.At the hearing on 29 June 2011, oral argument was presented by the representatives of Mr Costa, Mr Cifone, the Commission, Italy, Belgium, Malta and Portugal.

V – The admissibility of the reference for a preliminary ruling

31.The Italian Government has raised a number of objections to the admissibility of the reference for a preliminary ruling.

32.First of all, the Italian Government argues that the question referred is hypothetical. In its opinion, a declaration that the new Italian legislation is incompatible with EU law would not affect the defendants in the cases before the referring court because Stanley chose of its own free will not to participate in the 2006 tendering procedures, which were governed by that new legislation. The Italian Government suggests, in short, that the features of a licensing system with which Stanley has had no involvement cannot have any bearing on the position of Mr Costa and Mr Cifone under criminal law.

33.Mr Costa and Mr Cifone claim, on the other hand, that Stanley’s decision not to apply for a licence was influenced by the restrictions introduced by the new legislation, from which it follows, in accordance with the Placanica case-law, that any unlawfulness of the system is likely to have a bearing on the criminal proceedings in progress. That view appears to underlie the reference for a preliminary ruling, which, according to settled case-law, is guaranteed a presumption of relevance which militates in favour of a declaration of admissibility. (14)

34.Secondly, the Italian Government submits that the question referred for a preliminary ruling should be declared inadmissible because it is too general. In my view, however, the orders for reference from the Corte Suprema di Cassazione provide a definition of the factual and legislative context of the question referred, presenting the essential information needed for the Court to provide a useful reply. (15)

35.It follows from the foregoing that the reference for a preliminary ruling must be declared admissible.

VI – Analysis of the question referred for a preliminary ruling

A – The existence of restrictions on the freedom of establishment and the freedom to provide services, and possible justifications for those restrictions

36.In accordance with settled case-law, the provisions to which the question refers (the special protection allegedly provided to existing licence holders; the rules on minimum distances which protect their position; and specified situations in which licences are to be withdrawn) constitute restrictions on the freedom of establishment (Article 49 TFEU) and the freedom to provide services (Article 56 TFEU), because they place conditions on, and are liable to hinder or make less attractive, the exercise of those freedoms. (16)

37.Such restrictions may be justified by overriding reasons in the public interest, provided that they are applied in a non-discriminatory manner, that they are suitable for achieving the public interest objective invoked (principle of coherence or adequacy) and that they do not go beyond what is necessary in order to attain that objective (principle of proportionality). (17)

38.In addition to those stringent requirements, the Court has acknowledged — ever since Schindler, (18) the judgment which first addressed this matter — that, when analysing the betting and gaming sector, ‘it is not possible to disregard the moral, religious or cultural aspects of lotteries, like other types of gambling, in all the Member States’ or the fact that gambling involves ‘a high risk of crime or fraud’ and is ‘an incitement to spend which may have damaging individual and social consequences’. According to settled case-law, all those particular factors ‘justify national authorities having a sufficient degree of latitude to determine what is required to protect the players and, more generally, in the light of the specific social and cultural features of each Member State, to maintain order in society’. (19) The Member States are therefore ‘free to set the objectives of their policy on betting and gaming and, where appropriate, to define in detail the level of protection sought’. (20)

B – The public interest objective pursued by the provisions at issue: its limitation in the case of Italy

39.Once it has been established that restrictions have been placed on the freedom of establishment and the freedom to provide services, the first step in the logical process for determining whether those restrictions are justified will be to identify the objective — the overriding reason in the public interest pursued by the provisions at issue — to which it will then be necessary to apply the double test of coherence and proportionality.

40.Within the considerable room for manoeuvre, which, as I have said, Member States have been allowed in this field, the Court has accepted as overriding reasons in the public interest the objectives of ‘consumer protection and the prevention of both fraud and incitement to squander on gaming, as well as the general need to preserve public order’. (21)

41.In Placanica, the Court observed that ‘the Italian legislature is pursuing a policy of expanding activity in the betting and gaming sector, with the aim of increasing tax revenue’, a factor which means that ‘no justification for the Italian legislation is to be found in the objectives of limiting the propensity of consumers to gamble or of curtailing the availability of gambling’. (22) That categorical assertion appears still to be valid, if not reaffirmed, in the cases under consideration here, following the decision of the Italian authorities to award 14 000 new betting and gaming licences in 2006. (23)

42.In short, had the Italian legislature wished to promote a policy of curtailing opportunities to gamble, it would have opted for the alternative approach suggested in Placanica; in other words, it would have chosen to revoke and re-award the 1999 licences without increasing their number. Instead, it undertook an extraordinary expansion of the sector from a quantitative and qualitative point of view, offering greater and increasingly varied gaming opportunities to Italian players. It is not an exaggeration to state at this point that the Italian policy in this field has trivialised gambling by making it increasingly accessible. Despite the numerous checks and restrictions which, as will be seen, continue to be imposed on licence holders, their numbers have increased to such an extent that it is almost possible to talk of a ‘liberalised’ sector, albeit one which is subject to regulation. Accordingly, the fight against addiction to gambling and the curtailment of opportunities to gamble are still not credible objectives of the Italian provisions on betting and gaming, particularly since the reforms of 2006.

