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7.3.2012 Official
Journal
of
the
European
Union L
68/3
DECISIONS
COMMISSION DECISION
of 20 September 2011
on the measure C 35/10 (ex N 302/10) which Denmark is planning to implement in the form of
duties for online gambling in the Danish Gaming Duties Act
(notified under document C(2011) 6499)
(Only the Danish text is authentic)
(Text with EEA relevance)
(2012/140/EU)
THE EUROPEAN COMMISSION,
Both complaints were forwarded to the Danish auth
orities on 23 September 2010 for their comments. The
Danish authorities submitted their comments in their
letter of 20 October 2010.
Having regard to the Treaty on the Functioning of the European
Union, and in particular the first subparagraph of Article 108(2)
thereof,
(3) A
meeting
with
the
Danish
authorities
to
discuss
the
notification and the two complaints referred to above
took place in Brussels on 10 November 2010. During
Having regard to the Agreement on the European Economic
the meeting the Danish authorities submitted a note
Area, and in particular Article 62(1)(a) thereof,
entitled ‘The dilemma created by the pending State aid
case’ in which they also announced their intention to
delay the entry into force of the notified Act until the
Commission had adopted a decision ( 3 ).
Having called on interested parties to submit their comments
pursuant to those provisions ( 1 ) and having regard to their
comments,
(4) By
decision
of
14
December
2010,
the
Commission
informed Denmark that it had decided to initiate the
Whereas:
procedure laid down in Article 108(2) TFEU in respect
of the notified measure. The Commission decision to
initiate the procedure (hereinafter the ‘initiating decision’)
was published in the Official Journal of the European
1. PROCEDURE
Union ( 4 ). The Commission invited interested parties to
submit comments.
(1) On
6
July
2010,
pursuant
to
Article
108(3)
of
the
Treaty
on the Functioning of the European Union (TFEU) the
Danish authorities notified the Legislative Proposal L 203
on Gaming Duties (the ‘Gaming Duties Act’ ( 2 )), adopted
(5) The
Danish
authorities
submitted
their
observations
on
on 25 June 2010, for the sake of legal certainty. The
the initiating decision by letter of 14 January 2011.
Commission requested further information by letters
dated 11 August 2010 and 22 September 2010. The
Danish authorities provided the requested information
by letter dated 20 October 2010.
(6)
In total, 17 interested third parties submitted comments
between 11 February and 22 February 2011 ( 5 ). These
comments were forwarded to Denmark on 16 March
(2) The
Commission
also
received
two
separate
complaints
2011, which was given the opportunity to respond.
with regard to the proposed Gaming Duties Act. The first
The Commission received Denmark’s comments by
was submitted by the Danish Amusement Machine
letter dated 14 April 2011.
Industry Association (‘DAB’) on 23 July 2010. The
second complaint was submitted by a land-based
( 3 ) Although the notified measure was initially due to enter into force
casino operator, ‘the Royal Casino’, on 6 August 2010.
on 1 January 2011, in order to comply with the State aid provisions,
Article 35, paragraph 1 of the Gaming Duties Act provides that the
Minister of Taxation will set the date for the Act’s entry into force.
( 1 ) OJ C 22, 22.1.2011, p. 9.
( 4 ) See footnote 1.
( 2 ) Act No 698 on Gaming Duties (‘Lov om afgifter af spil’).
( 5 ) See below, Section 5.

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L 68/4
EN
Official Journal of the European Union
7.3.2012
2. DESCRIPTION OF THE MEASURE
(12) Article
5
of
the
Gaming
Act
defines
online
gambling
as
‘gambling entered into between a player and a gambling
(7) Following
the
initiation
of
infringement
proceedings
and
provider using remote communication’. The same
the sending of a reasoned opinion on 23 March 2007
provision defines land-based gambling as ‘gambling that
concerning obstacles to the free movement of sports
is entered into by a player and a gambling supplier, or
betting services in Denmark ( 6 ), the Danish government
the suppliers’ agent, meeting physically’. Betting services
had decided to reform the national legislation on
are defined as ‘activities where a participant has a chance
gambling and betting services and to replace the
of winning a prize and where a bet is placed on the
existing monopoly regime with a regulated and
result of a future event or the occurrence of a future
partially liberalised one. The liberalisation was considered
event’.
necessary, inter alia, to comply with EU law and to
respond to the threat posed by illegal online gambling
services provided by gaming service providers located in
other jurisdictions.
