【foxwoods upcoming poker tournaments】European Commission sides with Ladbrokes in Belgium betting dispute

The EC’s decision ends a long-standing investigation triggered by a 2019 complaint from competing gaming operators Rocoluc NV and European Amusement Company NV.

The entities had alleged that Ladbrokes had benefited from an exclusive right to offer virtual betting in Belgium without appropriate compensation, thereby violating EU competition rules.

The investigation subsequently began in earnest in September 2020, under the formal procedure of Article 108(2) of the Treaty on the Functioning of the European Union (TFEU).

It examined whether Belgium’s Gaming Commission had selectively favoured Ladbrokes through informal approvals communicated via email.

Specifically, it scrutinised whether those communications amounted to state aid as defined under Article 107(1) of the TFEU.

Virtual betting, a type of gambling based on fictional sports events determined by random number generators, was relatively new in the Belgian market at the time.

The Belgian Gaming Commission had issued a series of framework notes between 2012 and 2015, asserting that virtual betting fell under the purview of Class IV gaming establishments, which included betting shops like those operated by Ladbrokes.

Based on this interpretation, the Commission responded affirmatively to Ladbrokes’ email inquiries in 2014 and 2015 regarding permission to offer both land-based and online virtual betting.

However, from 2015 onward, the Gaming Commission began denying similar requests from other operators and initiated an internal review to reconsider the regulatory framework for virtual betting.

This led to a suspension of the relevant framework note and Ladbrokes’ authorisation in July 2017.

Despite this suspension, Ladbrokes reportedly continued offering the service until broader regulation was enacted in May 2018, allowing all Class IV operators to offer virtual betting machines.

No evidence of wrongdoing

The complainants argued that this sequence of events resulted in a de facto exclusive right for Ladbrokes, constituting a selective advantage from state resources.

They highlighted that Ladbrokes did not pay any fee beyond standard licence costs and general gambling taxes, and contrasted this with the Belgian National Lottery.

The lottery had paid a significant percentage of its gross gaming revenue to the state in exchange for its exclusive status.

In its initial findings, the EC had agreed that Ladbrokes appeared to benefit from a de facto exclusive right between February 2014 and May 2018.

During this time, the operator did not provide remuneration commensurate with the potential market value of such a privilege. However, the Commission has now reversed that provisional view in its final assessment.

Its conclusion determined that the emails from the Belgian Gaming Commission did not constitute a formal or legally binding act granting exclusive rights or state aid.

It found that these communications lacked the legal effect necessary to establish a grant of rights and, importantly, that no state resources had been transferred or foregone as a result of the Gaming Commission’s actions.

Belgium could have faced censure

Furthermore, the EC noted that the Gaming Commission’s classification of virtual betting was under continuous review during the period in question, and it ultimately suspended the framework governing Ladbrokes’ operations in this domain.

As no payments were made or expected by law from Ladbrokes for offering virtual betting, and in the absence of formal, enforceable exclusive rights, the criteria for state aid under Article 107(1) of the TFEU were not met.

The ruling reaffirms that regulatory actions by Member States, including ad hoc permissions or administrative practices, do not necessarily equate to state aid unless they involve the transfer of state resources and confer a selective economic advantage.

With this conclusion, Ladbrokes avoids potential retroactive financial liabilities or recovery of any alleged aid, and Belgium avoids formal censure under EU State aid law.

The EC did not release all of the details involved in its decision. Instead, it explained that the full report will be available “once any confidentiality issues have been resolved”.