43.It is true that in Placanica the Court also ruled that ‘a policy of controlled expansion in the betting and gaming sector may be entirely consistent with the objective of drawing players away from clandestine betting and gaming — and, as such, activities which are prohibited — to activities which are authorised and regulated’. An acceptable objective in that connection would therefore be ‘preventing the use of betting and gaming activities for criminal or fraudulent purposes by channelling them into controllable systems’. (24)

44.In line with the requirements laid down in Placanica, and to a certain extent in anticipation of them, the Bersani Decree expressly stated that the objectives of the new legislation were ‘to counter the spread of irregular and illicit betting and gaming, tax evasion and avoidance in the betting and gaming sector and to ensure the protection of gamblers and players’.

45.The foregoing considerations on the public interest requirements pursued are, as will be seen, extremely important because they influence the assessment as a whole of the measures at issue.

C – Possible justification for the restrictions: the requirements of non-discrimination, adequacy and proportionality

46.Once the objective has been established, it must be determined whether each of the national restrictions satisfies — separately — (25) the requirements resulting from the case-law of the Court: non-discrimination, adequacy or coherence, and proportionality.

47.According to the referring court, the Italian legislation establishes ‘a State monopoly’ and a system of licences and authorisations.

48.The Court has consistently held and, in particular, with regard to Italy, that where national legislation ‘prohibits — on pain of criminal penalties — the pursuit of activities in the betting and gaming sector without a licence or police authorisation issued by the State, it constitutes a restriction on the freedom of establishment and the freedom to provide services’. (26) Those restrictions may, however, be justified by the objective of preventing the pursuit of activities in the betting and gaming sector for criminal or fraudulent purposes. (27)

49.In that connection, suffice it to say that it will be for the referring court to determine whether the national legislation continues to satisfy that objective and whether it complies with the requirement of proportionality laid down in case-law, particular account being taken of the increase in the number of licences in 2006.

50.The Corte Suprema di Cassazione goes on to state that the Italian rules tend generally to ‘protect holders of licences issued at an earlier period on the basis of a procedure that unlawfully excluded some operators’ (the 1999 licences).

51.A system specifically for the protection of existing licence holders would undoubtedly constitute a restriction of the freedom of establishment and the freedom to provide services (28) which would be difficult to justify because it pursues a clearly economic objective (preventing the new system from exerting excessive ‘competitive pressure’ — to use the Italian Government’s expression — on operators which are already established). (29)

52.Such a general conclusion may not be reached without specific information concerning the existence of that possibly unlawful protection, a matter about which the orders for reference are not particularly forthcoming. Certainly, it is not a view which is held by the Corte Suprema di Cassazione alone. Mr Costa refers in his pleadings to a long list of judgments which adopt a similar position. Despite that, the referring court provides no specific explanation to support its assertion that there is a general tendency to protect existing licence holders.

53.The Commission submits that, by that assertion, the question refers simply to the maintenance in force of the 1999 licences. Since those licences were granted under a procedure which was subsequently held to be incompatible with EU law, the Commission argues that the fact that they have remained in force could be regarded as anomalous. The fact is that, since the 2006 tendering procedures, the pre-existing licence holders have shared the market in sports bets with the holders of 14 000 new licences, an approach which was expressly accepted in Placanica. (30) The Commission argues, therefore, that, in general terms, the approach taken by the Italian legislature is in conformity with that judgment, provided that the Italian courts find that the number of new licences granted (14 000) is ‘adequate’, being sufficient to eliminate the unlawful effects of the 1999 tendering procedure.

54.In my opinion, 14 000 new licences could, in principle, be regarded as ‘adequate’ within the meaning of Placanica, or even to be more than sufficient to meet the requests from operators who were unlawfully excluded in 1999. It is sufficient to observe that 16 000 licences were up for tender in the 2006 procedures although ultimately only 14 000 were granted. All those factors suggest that in Placanica the Court also accepted the extension until 2012 of the pre-existing licences, the validity of which was prolonged in 2006 in parallel with the grant of new licences. From that perspective, therefore, the protection consisting in the maintenance in force of the pre-existing licences is not, in itself, contrary to EU law.

55.It should be borne in mind that, in any event, the approach taken under national law to restore the rights of unlawfully excluded operators must not be such that it makes it ‘excessively difficult or impossible in practice to exercise the rights conferred by Community law (principle of effectiveness)’. (31) Consistently with the principle of effectiveness, the course of action adopted by the Italian legislature (the grant of new licences in addition to those already in existence) must not have the same effect of unlawfully excluding certain operators.

