The Council of State decides in Betfair’s favour

On 24 June 2020, the Council of State (“CoS”) rendered two judgments upholding the appeal brought by remote gambling operators against the Netherlands Gambling Authority (“NGA”).

• The judgment with ECLI number ECLI:NL:RVS:2020:1458 concerns The Sporting Exchange Limited (previously trading under the name Betfair, now part of the Flutter Entertainment Group).
• The judgment with ECLI number ECLI:NL:RVS:2020:1456 concerns Trannel International Limited (known from amongst others the Unibet brand).

The CoS held that Betfair and Unibet’s objections to the granting of the totalisator licence cannot be rejected a priori because they did not take part in the allocation procedure for that licence. The NGA must address their substantive objections submitted against the totalisator licence allocation procedure.

Allocation procedure for the totalisator licence

Pursuant to Article 24 of the Betting and Gambling Act, the NGA can grant one licence for the offering of betting on horseracing, i.e. the totalisator licence. In the past, this licence was consistently and privately granted to ZEbetting & Gaming Nederland B.V. (“ZEbetting”) or its legal predecessors. As a result of the Betfair judgment delivered by the CoS on 23 March 2011 (ECLI:NL:RVS:2011:BP8768), the NGA had to grant this licence on the basis of a transparent allocation procedure. The NGA started a new procedure to that end in late 2016. Ultimately, the licence was again granted to ZEbetting.

Betfair and Unibet objected to the granting of the licence to ZEbetting. They asserted that the new allocation procedure did not give other parties a fair chance of obtaining the licence. They believed the allocation procedure to be in violation with, among other things, the transparency requirements in Article 56 TFEU. All interested parties should have a fair and equal chance of obtaining the licence, and thus access to the market.

The NGA rejected the objections on the ground that the objecting parties should have taken part in the allocation procedure. Since they did not, they do not qualify as interested parties within the meaning of Article 1:2 of the General Administrative Law Act, according to the NGA. This procedural issue – whether objecting parties can be considered interested parties – was the reason for appeal proceedings before the District Court and the CoS.

The CoS’ judgment

In April 2019, the District Court of The Hague confirmed the opinion of the NGA. However, with its judgments of 24 June 2020, the CoS corrected this judgment. Betfair and Unibet have an interest in their objection to the granting of the licence. Their objection cannot be rejected a priori on the ground that they did not take part in the allocation procedure.

Unlike in the case law underlying the District Court’s judgment, Betfair did not decide to not take part in the allocation procedure “for commercial reasons”. It did not take part because it believed the allocation procedure to be fundamentally flawed. In that case, in the opinion of the CoS, the additional requirement that the objecting party must have taken part in the allocation procure (to be considered an interested party in the context of their objection to the ultimate granting of that licence) does not apply.

The CoS held that the NGA must consider whether as a result of the set-up of the allocation procedure and the conditions stipulated in this regard competitors of ZEbetting were unable to properly compete for the licence.

In this context, the CoS indicated that the NGA must adjust the allocation procedure if it becomes evident that the allocation procedure did not meet the requirements set by EU law. However, if the objections prove unfounded, Betfair and Unibet’s refusal to take part in the allocation procedure may yet be invoked against them.

Concluding remarks

The substantive assessment of the allocation procedure is therefore only starting now. The CoS ordered the NGA to render a new decision in which the appellants’ objections are dealt with substantively.

It will be interesting to see how the NGA will defend its allocation procedure which it used to grant the totalisator licence, especially given the great task that lies ahead: the procedure for granting remote gambling licences in 2021. In this allocation procedure too, all interested parties must be given a fair and equal chance. Their applications will have to be assessed impartially.

Kalff Katz & Franssen assisted Betfair in this higher appeal.