(13) Under the terms of Articles 2-17 of the Gaming Duties
Act, the games subject to duty are (i) lotteries, including
class lotteries and non-profit lotteries, (ii) betting,
(8) The
notified
Gaming
Duties
Act
is
part
of
a
set
of
Acts
including local pool betting, (iii) land-based casinos, (iv)
introduced to liberalise the gambling sector (
online casinos, (v) gaming machines offering cash

7 ). Under the
terms of Article 1 of the Gaming Act, the overall
winnings in amusement arcades or restaurants, and (vi)
objective of this new law reform for gambling services is:
games without stakes.
— to keep gambling consumption at a moderate level,
(14) The
Gaming
Duties
Act
sets
different
tax
rates,
depending
on whether the games are provided in online casinos or
in land-based casinos.
— to protect young persons and other vulnerable
persons from exploitation or from becoming
addicted to gambling,
(15) Under Article 10 of the Gaming Duties Act, holders of a
licence to provide games in land-based casinos are
subject to a basic charge of 45 per cent of their gross
— to protect gamblers by ensuring that gambling is
gaming revenues (‘GGR’ — stakes minus winnings), less
supplied in a reasonable, reliable and transparent
the value of the tokens in the tronc, and an additional
manner, and
charge of 30 per cent for GGR (less the value of the
tokens in the tronc) which exceeds DKK 4 million (cal
culated on a monthly basis) ( 8 ).
— to ensure public order and prevent gambling being
used for criminal purposes.
(16) Under Article 11 of the Gaming Duties Act, holders of a
licence to provide games in an online casino are subject
(9) Under
the
Gaming
Act,
‘supplying
or
arranging
gambling
to a charge of 20 per cent of their GGR.
requires a licence unless this Act or other legislation
provides otherwise’. In addition, the provision or
arranging of gambling is subject to the payment of
duty (Article 1 of the Gaming Duties Act).
(17) Holders of a licence to provide gaming machines offering
cash winnings (slot machines) in amusement arcades and
restaurants are subject to a charge of 41 per cent of their
GGR. An additional 30 per cent is paid on gaming
(10) Article
5
of
the
Gaming
Act
defines
gaming
as
covering
machines in public houses, bars, etc. for GGR
the following activities: (i) lotteries, (ii) combination
exceeding DKK 30 000, and on gaming machines in
gambling, and (iii) betting.
amusement arcades for GGR exceeding DKK 250 000 ( 9 ).
(11) Combination gambling refers to ‘activities where a
participant has a chance to win a prize, and where the
(18) With
regard
to
the
licence
fees,
the
Gaming
Act
provides
likelihood of winning depends on a combination of skill
that anyone applying for a licence to offer betting or
and chance’. Combination gambling thus includes games
online casino games is liable to a fee of DKK 250 000
that are often offered by casinos, such as roulette, poker,
(DKK 350 000 if they apply for both betting and online
baccarat, blackjack, and gaming machines offering cash
casino games) and a yearly licence fee ranging from
winnings.
DKK 50 000 up to DKK 1 500 000 depending on the
gaming revenues.
( 6 ) Infringement proceedings No 2003/4365. See also IP/07/360.
( 7 ) Act on Gaming (No 848 of 1 July 2010); Act on the Distribution of
( 8 ) 1 Danish krone (DKK) ≈ EUR 0,13.
Profits Stemming from Lotteries and Horse and Dog Racing (No 696
( 9 ) Under Article 12 of the Gaming Duties Act, the following amounts
of 25 June 2010); Act laying down a Statute governing Danske Spil
are additionally levied per month: DKK 3 000 per machine for up to
A/S (Act No 695 of 25 June 2010).
50 machines and DKK 1 500 for machines beyond that number.

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EN
7.3.2012 Official
Journal
of
the
European
Union L
68/5
(19) The
Gaming Act requires
online gambling providers
general nature and external to the tax system. Since it is
either to be established in Denmark, or if they are
established case-law that only intrinsic objectives of the
residents of another EU or EEA Member State, to
tax system are pertinent, the Commission considered that
nominate an approved representative (Article 27).
the Danish authorities had not sufficiently substantiated
their claim that the selectivity of the tax measure at issue
was required by the logic of the tax system.