56.Mr Costa and Mr Cifone have claimed that, far from making it possible for Stanley to participate (by allowing it to ‘exercise the rights granted by Community law’), in practice, the new rules governing the 2006 tendering procedures impeded Stanley’s participation. According to Mr Costa and Mr Cifone, that is because of the inclusion of rules which, on the one hand, excessively protect the competitive advantage of pre-existing licence holders (in particular, by setting obligatory minimum distances from their outlets) and, on the other, rendered Stanley’s participation pointless (since it risked the automatic withdrawal of its licence).

57.The rules on minimum distances and the cases triggering withdrawal provided for in the legislation at issue are, Mr Costa and Mr Cifone submit, the clearest expressions of the general tendency to protect pre-existing licence holders to which the question refers, and, in their opinion, that general tendency is also entrenched in Article 38(2) and (4)(l) of the Bersani Decree, under which ‘measures for the protection of licence holders’ are expressly defined.

58.In summary, therefore, it is appropriate to state that national legislation which expressly and effectively entrenches a general tendency ‘to protect holders of licences issued at an earlier period on the basis of a procedure that unlawfully excluded some operators’ could constitute an unjustified restriction of the freedoms enshrined in the Treaty. In the case of Italy, in particular, the provision concerned (Article 38(2) and 4(l) of the Bersani Decree) is worded somewhat cryptically. The determination of its scope falls exclusively to the Italian court, which is the only court with jurisdiction to interpret national law.

59.In addition, in the absence of further details provided by the referring court, it is necessary to examine separately in the cases under consideration the rules on minimum distances and the grounds for withdrawal, which could be specific expressions of the alleged general tendency to protect pre-existing licence holders.

60.The Corte Suprema di Cassazione also questions whether provisions which ‘in fact ensure the maintenance of market positions acquired on the basis of a procedure that unlawfully excluded certain operators’ are compatible with EU law, referring by way of example to the fact that the provisions prohibit new licensees from locating their outlets within less than a specified distance from those already in existence.

61.The Bersani Decree imposed a system of minimum distances between betting and gaming outlets, which was repealed by Decree-Law No 149 of 25 September 2008. (32) In accordance with Article 38(2)(f) and (g) of the Bersani Decree, public gaming points had to be located at a minimum distance from ‘those in respect of which a licence has already been awarded’. (33) In the case of outlets where the marketing of betting is ancillary, that provision added that those distances had to be observed ‘without prejudice to outlets where, as at 30 June 2006, sports-based pool bets were collected’. (34)

62.As justification for the measure, the Italian Government claims that it is aimed at ensuring the uniform distribution of betting outlets throughout the national territory in order to prevent the doubly harmful outcome which the accumulation of betting establishments in certain locations might have for consumers: for those who live close to such locations, exposure to excess supply; for those who live in the most ‘poorly supplied’ areas, the risk of opting for clandestine betting or gaming. The Italian Government therefore refers indirectly to a twofold public interest objective: (i) the fight against gambling addiction and (ii) the fight against criminality and fraud in the sector.

63.As already stated, it is hardly convincing to plead the fight against gambling addiction in relation to Italy, which has a ‘policy of expanding activity in the betting and gaming sector’. (35) In my opinion, it is not possible to apply by analogy the reasoning in Blanco Pérez and Chao Gómez, (36) in which the Court held that certain rules on minimum distances between pharmacies were compatible with Article 49 TFEU because they were justified by imperative requirements relating to the protection of public health. (37) Although the arguments of the Italian Government appear to be based on a number of points from that judgment, (38) it is not appropriate here to rely on overriding reasons in the public interest relating to public health (in particular, the fight against gambling addiction), for the reasons set out above.

64.There remains the justification based on the fight against criminal and fraudulent activities in the betting and gaming sector, which — as I have already stated — also constitutes a public interest objective capable of justifying restrictions of the freedoms laid down in the Treaty. To my mind, however, the system of minimum distances between betting outlets has little connection with that objective.

65.Although the existence of a sufficiently wide, attractive and well-publicised supply of lawful betting and gaming opportunities is capable of contributing to the fight against criminality in the sector, the uniform distribution of that supply throughout the national territory does not, from the point of view of proportionality, appear to constitute an essential mechanism for the prevention of fraud and unlawful activities in the sector.

66.While it is true that, in the absence of compulsory rules on minimum distances, there is a likelihood that a significant proportion of outlets will be concentrated in the most populated or the most commercially active areas of national territory, it is appropriate to treat with a certain amount of scepticism the claim that that situation would lead a significant number of gamblers who reside in areas where there is limited or even no supply to opt for unlawful operators. Conversely, the uniform distribution, from a territorial point of view, of the lawful supply of betting and gaming does not appear to be a sufficient means of preventing certain gamblers from having recourse to unlawful operators.

