Last December we reported on the intended introduction – by way of the Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2018 (“the 2018 Regulations”) – of a new operating licence condition to prohibit betting operators from accepting bets in relation to a EuroMillions draw, or the outcome of a EuroMillions lottery. This was on the basis that betting operators would still be able to offer bets on international lotteries such as the Irish Lottery or New York State Lottery.
Our crystal ball let us down on this occasion because we forecast that this prohibition was unlikely to face a judicial challenge. In fact it did. However, it was unsuccessful.
The application for judicial review was made by three online betting operators – EU Lotto Limited, Lottoland Europe Limited and Multi Lotto UK Limited (“the Claimants”) – who have been prevented by what is now Regulation 4 of the the Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2007 from continuing to offer what had, in the past, been a lawful product to their customers in the UK by providing them with the opportunity to bet on the outcome of non-UK EuroMillions draws.
The background to, and reasons for, the introduction of this new operating licence condition are contained in an Explanatory Memorandom to the 2018 Regulations (prepared by the Department for Digital, Culture, Media & Sport) that can be downloaded below.
The essence of the Claimants’ argument in its application for judicial review was that “the effect of the 2018 Regulations is to prevent the Claimants from offering that service on pain of breach of the criminal law. Similarly, the Claimants’ British customers have been deprived of the choice to access these products”.
Giving judgment on 18 November 2018, the High Court granted the Claimants permission to claim judicial review but nevertheless rejected all of their claims.
The first ground of challenge
The first ground of challenge was that Regulation 4 is prohibited by Article 56 of the Treaty on the Functioning of the European Union (“TFEU”). The question for determination by the High Court was: “Do the 2018 Regulations impose an unlawful restriction on the Claimant’s freedom to provide services contrary to Article 56 TFEU which prohibits restrictions on the freedom to provide services within the European Union unless justified on established policy grounds”, in relation to which the judgment records that it was common ground between the parties to the litigation that, prima facie , Regulation 4 engages the prohibition on measures restricting the provision of services within the EU and the real issue was whether that restriction is justified on public policy grounds”.
Rejecting that first ground of challenge, the High Court:
- accepted that, on the evidence, only an outright ban would be effective in addressing the real and substantial public interest concerns that the Secretary of State had raised.
- did not consider that the mooted less restrictive measures would be as effective as the outright ban and
- therefore concluded that “the Secretary of State was well within his margin of discretion in deciding to choose an outright prohibition and not any less extreme restrictive measure”.
The second ground of challenge
The second ground of challenge was whether the preceding consultation had been unfair and therefore unlawful. The Claimants argued that the Secretary of State had failed to conduct a fair and lawful consultation concerning the introduction of Regulation 4 because he omitted from the consultation any reference to the need to ensure, so far as possible, that gambling on the outcome of the National Lottery did not lead individuals towards harder and more harmful forms of gambling such as betting. They contended that this objective, upon which weight is now placed by the Secretary of State, was not identified in the course of the consultation and the inevitable consequence was that that consultees directed their representations to the stated objectives but not to this then unidentified objective and, in the event the consultation was unfair and therefore unlawful.
Rejecting this second ground of challenge, the High Court:
- did not accept the Claimants’ assumption that the risk that non-EuroMillions betting was leading consumers into harder forms of gambling was an operative reason behind Regulation 4 at the time of its promulgation by Parliament, concluding:
- that the point was only appreciated as having real force when the Claimants served their own evidence in the judicial review litigation such that it was a genuinely new point and not a hidden concern and
- “put another way when the Consultation started this was not a point that needed to be consulted over”, and
- found that as it was a “ new ” point, it had passed beyond the realms of consultation and was now a matter for the Court to assess as part of the overall proportionality assessment., which it has now done, taking into account all of the Claimants’ arguments and evidence.
The third ground of challenge
The third ground of challenge was raised by the Secretary of State and related to the locus of two out of the three Claimants to seek judicial review (one of which was based in Gibraltar but held an operating licence granted by the UK Gambling Commission and the other which was based in Gibraltar but had not yet applied for such an operating licence).
However, (a) it was accepted by the Secretary of State that at least one of the Claimants had locus and (b) the substantive issues were all fully argued before the Court, as a result of which the High Court decided that it was unnecessary to spend time addressing an issue which was academic and it took the matter summarily, albeit indicating that, had it mattered, it would have accepted the Claimants’ submissions.