3. REASONS FOR OPENING THE PROCEDURE
(20) The Commission opened the formal investigation
(26) Moreover, the Commission took the view that the
procedure laid down in Article 108(2) of the TFEU in
notified Act involved a tax advantage conferred
respect of the measure at issue on the grounds that it
through the use of State resources since foregoing tax
might entail State aid within the meaning of
revenue gave online gambling operators an advantage
Article 107(1) TFEU.
in the form of a substantially lower rate of duty. In
addition, to the extent that the measure provides a
selective economic advantage to online operators
operating in Denmark, it could affect trade in the
(21) In particular, the Commission considered that the
internal market and distort competition.
measure could be regarded as selective in the light of
case law. It recalled that any assessment of the selectivity
of a tax measure should involve examining whether a
given measure favours certain undertakings in
(27) Finally,
the Commission expressed its doubts as to
comparison with other undertakings whose legal and
whether the notified measure could fall within the
factual situation is comparable in the light of the
scope of any of the derogations laid down in
objective pursued by the scheme in question ( 10 ).
Article 107(2) and 107(3) TFEU.
(22) Given the nature of the games offered online and in
4. COMMENTS FROM THE DANISH AUTHORITIES
land-based establishments, the social experience
provided by gaming of both types, and the socioe
(28) By
letter
dated
14
January
2011,
the
Danish
authorities
conomic profiles of the consumers, the Commission
submitted their comments on Commission’s decision to
had doubts as to whether the differences between
initiate proceedings.
online and land-based gambling were substantial
enough to consider them not to be comparable in law
and in fact for the purposes of their tax treatment under
the Gaming Duties Act.
Comments regarding the comparability of online and
land-based casinos
(29) The
Danish
authorities,
relying
on
a
list
of
factual
and
economic differences between online and land-based
(23) Furthermore, at that stage of the procedure, the
gambling set out in their notification, reiterated the
Commission took the view that should the measure be
view that online gambling should be regarded as an
considered prima facie to be selective, the Danish auth
activity that is different from land-based gambling.
orities had failed to establish that the measure could be
justified by the logic of the tax system.
(30) According to the Danish authorities, the software used in
certain electronic games offered in land-based casinos
(24) In this regard, the Danish authorities argued that the tax
and those used in online casinos is not identical.
rate for online gambling reflected the necessary balance
Besides the fact that the platforms and suppliers are
between meeting the aims of the Danish gambling legis
not the same, it was argued that there are major
lation in order to protect players on the one hand, and
differences between these electronic games since the
being able to face the competition from online operators
physical presence of gamblers is required in order to
established in other countries with lower tax rates on the
play them in land-based casinos. Physical presence
other.
entails various costs (e.g. for transportation, entrance
fees, cloakroom fees, food or drink) which are not
incurred in online gambling.
(25) In addition, regarding the reference made by the Danish
authorities to the overall objectives pursued by the
Gaming Act (see paragraph 8), the Commission took
(31) For the Danish authorities, the fact that a number of
the view that these objectives appeared to be of a
Member States prohibit online gambling while allowing
land-based gambling services reflected the differences
( 10 ) See paragraphs 73 ff. of the initiating Decision.
involved in providing the two types of gaming.

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L 68/6
EN
Official Journal of the European Union
7.3.2012
(32) Furthermore,
the
Danish
authorities
contended
that
the
provide services from Denmark, thus defeating the
Commission had not taken account of the conclusions of
liberalisation objectives of the law. This would also be
its 2006 ‘Study of Gambling Services in the Internal
contrary to the general interest of consumer protection
Market of the European Union’ ( 11 ), according to which
since no effective control of online gambling would be
online and land-based casinos should be considered as
possible.
being distinct markets.
(38) In
support of their position, the Danish authorities
(33) The
Danish
authorities
also
stressed
that
the
Commis
submitted a memorandum from the Ministry of
sion’s assessment focused only on land-based casinos
Taxation of 6 March 2010 to the Policy Spokesmen of
and did not take account of gambling machines (i.e.
the political parties of the Danish Parliament concerning
slot machines, but not roulette, blackjack, poker, etc.)
the level of duty to be set ( 12 ). The memorandum shows
located in land-based restaurants or amusement arcades
that the current differential tax treatment should be
and gaming halls.
regarded as the result of a balancing exercise aimed, on
the one hand, at ensuring that the law is upheld, while
on the other hand maximising the tax revenue and
Comments regarding prima facie selectivity being justified
keeping gambling to a moderate level.
by the logic of the tax system
(34) With
regard
to
the
justification
for
the
measures
by
virtue of the logic of the tax system, the Danish auth
(39) In
this
connection,
the
Danish
authorities
considered
that
orities claim that the Commission might have misinter
international competition and the global nature of the
preted the objective of the notified measure. This
online gambling industry should also be taken into
measure is not aimed at preserving the international
account. In this regard, the Danish authorities referred
competitiveness of the Danish gaming industry, but
to the ‘Study of Gambling Services in the Internal
rather at pursuing the four objectives set out in the legis
Market of the European Union’, according to which the
lation (maintaining gambling at a moderate level;
costs of doing business onshore for suppliers should not
protecting young people or other vulnerable persons
exceed the costs of doing business offshore, in order to
from being exploited through games or from developing
be more attractive for consumers and suppliers to
an addiction of gambling; protecting players by ensuring
operate within their jurisdictions than in other coun
that games are offered in a fair, responsible, and trans
tries ( 13 ).
parent manner; ensuring public order and preventing
gaming being used for criminal purposes).