67.It should be recalled that the rules on minimum distances were imposed exclusively on new licence holders in relation to pre-existing licence holders, which tends to confirm the view, expressed in the question referred, that the rules on minimum distances may be aimed at maintaining the ‘market positions’ of pre-existing licence holders, by guaranteeing them, in practice, a certain competitive advantage over those which did not have access to the market until the 2006 tendering procedures and which might be obliged to establish themselves in less commercially attractive locations than those occupied by pre-existing licence holders. That raises doubts as to whether the measure is consistent with the objective of combating criminality invoked by the Italian Government.

68.As was made clear in Attanasio Group, (39) which concerned the Italian rules on minimum distances between roadside service stations, by hindering the market access of new operators, a measure of that kind ‘appears instead to favour the position of operators already present on Italian territory, without consumers obtaining any real benefits’. In short, the measure appears to pursue a purely economic objective which, as already indicated, may not, under any circumstances, constitute an overriding reason in the public interest, within the meaning of the case-law. (40)

69.In summary, Articles 49 TFEU and 53 TFEU preclude national legislation which in fact ensures the maintenance of market positions acquired under a procedure which unlawfully excluded certain operators; in particular, they preclude the prohibition on new licensees locating their outlets within less than a specified distance from those already in existence.

4. The rules on the withdrawal of licences

a) Withdrawal because of the marketing, ‘on Italian territory or by means of data transfer sites located outside the national territory’, games analogous to public games or games which are prohibited (Article 23(3) of the model contract with licence holders)

70.Lastly, the Corte Suprema di Cassazione asks the Court whether the Italian rules on the withdrawal of betting or gaming licences (which also entails forfeiture of the guarantee) are lawful, referring specifically to ‘the case in which the licensee directly or indirectly carries on cross-border gaming activities analogous to those under the licence’.

71.It is possible to infer that, in that way, the Italian court is referring to the ground for withdrawal provided for under Article 23(3) of the model contract intended to govern future licences. In accordance with that provision, a licence is to be withdrawn ‘where the licensee markets, either itself or through a company linked to it — whatever the nature of that link — on Italian territory or by means of data transmission sites located outside Italian territory, games analogous to public games or to other games operated by the AAMS, or games which are prohibited under Italian law’.

72.Although, in accordance with case-law, it is exclusively for the referring court to determine, in the cases before it, the correct interpretation of national law, (41) the grey areas in both the wording of the provision at issue and, in that regard, in the orders for reference themselves oblige me to envisage two possible alternative interpretations of Article 23(3). (42)

i) First possibility: withdrawal as a result of cross-border activity

73.According to the first possible interpretation, by referring to the marketing of certain games ‘by means of data transmission sites located outside Italian territory’, the provision is intended to preclude all cross-border betting and gaming, in particular the activities engaged in by Stanley through its DTCs.

74.That is the interpretation which appears to be favoured by Mr Costa, Mr Cifone and the Corte Suprema de Cassazione, and it is also the interpretation which may be inferred from a large number of judgments from national courts. (43) Such an interpretation is also supported by the correspondence between the AAMS and Stanley at the time of the 2006 calls for tenders.

75.Thus, when asked by Stanley whether ‘the activity which Stanley carries on directly or indirectly through the DTCs affiliated to it, [was] considered by the AAMS to infringe the principles and the provisions set out in the tender documents (in particular, Article 23 of the model contract)’, the AAMS replied, by letter of 6 October 2006, that participation in the tendering procedures was conditional on the cessation, in Italy, of cross-border activities. The AAMS stated in particular that the new system would make it possible for successful tenderers ‘to create sales networks which, according to an independent assessment, could also extend nationwide’, and explained that those networks ‘obviously tended to replace any old networks and, in those circumstances, the provisions under Article 23 of the model contract constitute[d] appropriate protection of the investments made by those licence holders’.

76.In addition to the fact that that reply is extremely vague, the impression that Stanley’s business model (which involves a cross-border activity using data transfer), or at least its current network of distributors, did not satisfy the conditions for the grant of the new licences had the effect of dissuading it from participating in the tendering procedures.

77.If the Corte Suprema di Cassazione considers that, under Article 23(3) of the model contract, a licence will automatically be withdrawn simply because the betting or gaming activity concerned is operated on a cross-border basis, it must find that the measure constitutes a restriction of the freedom of establishment and the freedom to provide services, to which I must add that the justification based on the fight against fraud and criminality in the sector seems to me to be extremely contrived.

