NGA cannot change the names of the Lotto and State Lottery licences without reason

De organisations behind Lotto (Stichting de Nationale Sporttotalisator) and Staatsloterij (Stichting Exploitatie Nederlandse Staatsloterij) merged in 2016 to form the Nederlandse Loterij Organisatie. In that process, the foundations (stichtingen) were converted into private limited companies (besloten venootschappen), Lotto B.V. en Staatsloterij B.V. Also, Lotto B.V. and Staatsloterij B.V. became part of the holding company Nederlandse Loterij B.V. Shortly thereafter, the NGA implemented these organisational changes in the gambling licences (i.e. the sports betting and lotto games licence 2015/2016 and the instant lottery licence 2015/2016 for Lotto B.V. on the one hand, and on the other the State lottery licence for Staatsloterij B.V.) previously held by the foundations to now reflect the fact that they are held by the newly formed private limited companies, Lotto B.V. en Staatsloterij B.V. Two remote gambling operators and two trade organisations challenged this course of events up until the highest administrative court in the Netherlands.

The Netherlands has an exclusive licence system for sports betting, lotto games, and instant lotteries (scratch cards). EU law only allows for such a system under strict conditions. The CoS finds that the changes to the concerned licences performed by the NGA actually entail more than just a name change. The change in legal form from the foundations into private limited companies are in fact a significant amendment, according to the CoS, because it resulted in a change regarding the qualities of the licence holders and their relationship with the State. The qualities of the licence holders and their relationship with the State are decisive, the CoS notes, with respect to the permissibility under EU law of the existing practices of automatic reallocation of exclusive gambling licences to incumbents upon expiry of those licences (which in principle is not allowed, subject to an exception under strict conditions created by case law of the CJEU). The NGA did not take into account these EU law conditions when it changed the names of the licences in question. The CoS decides in favour of the remote gambling operators and trade organisations.

Due to this decision by the CoS, the NGA will have to take a new administrative decision concerning the name change. In that administrative decision the NGA will have explain why there is an exclusive licence system in place for lotto games and for the State lottery. Moreover, it will have to be motivated whether these licences can be allocated to Lotto B.V. and Staatsloterij B.V.

It will be interesting to see what the NGA’s argumentation is going to be in its new administrative decision. The administrative decision is not likely to entail any changes concerning the fact that the abovementioned licences are held by the Nederlandse Loterij. The NGA will have to substantiate that the exclusive licence system for lotto games and for the State lottery is justified, therewith it will have to address the matter of ‘horizontal consistency’. The requirement of ‘horizontal consistency’ demands that a coherent policy with respect to the different gambling submarkets must be maintained.

There is another procedure pending, in which the CoS has to rule on whether the Dutch exclusive licence system for lotto games is necessary while an open licensing system is in place for charity lotteries. Furthermore, the NGA will have to explain in its decision whether the Lotto B.V. and Staatsloterij B.V. can benefit from the exception ground created by the CJEU on the basis of which automatic reallocation of exclusive gambling licences to incumbents can be allowed. This can be the case if Lotto B.V. and Staatsloterij B.V are considered to be a public operator whose management is subject to direct State supervision or a private operator whose activities are subject to strict control by the public authorities (C-203/08, Sporting Exchange, para. 59).

Questions? Please contact gaming@kalffkatzfranssen.nl.