(40) Furthermore,
the Danish authorities argued that the
principle laid down by the Court of Justice in the
(35) With
regard
to
the
different
tax
rates
for
online
and
land-
Salzgitter case, according to which the Commission
based gambling, the Danish authorities explained that
should not compare the notified level of taxation with
they are confronted with a legislative and regulatory
levels applicable in other Member States in order
dilemma. On the one hand, they could no longer
determine whether the notified measure constitutes
maintain the current monopolistic situation and delay
State aid ( 14 ), does not apply to the notified Act, since the
liberalisation of the online gambling market. On the
other hand, providing for a uniform tax level for
( 12 ) For an English version of the memorandum, see Annex B to the
online and land-based gambling activities would
Danish authorities’ observations of 14 January 2011 on the
undermine the policy objectives pursued by the
initiating decision. The Danish version of the memorandum can
government in this field.
be found in Annex 20 to the Danish authorities’ notification of

6 July 2010.
( 13 ) Swiss Institute of Comparative Law, Study of Gambling Services in
the Internal Market of the European Union, European Commission
2006, Chapter 7, p. 1402.
(36) In
particular,
the
Danish
authorities
argued
that
setting
a
( 14 ) Case T-308/00 Salzgitter v Commission of the European Communities
uniform tax level for all gambling activities would lead to
[2004] ECR II-1933, paragraph 81. The wording of this paragraph
inconsistent solutions, regardless of the tax model opted
is as follows: ‘Consequently, in order to identify what constitutes an
for. Opting for a model based on a lower, uniform 20
advantage as contemplated in the case-law on State aid, it is
per cent tax rate would give a strong incentive to gamble
imperative to determine the reference point in the scheme in
question against which that advantage is to be compared. In the
in land-based casinos, which would be contrary to the
present case, when a “normal” tax burden with the meaning of the
general interest of consumer protection.
aforementioned case laws is being determined, comparing the tax
rules applicable in all of the Member States, or even some of them,
would inevitably distort the aid and functioning of the provisions
on the monitoring of State aid. In the absence of Community-level
(37) Conversely, a model based on a higher uniform tax rate
harmonisation of the tax provisions of the Member States, such an
similar to that applied to land-based gambling would
approach would in effect compare different factual and legal situ
dissuade online operators from seeking a licence to
ations arising from legislative and regulatory disparities between the
Member States. The information provided by the applicant in the
present case illustrates, moreover, the disparity which exists
( 11 ) Swiss Institute of Comparative Law, Study of Gambling Services
between the Member States, particularly as regards tax bases and
in the Internal Market of the European Union, Final Report,
rates of taxation on capital goods.’ Commission Decision C2/09
European Commission, 2006. http://ec.europa.eu/internal_market/
MoRaKG, Conditions for Capital Investment (OJ C 60, 14.3.2009,
services/docs/gambling/study1_en.pdf
p. 9), paragraph 25.

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EN
7.3.2012 Official
Journal
of
the
European
Union L
68/7
differential tax treatment between land-based and online
casinos differ substantially. The activities offered by land-
gambling activities is based exclusively on internal tax
based casinos constitute a social experience where, unlike
considerations. In particular, the Danish government
online gambling, discussion, appearance, and physical
took no account of the tax rates applicable in other
environment are a central part of the gaming experience.
Member States so as to enhance the competitiveness of
Furthermore, land-based gambling should be regarded as
the Danish gaming industry, but merely sought to strike
part of the overall entertainment experience, which is
an appropriate balance with the four aforementioned
complemented by other activities, such as are offered
policy objectives of the notified Act.
by restaurants, bars, convention facilities, and hotel
services.
(41) Moreover, the Danish authorities argued that the
Commission had misinterpreted the Salzgitter case, as it
(46) In addition, those interested parties argue that online and
had relied on it not in order to assess the selective nature
land-based gambling activities do not present the same
of the notified measure but in order to examine whether
risks of addiction. Support for this position can be found
the selectivity of the notified measure could be regarded
in the case-law of the Court of Justice of the European
as justified.