78.Certainly, in Liga Portuguesa, the Court afforded Member States considerable latitude in relation to games of chance offered over the internet. (44) However, that reasoning cannot be transposed to this case, in which, if the present hypothesis is correct, it is not the control of gaming over the internet which is at issue but rather the prohibition of all cross-border activity in the betting and gaming sector. In the cases before the referring court, in particular, the legislation at issue might impede an activity which, albeit cross-border in nature, does not amount to internet gambling in the strict sense because it also involves the physical presence of a representative of the undertaking on Italian territory.

79.In principle, therefore, the activity at issue here does not display the main characteristic of internet gambling, on which the Court based all its reasoning in Liga Portuguesa: in other words, ‘the lack of direct contact between consumer and operator’. Not all cross-border activity necessarily precludes such contact; in so far as it is possible to guarantee such physical, direct contact with an intermediary or representative of the undertaking, the specific risks of internet gambling referred to do not arise here and cannot, therefore, justify the measure in question.

80.In addition, it should be borne in mind that, in Liga Portuguesa, all that reasoning was directed at putting an end to the requirement of mutual recognition of gaming licences. (45) Mutual recognition was accordingly excluded in relation to the internet gambling sector in Liga Portuguesa, and generally, in very clear terms, in relation to the entire betting and gaming sector in Stoß. (46)

81.In the cases currently under consideration, however, if that first interpretation were accepted, the restriction imposed would go much further than requiring foreign operators to undergo checks by national authorities in order to engage in a betting or gaming activity. Purely and simply, such operators would be prohibited from participating in the betting and gaming market solely because their principal place of establishment is in another Member State and the legal transaction concluded with customers is cross-border in nature, despite the fact that it would be possible to carry out a police check on any representatives who were permanently present on national territory.

82.In summary, I believe that national legislation which in fact precludes all cross-border activity in the betting and gaming sector, regardless of the form in which that activity is undertaken and, in particular, in cases where there is the possibility of direct contact between consumer and operator and where physical checks for police purposes can be made of an undertaking’s intermediaries who are present on national territory, is contrary to Articles 49 TFEU and 56 TFEU.

ii) Second possibility: withdrawal of a licence because of offering unauthorised betting or gaming

83.An alternative interpretation of Article 23(3) of the model contract is that the provision is intended, above all, to prohibit a variety of types of gaming, regardless of whether they are offered on a cross-border basis (‘by means of data transmission sites located outside Italian territory’) or directly ‘on Italian territory’. More specifically, under Article 23(3), games the offer of which results in the withdrawal of a licence are ‘games analogous to public games or to other games operated by the AAMS, or games which are prohibited in Italy’. First and foremost, attention should be drawn to the considerable imprecision of that wording, in contrast to the seriousness of its consequences.

84.The Commission and Mr Costa have provided information which enables some light to be shed on this matter. Both have referred to the existence of a catalogue or list of games drawn up and updated weekly by the AAMS, which delimits the operational scope of licences with the result that licence holders may offer only the games which are on that list, while the offer of games which are not on the list triggers withdrawal of a licence. (47) I will therefore attempt, in proposing an answer to the question from the referring court, to take that information into consideration.

85.In Stoβ, the Court acknowledged that, given the significant differences which the various types of games of chance can exhibit, national legislation which makes certain types of games subject to stricter rules, or even prohibits certain types while authorising others, may be compatible with the Treaty. (48) In any event, it will of course be necessary for the measure in question to be non-discriminatory and to contribute in a coherent, systematic and proportionate manner to the achievement of the public interest objective at which it is aimed: in this case, the fight against fraud and the spread of illicit gaming.

86.As regards the cases under consideration, it should be pointed out that, in principle, the list may be adapted to the needs of operators. Licence holders may ask the AAMS to place certain games on the list, although apparently such a decision lies within the discretion of the authority.

87.The administrative decision to place a particular game on the list undeniably constitutes a prior administrative authorisation which restricts the freedoms laid down in the Treaty but which, in accordance with case-law, may be justified provided that it is based on objective, non-discriminatory criteria and is open to a judicial remedy. (49) The parties agreed at the hearing that there is a right of appeal against the decision of the AAMS, but it is not possible to conclude clearly from the documents submitted whether the decision of the AAMS on the range of authorised games is actually based on objective criteria which the persons concerned are aware of in advance.

88.There is another point in addition to the foregoing which may be inferred from an examination of the documents provided by the parties and which, in any event, is — like all the other facts — for the referring court to check. I refer to the information that the games excluded from the AAMS list are mainly games which are offered by foreign operators and which may constitute the most ‘attractive’ part of their offer, distinguishing it from that of national operators. If the truth of those allegations is confirmed, there may be a finding in these cases of indirect discrimination which is difficult to justify by reference to the purported objectives.

