Legal Corner: Applying the anti-circumvention theory to fight illegal operators

This article written by EL Legal adviser Philippe Vlaemminck is based on the presentation he made at the EL Legal and Regulatory Affairs Seminar (Vienna, Nov. 23 & 24).


Many Lottery operators are challenged by the activities of operators which are operating illegally within their jurisdictions.  During the EL Legal & Regulatory Affairs seminar, the “anti-circumvention” theory was developed as an important tool to fight against these illegal operators.   Such illegal operators violate the prohibition existing in many jurisdictions to offer bets on lottery products (the so-called secondary lotteries).


EL Legal adviser Philippe Vlaemminck

These operators justify their actions with two arguments.

The first argument they use is that EU law provides that a license in one EU jurisdiction entitles them to operate in all EU jurisdictions. This argument has already been rejected by the European Court.

The second argument they use is that the law in the jurisdiction where the consumer resides, is actually not in compliance with EU law and the case law of the European Court due to a lack of proportionality of the restrictions and/or inconsistency of the policy.

This argument is often only used for the purpose of circumventing the laws which apply to the jurisdiction where the consumer resides.  The concept of “illegal gambling” was addressed in the Spanish Presidency Report of 11 May 2010: “Legal framework for gambling and betting in the Member States of the European Union”.  In its conclusion, the Spanish Presidency Report states that illegal gambling may be defined as “gambling in which operators do not comply with the national law of the country where services are offered provided those national laws are in compliance with EU Treaty principles.”

The question of illegal gambling was addressed for the first time in 2014 at a “common” level in the Council of Europe Convention on the Manipulation of sport competitions. According to art 3,5 (a) “illegal sports betting” means any sports betting activity whose type or operator is not allowed under the applicable law of the jurisdiction where the consumer is located.

In the Italian Laezza case   the European Court declared that the objective pursued by the Italian government, is justified “by the interest in ensuring the continuation of the lawful activity of collecting bets in order to curb the growth of parallel illegal activities”.  In the Stanleybet judgment, the Court explains that if the gambling regime is found to be incompatible with EU law, it “does not necessarily lead to an obligation for the Member State concerned to liberalise the market in games of chance if it finds that such a liberalisation is incompatible with the level of consumer protection and the preservation of order in society which that Member State intends to uphold.” It adds that “Member States remain free to undertake reforms of existing monopolies in order to make them compatible with Treaty provisions, inter alia by making them subject to effective and strict controls by the public authorities”.  In other words, Member States are and remain free to determine what constitutes “illegal gambling”, even if their gambling regime is found to be incompatible with EU law.

In the Carmen Media case, the Belgian and Austrian Governments raised for the first time the question as to whether Carmen Media may rely on EU rules on the freedom to provide services, given that the operator established itself in Gibraltar, and was encouraged in that respect by tax incentives, only in order to evade the stricter rules that would have been applicable to it if it had established itself in the territory of the Member State towards which its business is directed and wherein the consumer resides.

As the Court mentioned: ”It should also be remembered that the Court of Justice has previously held that the question of the applicability of Article 49 EC ( now article 56 TFEU)  is distinct from that of whether a Member State may take measures to prevent a provider of services established in another Member State from circumventing its internal legislation”. While the circumvention theory could be used for tax purposes, it is equally possible to use it to address the illegal offer as such to counter the EU internal market discussion.

This issue, while raised, was not addressed in the Carmen Media case, but may become relevant again.  The issue is whether an operator can (ab)use EU law to try to get access to a jurisdiction where the game he wants to offer will always be prohibited.   The fact that he has a license for such game in another jurisdiction is not relevant. Neither is the discussion relevant whether the gaming policy of the jurisdiction he is targeting is or is not incompatible with EU law. Indeed, as the European Court said clearly, even if a gaming policy is found to be incompatible, it does not mean that such state must open its market to permit all games. Certain types of games can still be prohibited and offering such games from abroad with the sole objective of circumventing the applicable laws does not give such illegal operator the right to invoke EU law in its favor.