Union, which held that ‘the offer of games of chance by
the Internet may prove to be a source of risks of a
different kind and a greater order in the area of
consumer protection’ ( 18 ). Reference is also made to the
study on gambling published by the Institut National de la
(42) For the above reasons, the Danish authorities consider
Santé et de la Recherche Médicale ( 19 ), according to which
that the notified tax measure, if it were found to be
online gambling presents an actual risk of addiction that
selective, should be regarded as justified by the logic of
needs, however, to be addressed by a regulated market
the tax system.
for online gambling.
5. COMMENTS FROM THIRD PARTIES
(47) Moreover,
some
interested
parties
argued
that
there
is
a
segmentation of the gambling market based on different
(43) The
Commission
received
comments
from
17
interested
third parties, including the complainants: seven of them
distribution channels, which would constitute a pertinent
were associations (
element for distinguishing different relevant markets. In

15 ), seven were undertakings ( 16 ) and
three were Member States (
that respect, they refer to an opinion of the French

17 ).
competition authority of 20 January 2011, which
noted that online gambling could be differentiated from
gambling in clubs or outlets ( 20 ).
Comments from third parties supporting the Danish
authorities’ position
(44) With regard to the selectivity of the measure, some of the
(48) Some
of
the
interested
parties
also
pointed
out
that
land-
interested parties claim that online and land-based
based gambling operators are subject to a limited
casinos are not in a comparable legal and factual
competitive pressure in the specific geographic area
situation because these undertakings do not operate in
where they offer their games. By contrast, online
the same market and, consequently, the tax measure does
operators would face fierce competition from other
not depart from the generally applicable tax system.
online operators. In particular, since the gaming
Hence, the tax measure should not be regarded as
products in land-based casinos are bound to a physical
selective.
location, customers need to physically move to get to the
relevant location. For instance, in Denmark, there are
only six locations where land-based casinos can
operate. By contrast, online gambling activities allow
players to access a great number of gaming line-ups
(45) In
support
of
this
position,
the
interested
third
parties
offered by different international operators. Moreover,
claim that the products offered by land-based and online
the strong competition for online casinos is all the
more exacerbated by the existence of specialised
( 15 ) European Gaming and Betting Association (EGBA), Remote
websites that compare the offer of various online
Gambling Association (RGA), Automatenverband, Eupportunity, Van
gambling providers, and by numerous blogs and
Speelautomaten, Danish Chamber of Commerce and European
forums that allow players to compare the products,
Casino Association (ECA).
prices and services offered by online operators.
( 16 ) PokerStars, Betfair, Club Hotel Casino Loutraki, Royal Casino (along
with DAB), BWin, Compu-Game, nine casinos in Greece (Club
Hotel Casino Loutraki, Regency Casino Parnes, Regency Casino
( 18 ) Case C-46/08 Carmen Media Group, [2009], not yet published,
Thessaloniki, Casino Xanthi (Vivere Entertainment S.A.), Casino
paragraph 103.
Rio (Theros International gaming INC.), Casino Corfu (Greek
( 19 ) Institut national de la santé et de la recherche médicale, Jeux de hasard et
Casino Corfu), Casino Rodos, Porto Carras Grand Resort 20 and
d’argent — Contextes et addictions, July 2008, http://lesrapports.
Casino Syrou).
ladocumentationfrancaise.fr/BRP/084000697/0000.pdf
( 17 ) Estonia, France and Spain.
( 20 ) Autorité de la concurrence franaise, Avis 11-A-02 du 20 janvier 2011.

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L 68/8
EN
Official Journal of the European Union
7.3.2012
(49) At
the
same
time,
these
interested
parties
point
out
that
land-based casinos carry out competing activities in the
profit margins associated with online gambling are
one and the same market and they are therefore in
significantly lower than those associated with land-
comparable situations.
based gambling, given the fierce competition among
online operators and the absence of such competition
between land-based casinos. Thus, online casinos would
have significantly lower margins with regard to the
(54) In
support
of
this
position,
the
interested
parties
claim
payout ratio, i.e. the percentage of the wagered
that that the games provided by online and land-based
amounts that is credited back to customers. Moreover,
casinos are similar. The rules of casino games should be
land-based casinos can offer other side-products and so
regarded as the same, and virtual interactions with
benefit from side-earnings such as casino hotels, bars, or
croupiers or other players online are comparable with
restaurants, which are absent in an online environment.
real interactions in land-based casinos. Manufacturers of
Consequently, since land-based gambling operators could
land-based gambling machines would produce the same
generate higher gambling profit than online operators,
models for online use as for land-based use. Hence, from
the difference in tax rates would be justified by the
a technical point of view, casino games offered online
principle of the ‘financial capacity to pay’, according to
and offline were identical in terms of technological plat
which those who can bear a higher tax burden should
forms, descriptions, features, formats and parameters.
pay higher taxes.