89.In short, I believe that a system under which it is only permissible to offer the types of game which feature in a catalogue or a list, and under which the offer of any other types of game is penalised by the withdrawal of a licence, may be justified only if that system is based on objective, non-discriminatory criteria which are known in advance and if the administrative decisions relating to the drawing up of the list are open to challenge before the courts.

b) Withdrawal because of the adoption of interim protective measures or the initiation of criminal proceedings against licence holders, their representatives or their directors (Article 23(2) of the model contract)

90.Although this point is not expressly raised in the question referred, (50) Mr Costa and Mr Cifone have referred in their pleadings to another case triggering the withdrawal of a licence which is also provided for in the model contract, specifically in Article 23(2). Under that provision, the AAMS will decide that a licence is to be withdrawn where, in relation to ‘licensees, their legal representatives or directors, interim protective measures have been adopted or a decision has been taken to remit a matter to the court with jurisdiction to decide on the substance, in connection with any of the offences referred to in Law No 55 of 19 March 1990 or any other offence liable to breach the relationship of trust with the AAMS, or in the case of serious or repeated infringements of the rules in force governing public gaming, including failure on the part of third parties which the licensee has entrusted with the supply of services ancillary to the distance collection of sports bets to comply with the legislation in force’.

91.Mr Costa and Mr Cifone have stated that, in practice, the introduction of that ground for withdrawal was a barrier to Stanley’s participation in the 2006 tendering procedures, since many of its Italian representatives were facing criminal charges at that time, which was prior to the Placanica judgment, hence prior to the decisions to discontinue the criminal proceedings which were then underway against them.

In the light of the foregoing, Mr Costa and Mr Cifone submit that that withdrawal provision (which entails forfeiture of the guarantee) constitutes a restriction on the freedom to provide services and the freedom of establishment which is contrary to the Treaty. (51)

A measure intended to prevent that type of activity from being engaged in by persons who may be of doubtful character appears in principle to be an adequate instrument for attaining the objective of combating fraud and illicit betting and gaming, and the fact that Article 23(6) of the model contract provides that the person concerned has the right to seek compensation for subsequent damage where withdrawal of the licence is later revealed to be unfounded is a not inconsiderable element of proportionality. (52) Irrespective of that, this ground for the withdrawal of a licence (which, surprisingly, is invented by a contractual document) could raise a number of problems from the point of view of proportionality.

The first problem is the apparently premature nature of the withdrawal decision, which is triggered by the initiation of any criminal proceedings and, therefore, before any finding of guilt. Article 23(2) of the model contract refers to the adoption of interim protective measures and to the decision to remit the matter to the court with jurisdiction to decide on the substance (53) as factors which determine the withdrawal of a licence. In that regard, I believe that the fact that the decision concerning withdrawal is adopted before there is a court judgment finding the person concerned guilty as charged is not a factor which determines the unlawfulness of the measure, which could be regarded as proportionate given that the adoption of interim protective measures and the opening of criminal proceedings are, under Italian law, decisions based on evidence capable of giving rise to reasonable doubt as to the good character of the persons concerned. It should be borne in mind, moreover, that Article 23(6) provides for the possibility of reparation.

More worthy of consideration is the second problem, which relates to the excessively broad definition in Article 23(2) of the model contract of the criminal offences in relation to which decisions resulting in the withdrawal of a licence must be adopted. That provision refers, first of all, to the ‘offences referred to in Law No 55 of 19 March 1990’, (54) a case which is sufficiently delimited and justified in the light of the seriousness of the offences concerned (offences relating mainly to mafia activity). Next, however, the provision refers in much more general terms to ‘offences liable to breach the relationship of trust with the AAMS’. Unless the referring court considers that the latter phrase is a sufficiently clear description of the types of offence to which that provision refers, Article 23(2) of the model contract may, in this particular regard, be vitiated by a lack of proportionality, because it could authorise the Italian public authorities to adopt a decision with such serious consequences as the withdrawal of a betting or gaming licence in situations which are entirely unrelated to the management of gaming and betting.

In summary, I believe that a provision under which a betting or gaming licence is to be withdrawn where, in relation to licensees, their representatives or directors, interim protective measures have been adopted or a decision has been taken to remit a matter to the court with jurisdiction to decide on the substance, is not contrary to Articles 49 TFEU and 56 TFEU, provided that this ground for withdrawal is delimited by reference to criminal offences related to betting or gaming activities and those offences are clearly defined.