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Application de la théorie anti-contournement pour lutter contre les opérateurs illégaux.  De nombreux opérateurs de loteries sont mis en difficultés par les activités des opérateurs qui agissent illégalement dans leurs juridictions. Au cours du séminaire Legal & Regulatory Affairs d’EL, la théorie « anti-contournement » a été développée comme un outil important pour lutter contre ces opérateurs illégaux. Ces opérateurs illégaux violent l’interdiction existant dans de nombreuses juridictions de proposer des paris sur les produits de loterie (aussi appelés loteries secondaires). Le premier argument qu’ils utilisent pour justifier leurs actions est que la législation de l’UE prévoit qu’une licence dans une juridiction de l’UE leur donne le droit d’opérer dans toutes les juridictions de l’UE. Cet argument a déjà été rejeté par la Cour européenne. Le deuxième argument qu’ils mettent en avant est que la loi de la juridiction où réside le consommateur n’est pas conforme au droit communautaire et à la jurisprudence de la Cour européenne en raison d’un manque de proportionnalité des restrictions et/ou de l’incohérence de la politique. Cet argument est souvent utilisé uniquement dans le but de contourner les lois qui s’appliquent à la juridiction où réside le consommateur. La question est de savoir si un opérateur peut utiliser (abuser de) la législation de l’UE pour tenter d’accéder à une juridiction où le jeu qu’il veut proposer sera toujours interdit. Le fait qu’il possède une licence pour un tel jeu dans une autre juridiction n’est pas pertinent. Il n’est pas non plus pertinent de savoir si la politique relative aux jeux de la juridiction qu’il vise est ou n’est pas incompatible avec le droit européen. En effet, comme l’a clairement précisé la Cour européenne, même si une politique relative aux jeux est jugée incompatible, cela ne signifie pas que cet état doive ouvrir son marché pour permettre tous les jeux. Certains types de jeux peuvent toujours être interdits et proposer de tels jeux à l’étranger dans le seul but de contourner les lois applicables n’autorise pas cet opérateur illégal à invoquer le droit européen en sa faveur.
Aplicando la teoría de antievasión en la lucha contra los operadores ilegales.  Muchos operadores de lotería se enfrentan a las actividades de otros operadores que funcionan de forma ilegal en sus jurisdicciones. Durante el seminario de Asuntos regulatorios y legales de Loterías Europeas, se desarrolló la teoría de “antievasión” como una herramienta importante para luchar contra estos operadores ilegales. Estos operadores violan las prohibiciones existentes en muchas jurisdicciones en cuanto al ofrecimiento de apuestas sobre productos de lotería (las llamadas loterías secundarias). El principal argumento con el que justifican sus acciones es que la ley europea indica que la posesión de licencia en una de las jurisdicciones de la UE les autoriza a operar en todas las jurisdicciones de la UE. Este argumento ya ha sido rechazado por el Tribunal Europeo. Su segundo argumento es que la ley en la jurisdicción en la que el consumidor reside no se encuentra en cumplimiento con la ley europea y la ley de casos del Tribunal Europeo, debido a una falta de proporcionalidad en las restricciones y/o incoherencia en las políticas. Este argumento se utiliza a menudo con el único fin de evadir las leyes aplicables en la jurisdicción de residencia del consumidor. La cuestión aquí es si un operador puede (ab)usar de la ley europea para intentar acceder a una jurisdicción en la que el juego que ofrece está, y estará siempre, prohibido. El hecho de que el operador tenga una licencia para dicho juego en otra jurisdicción no es relevante. Tampoco es relevante discutir si la política de juego de la jurisdicción a la que se dirige es compatible o no con las leyes europeas. De hecho, tal como el Tribunal Europeo indicó con toda claridad, el que una política de juego sea incompatible no significa que dicho estado deba abrir su mercado para permitir juegos de todo tipo. Pueden seguir prohibiéndose cierto tipo de juegos, y ofrecerlos desde el extranjero con el único propósito de evadir las leyes vigentes no da al operador ilegal el derecho de invocar las leyes europeas en su favor.
Anwendung der Anti-Umgehungstheorie zur Bekämpfung illegaler Betreiber.  Viele Lotteriebetreiber werden durch die Tätigkeiten von Betreibern, die illegal in ihrem Rechtsgebiet tätig sind, vor Schwierigkeiten gestellt. Während des EL Legal & Regulatory Affairs Seminars wurde die „Anti-Umgehungstheorie“ als ein wichtiges Instrument zur Bekämpfung dieser illegalen Betreiber entwickelt. Solche illegalen Betreiber verletzen das in vielen Rechtsordnungen bestehende Verbot, Wetten auf Lotterieprodukte (die sogenannten Zweitlotterien) anzubieten. Das erste Argument, mit dem sie ihre Handlungen rechtfertigen, ist, dass es das EU-Recht vorsieht, dass eine Lizenz in einer EU-Rechtssprechung ihnen erlaubt, es in allen EU‑Rechtsprechungen zu betreiben. Dieses Argument wurde vom Europäischen Gerichtshof bereits abgelehnt. Das zweite Argument ist, dass das Gesetz in dem Zuständigkeitsbereich, in dem der Verbraucher seinen Wohnsitz hat, nicht im Einklang mit dem EU-Recht und der Rechtsprechung des Europäischen Gerichtshofs steht, da die Verhältnismäßigkeit der Beschränkungen und/oder der Unstimmigkeit der Richtlinie unangemessen ist. Dieses Argument wird oft nur dazu verwendet, die Gesetze zu umgehen, die für den Zuständigkeitsbereich des Verbrauchers gelten. Dieses Argument wird oft nur verwendet, um die Gesetze zu umgehen, die Gegenstand der Frage sind, ob ein Betreiber das EU-Recht nutzen kann, um zu versuchen, Zugang zu einer Gerichtsbarkeit zu erhalten, in der das Spiel, das er anbieten möchte, immer verboten sein wird. Die Tatsache, dass er eine Lizenz für ein solches Spiel in einem anderen Land hat, ist nicht relevant. Genauso wenig ist die Diskussion relevant, ob die Gaming-Politik der von ihm angestrebten Gerichtsbarkeit mit dem EU-Recht unvereinbar ist oder nicht. Tatsächlich sagte der Europäische Gerichtshof klar, dass, selbst wenn eine Spielpolitik als unvereinbar erachtet wird, es nicht heißt, dass dieser Staat seinen Markt öffnen muss, um alle Spiele zuzulassen. Bestimmte Arten von Spielen können immer noch verboten werden und solche Spiele aus dem Ausland mit dem alleinigen Ziel der Umgehung der anwendbaren Gesetze anzubieten, gibt solchen illegalen Betreibern nicht das Recht, sich zu ihrem Vorteil auf das EU-Recht zu berufen.

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