(55) Furthermore, the interested parties allege that the
consumer profiles of online and land-based casinos are
(50) Besides
the
aforementioned
arguments,
some
interested
comparable. Hence, the consumer aspect should not be
parties also argued that even if the Danish measure were
used as a pertinent argument to distinguish online
found to be selective, the selectivity criterion would be
gambling from land-based gambling.
justified by the nature and general scheme of the tax
system. The aim of the Danish differential tax rate was
to ensure that online operators would apply for a Danish
licence and thus pay Danish taxes in the future, whilst at
(56) Some
interested
parties
did
not
think
online
gambling
the same time guaranteeing that the objectives of
should be regarded as a different activity from land-
consumer protection, as laid down in the Danish
based gambling, but simply as another channel through
gambling legislation, would be achieved.
which games are offered to players.
(57) In addition to the aforementioned arguments, the
(51) In
this
connection,
some
interested
parties
referred
to
the
interested parties take the view that the current gaming
1998 Commission Notice on the application of the State
market should be viewed as a single market which is
aid rules to measures relating to business taxation ( 21 ),
undergoing major change, marked by a substantial shift
according to which the whole purpose of a tax system
of players from land-based to online casinos. There are
is the collection of revenue for State expenditure. On this
several possible reasons for this recent development,
basis, they take the view that the objective of optimising
including the ever-increasing use of the Internet, the
tax revenue from providing online gambling to Danish
low operating costs of online casinos at all levels (facil
residents would otherwise not be achieved with a tax rate
ities, staff, and fixed costs), the fact that online casinos
higher than the rate laid down for online gambling under
can provide unlimited access to online gambling 24
the notified Act.
hours per day anywhere given the ongoing development
of new technologies.
Comments from third parties against the Danish auth
orities’ position
(58) The
interested
parties
predict
that
this
shifting
of
the
market share from land-based to online gambling will
(52) In
contrast
to
the
aforementioned
arguments,
other
third
increase in the future, given the rapid pace of tech
parties — mainly land-based operators — submitted
nological progress, commercial initiatives, and the
comments against the stance adopted by the Danish
market penetration typical of e-commerce, which have
authorities.
made this sector of the gambling industry extremely
dynamic and transformative. In this regard, they also
refer to the opinion delivered by Advocate General Bot
in the Liga Portuguesa de Futebol Profissional case ( 22 )
(53) In
substance,
these
interested
parties
argued
that
the
according to which, the impact of new means of
Danish tax regime should be regarded as selective since
communication is such that games of chance and
it introduces a difference in tax treatment between two
gambling, which used to be available only in specific
groups of undertakings which are in a legal and factual
premises, could now be played at any time and any
situation that is comparable in the light of the objectives
place, given the evolution of new technologies such as
of the measure. These parties allege that the online and
phones, interactive television and the Internet.
( 21 ) Commission Notice on the application of the State aid rules
( 22 ) Opinion of AG Bot (14 October 2008), Case C-42/07 Liga
to measures relating to direct business taxation, OJ C 384,
Portuguesa de Futebol Profissional, [2009] ECR I-10447, paragraphs
10.12.1998, paragraph 26.
41 ff.

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EN
7.3.2012 Official
Journal
of
the
European
Union L
68/9
(59) Reference is also made to the 2006 Commission Study
token machines and all-cash or amusements with prizes
on Gambling Services in the Internal Market ( 23 ). Accord
(AWPs)) constitute a separate product market ( 26 ). They
ingly, ‘the future of gambling in casinos is increasingly
also mention, among others, the decision adopted by the
going to be server-based as gaming machines move
French Competition Authority, according to which land-
increasingly to downloadable game software’ ( 24 ). This
based poker does not form part of the same market as
development would be marked by the development of
online poker, since land-based poker requires personal
new hybrid gaming venues.
self-control, observation of the other players, often
higher costs and a limitation from a geographic point
of view ( 27 ). Reference is also made to a merger
decision adopted by the British Office of Fair Trading,
(60) On the basis of the foregoing argument the interested
which draws a distinction between licensed betting
parties conclude that the measure is selective since online
offices on the one hand, and telephone or Internet
and land-based casinos carry out activities which are in a
betting, on the other hand ( 28 ).
comparable situation in law and in fact. Nor could such
selectivity be justified by the logic of the tax system.