VII – Conclusion

Accordingly, I propose that the Court of Justice should reply as follows to the question referred for a preliminary ruling by the Corte Suprema di Cassazione:

In relation to the freedom of establishment and the freedom to provide services in the sports betting sector, Articles 49 TFEU and 56 TFEU must be interpreted as meaning that, in the context of a State monopoly and a system of licences and authorisations:

(a) they preclude national legislation which expressly and effectively entrenches clear protection for the holders of licences granted at an earlier time on the basis of a procedure under which some operators were unlawfully excluded. It is for the national court to determine whether the national legislation includes a provision with that meaning and scope;

(b) they preclude national legislation which in fact ensures the maintenance of market positions acquired on the basis of a procedure under which some operators were unlawfully excluded; in particular, they preclude a prohibition on new licensees locating their outlets within less than a specified distance from those already in existence;

(c) they preclude national legislation under which a gaming licence is to be withdrawn where the licensee engages in cross-border gaming activities, irrespective of the form in which those activities are pursued, and even though there is the possibility of direct contact between consumer and operator and where physical checks for police purposes can be made of an undertaking’s intermediaries who are present on national territory;

(d) they do not preclude national legislation under which it is permissible to offer only the types of game which feature in a catalogue or on a list, and under which the offer of any other types of game is penalised by the withdrawal of a licence, provided that the administrative decisions relating to the drawing up of the list are based on objective, non-discriminatory criteria which are known in advance and provided that they are open to challenge before the courts;

(e) they do not preclude national legislation under which a betting or gaming licence is to be withdrawn where, in relation to the licensees, their representative or directors and in the context of specific criminal proceedings, interim protective measures have been adopted or a decision has been taken to remit a matter to the court with jurisdiction to decide on the substance, provided that that ground for withdrawal is delimited by reference to criminal offences related to gaming activities and those offences are clearly defined.

(1) Original language: Spanish.

(2) Case C-67/98 [1999] ECR I-7289.

(3) Case C-243/01 [2003] ECR I-13031 (‘Gambelli’).

(4) Joined Cases C-338/04, C-359/04 and C-360/04 [2007] ECR I-1891 (‘Placanica’).

(5) For a summary of that Italian case-law, see Ruotolo, G.M., ‘Il regime italiano del gambling all’esame della Corte di giustizia: rien ne va plus’, Diritto pubblico comparato ed europeo. III (2007), p. 1399. See also the commentaries on Placanica by Gnes, M. in Giornale di Diritto Amministrativo, No 8/2007, p. 833, and Schiano, R. in Revue du Droit de l’Union Européenne, 2/2007, p. 461.

(6) GURI No 18 of 11 August 2006.

(7) Replacing Article 1(287) of Law No 311 of 30 December 2004 (Finance Law 2005).

(8) Replacing Article 1(498) of Law No 311 of 30 December 2004.

(9) Testo Unico delle Leggi di Pubblica Sicurezza, as amended by Law No 388 of 23 December 2000.

(10) As amended by Law No 388 of 23 December 2000.

(11) Ordinary supplement to GURI No 305 of 31 December 2002.

(12) GURI No 111 of 14 May 2005.

(13) Action No 10869/2006.

(14) Case C-379/98 PreussenElektra [2001] ECR I-2099, paragraph 38; Case C-169/07 Hartlauer [2009] ECR I-1721, paragraph 24; and Joined Cases C-316/07, C-358/07 to C-360/07, C-409/07 and C-410/07 Stoβ and Others [2010] ECR I-8069 (‘Stoβ’), paragraph 51.

(15) Orders in Case C-157/92 Banchero [1993] ECR I-1085, paragraph 4; Case C-167/94 Grau Gomis and Others [1995] ECR I-1023, paragraph 8; and Case C-45/08 Spector Photo Group and Van Raemdonck [2009] ECR I-12073, paragraph 26.

(16) See, inter alia, Case C-55/94 Gebhard [1995] ECR I-4165, paragraph 37, and Case C-76/90 Säger [1991] ECR I-4221, paragraph 12.

(17) See, inter alia, Gambelli, paragraphs 65 and 67.

(18) Case C-275/92 [1994] ECR I-1039.

(19) Schindler, paragraphs 60 and 61. See, to the same effect, Case C-124/97 Läärä and Others [1999] ECR I-6067, paragraph 13; Zenatti, paragraphs 14 and 15; Gambelli, paragraph 63; Placanica, paragraph 47; Case C-42/07 Liga Portuguesa de Futebol Profissional and Bwin International [2009] ECR I-7633 (‘Liga Portuguesa’), paragraph 57; and Stoβ, paragraphs 76 and 77.

(20) Placanica, paragraph 48.

(21) See, inter alia, Placanica, paragraph 46.

(22) Paragraph 54. By contrast with Gambelli, in which the Court left the assessment of the real objectives of the legislation at issue to the Italian court, in Placanica the Court chose to carry out that assessment itself, in the light of the information provided by the Corte Suprema di Cassazione and the Italian Government.

(23) That decision was taken before Placanica, albeit — as will be seen below — in line with the possible courses of action put forward in that judgment.

(24) Placanica, paragraph 55. In accordance with paragraph 63 of Liga Portuguesa, ‘the fight against crime may constitute an overriding reason in the public interest that is capable of justifying restrictions in respect of operators authorised to offer services in the games-of-chance sector. Games of chance involve a high risk of crime or fraud, given the scale of the earnings and the potential winnings on offer to gamblers’.