Moreover, they consider that imposing a higher tax rate
would not discourage online providers to apply for a
licence in Denmark.
(65) With
regard
to
the
differences
in
product
markets,
the
Danish authorities point out that, according to many
interveners, additional — and significantly more
expensive — services are offered in gaming establish
(61) Moreover, the Danish reference to other Member States’
ments. From a sociological point of view, the Danish
national tax systems to justify the need to attract
authorities reiterated their view that remote and land-
providers of online casinos is not pertinent since it is
based players are different types of consumers, as also
settled case-law that any justification should be based
indicated in the Commission’s recent Green Paper on
exclusively on the national tax system ( 25 ). In addition,
Online Gambling in the Internal Market of 24 March
the Danish authorities’ argument that lowering the tax
2011, which stated that the profile of online gamblers
rate applicable to certain undertakings is necessary in
seems to be different from that of traditional casino or
order to render the market more competitive, has
betting shop customers ( 29 ).
consistently been rejected by the courts.
6. COMMENTS FROM DENMARK ON THIRD-PARTY
(66) The
Danish
authorities
also
reiterate
that
the
payout
ratio
COMMENTS
is significantly higher for online operators, given their
lower operating costs. They also point out that disparities
(62) While
reiterating
their
views
that
the
notified
measure
is
between online and land-based casinos can be found in
not selective and does not constitute a State aid, the
the technical aspects of the software used, the different
Danish authorities point out that all intervening
regulations for granting licences, and the position of local
governments support their position that there is a
dominance for land-based casinos.
need, from a regulatory perspective, to draw a distinction
between online and land-based casinos.
(67) The
Danish
authorities
also
contest
the
interpretation
by
(63) They also point out that the methodology used to define
certain interested parties of the above-mentioned opinion
the relevant market for the purposes of Articles 101 and
delivered by Advocate General Bot in the Liga Portuguesa
102 TFEU is intended for private undertakings and is
case. They point out that this opinion, which was issued
based on an assessment of product substitutability from
in the context of the freedom to provide services, accords
a demand and supply point of view, and therefore should
with the idea that remote gambling operators should be
not apply for the purpose of a State aid assessment.
regarded as being in a different legal and factual situation
Applying this methodology would overstep the bounds
from land-based gambling operators.
of the State aid rules, which in the present case are being
applied to a Member State’s sovereign tax powers.
(68) However, the Danish authorities recognise that certain
types of online gambling services could still constitute
(64) In
their
view,
online
gambling
should
be
set
apart
from
another form of sale, as in the case of betting services.
land-based gambling. In this regard, they also refer to the
Commission position adopted in merger proceedings, by
virtue of which gambling machines (jackpot machines,
( 26 ) Commission Decision of 14 March 2003, COMP/M.3109,
Candover/Cinven/Gala, paragraph 16.
( 27 ) Autorité de la concurrence Avis n o 11-A-02 du 20 janvier 2011 relatif
( 23 ) Swiss Institute of Comparative Law, Study of Gambling Services in
au secteur des jeux d’argent et de hasard en ligne.
the Internal Market of the European Union, European Commission
( 28 ) Office of Fair Trading, Decision ME/1716-05 of 15 August 2005
2006.
regarding the acquisition by William Hill of the licensed betting
( 24 ) Ibid, p. 1403.
offices of Stanley Plc.
( 25 ) Case T-308/00, Salzgitter AG v Commission of the European Commu
( 29 ) European Commission, Green Paper on Online Gambling in the
nities, [2004] ECR II-1933, paragraph 81.
Internal Market, COM(2011) 128 final, p. 3.

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L 68/10
EN
Official Journal of the European Union
7.3.2012
(69) With regard to the aims of the notified Act, the Danish
7.1.2. Advantage
authorities reject the argument of certain interested
parties that the notified Act is aimed at attracting
(76) The
measure
also
has
to
confer
a
financial
advantage
on
foreign gambling providers. Rather, the objectives
the recipient. The notion of advantage covers not only
pursued by the government are the those listed in the
positive benefits but also interventions which, in various
Gaming Act. In addition, the general purpose of the new
forms, mitigate the charges normally borne by an under
Act would remain unchanged, that is to generate income
taking’s budget ( 31 ).
on gambling like any similar system for collecting
revenue to finance the public budget.
(77) In the present case, the existence of an advantage has not
been challenged by any of the parties, neither the Danish
(70) The
Danish
authorities
also
agree
with
the
view
expressed
by some interested parties that the taxable person’s
authorities, the complainants, nor third parties.
ability to pay could be regarded as a valid justification.