(25) Placanica, paragraph 49, and Stoβ, paragraph 93.

(26) Gambelli, paragraph 59, and Placanica, paragraph 42.

(27) Liga Portuguesa, paragraphs 63 and 70.

(28) Even though it is a measure which is applicable without distinction, it would impede or make less attractive the exercise of those freedoms by citizens of the Union, thereby affecting intra-Community trade and access to the market for undertakings from other Member States. To that effect, see Case C-442/02 CaixaBank France [2004] ECR I-8961, paragraph 11; Case C-299/02 Commission v Netherlands [2002] ECR I-9761, paragraph 15; and Case C-518/06 Commission v Italy [2009] ECR I-3491, paragraph 64.

(29) It is well known that, according to case-law, purely economic objectives cannot constitute an overriding reason in the public interest for those purposes. To that effect, see Case C-400/08 Commission v Spain [2011] ECR I-1915, paragraphs 74 and 95.

(30) Paragraph 63 of Placanica concerns the consequences of the unlawful exclusion of a certain number of operators from the 1999 tendering procedures, stating expressly that, ‘[i]n that connection, appropriate courses of action could be the revocation and redistribution of the old licences or the award by public tender of an adequate number of new licences’.

(31) Placanica, paragraph 63. See also, to that effect, the judgments cited therein: Case C-453/99 Courage and Crehan [2001] ECR I-6297, paragraph 29, and Joined Cases C-329/04 and C-422/04 i-21 Germany and Arcor [2006] ECR I-8559, paragraph 57.

(32) Converted into Law No 184 of 19 November 2008 on urgent measures to comply with Community obligations in relation to betting and gaming (GURI No 276 of 25 November 2008).

(33) The distance varies according to the number of inhabitants in the locality and depending on whether the marketing of betting and gaming is the outlet’s main activity or an ancillary activity.

(34) Article 38(4)(f) and (g) laid down similar provisions for outlets for bets on horse racing.

(35) Placanica, paragraph 54.

(36) Joined Cases C-570/07 and C-571/07 [2010] ECR I-4629.

(37) Blanco Pérez and Chao Gómez, paragraph 90 and the case-law cited.

(38) See, for example, Blanco Pérez and Chao Gómez, paragraph 64.

(39) Case C-384/08 [2010] ECR I-2055.

(40)

Attanasio Group

41Joined Cases C-188/10 and C-189/10 Melki and Abdeli [2010] ECR I-5667

42The Court adopted a similar approach in Melki. Faced with a problem concerning the interpretation of national law, the Court provided the national court with two alternative solutions: the starting point for the first was an interpretation of the provision at issue along the lines suggested by the national court, while the second interpretation was based on national case-law which took a different approach and which, the Court argued, might accord with EU law (Melki, paragraph 50).

43As I have already indicated, these are referred to in Mr Costa’s pleadings.

Liga Portuguesa

Liga Portuguesa

46Paragraphs 111 and 112.

47That mechanism is governed by Article 5 of Decree No 111 of 1 March 2006.

Stoß

49Case C-205/99 Analir and Others [2001] ECR I-1271, paragraph 38; Case C-389/05 Commission v France [2008] ECR I-5337, paragraph 94; Case C-169/07 Hartlauer [2009] ECR I-1721, paragraph 64; Case C-203/08 Sporting Exchange [2010] ECR I4695, paragraphs 49 and 50; and Case C-46/08 Carmen Media Group [2010] ECR I-3973, paragraphs 86 and 87.

50Which refers in general terms, however, to ‘cases in which the licence may be withdrawn’.

51Mr Costa and Mr Cifone take the view that that ground for withdrawal was in fact a ground for exclusion from the tendering procedures, an assertion which the Italian Government has disputed. In my opinion, that point is irrelevant for the purposes of examining the substance of the cases under consideration because, on any view, the fact that some of Stanley’s Italian representatives were facing criminal charges at the time of the new tendering procedures appears to have influenced its decision not to participate in those procedures (in any case, the licences would have been withdrawn almost immediately).

52It is nevertheless necessary to qualify that remark as a consequence of the fact that, after the present Opinion had been delivered, Mr Cifone’s representative forwarded to the Court the full version of Article 23 of the model contract, of which only a partial version had been available to the Court earlier. In the light of the full version of that provision, it is possible that the right to reparation referred to in Article 23(6) of the model contract is conferred solely on the AAMS and not, as initially suggested, to the licensee. The proper construction of that provision is, in any event, a matter for the national court.

53That decision is adopted at the end of the preliminary investigation of the case, when the criminal proceedings proper begin. For a description to those stages of criminal procedure in Italy, see Case C-105/03 Pupino [2005] ECR I-5285, paragraphs 13 and 14.

54New measures for the prevention of Mafia-type criminality and other serious dangers to society.