In the present case, the financial capacity of online
gambling operators would indeed be significantly lower.
(78) Under
the
Gambling
Duties
Act,
online
gambling
under
takings are liable to pay tax on their GGR at a rate 20
per cent. This rate is substantially lower than the rate
(71) Finally,
the
Danish
authorities
point
out
that
their
tax
applicable to land-based gambling operators. Therefore,
system on remote gambling is designed so as to ensure
online gambling undertakings benefit from an advantage
the best possible revenue yield. Thus, the lower tax rate
in the shape of a lower tax burden. It follows that the
for online gambling would reflect the need to balance the
measure under review involves an advantage for under
four objectives set out in the notified Act with the need
takings providing online gambling services.
to maximise tax revenue.
7. ASSESSMENT OF THE MEASURE
7.1.3. Distortion of competition and effect on trade
7.1. Existence of State aid under Article 107(1)
(79) Under the terms of Article 107(1) TFEU, the measure
TFEU
must affect intra-EU trade and distort, or threaten to
distort competition. In the present case, online
(72) Under
Article
107(1)
TFEU,
any
aid
granted
by
a
Member
gambling providers who establish themselves in
State or through State resources in any form whatsoever
Denmark will be exposed to competition and will be
which distorts or threatens to distort competition by
involved in intra-community trade. Consequently, the
favouring certain undertakings or the production of
Gaming Duties Act, which provides for favourable tax
certain goods is incompatible with the internal market
treatment of Danish undertakings supplying online
if it affects trade between Member States.
gambling services, necessarily affects intra-Community
trade and distorts or threatens to distort competition.
7.1.1. State resources
(73) Article
107(1)
TFEU
requires
that
the
measure
be
granted
7.1.4. Selectivity
by a Member State or through State resources. A loss of
tax revenue is equivalent to consumption of State
(80) In
order
to
be
regarded
as
a
State
aid
within
the
meaning
resources in the form of fiscal expenditure.
of Article 107(1) TFEU, the measure should be found
selective inasmuch as it favours certain undertakings or
the production of certain goods.
(74) In
the
case
under
review,
the
presence
of
State
resources
has not been contested by any of the parties, neither the
Danish authorities, the complainants, nor third parties.
(81) The
established
interpretation
of
selectivity
in
case
law
is
that a measure is selective if it is ‘intended partially to
exempt those undertakings from the financial charges
(75) By
allowing
online
gambling
operators
to
pay
tax
at
the
arising from the normal application of the general
relatively low rate of 20 per cent of their GGR (
system of compulsory contributions imposed by

30 ), the
Danish authorities forego revenue which constitutes State
law’ ( 32 ). It follows that the measure is selective if
resources. The Commission therefore takes the view that
the measure at issue involves a loss of State resources
( 31 ) Case 30/59 De Gezamenlijke Steenkolenmijnen in Limburg v High
and is therefore granted through State resources.
Authority of the European Coal and Steel Community [1961] ECR 3,
p. 19.
( 32 ) Case 173/73 Italian Republic v Commission of the European Commu
( 30 ) See paragraphs 15 and 16 above.
nities [1974] ECR 709, Summary No 3.

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EN
7.3.2012 Official
Journal
of
the
European
Union L
68/11
it constitutes a departure from the application of the
(86) Furthermore,
like other interested parties, they have
general tax framework. According to existing case law,
emphasised the substantial difference between the two
what has to be assessed is whether a given measure
categories of operators by reference to the fierce
favours certain undertakings over other undertakings
competition faced by online casinos compared with the
whose legal and factual situation is comparable in the
absence of competition encountered by land-based oper
light of the objective pursued by the scheme in ques
ators.
tion ( 33 ).
(82) Under case law, if the measure is considered to depart
(87) Despite
a
number
of
objective
differences
between
online
from the general tax system, it has to be examined to
and land-based gambling operators (such as physical
determine whether that differentiation results from the
versus online presence), the Commission considers that
nature or general scheme of the tax system of which it
the aforementioned differences between online and land-
forms part (
based gambling casinos are not sufficient to establish a

34 ). In other words, the question is whether
the measure concerned, which appears prima facie to be
substantial and decisive distinction in law and in fact
selective, is justified in the light of the logic of the tax
between the two types of undertakings.
system ( 35 ).
(88) In this regard, the Commission notes that the games
System of Reference
offered by land-based and online gambling operators
are equivalent. The games offered by both online and
(83) In the present case, the reference system should be
land-based operators — including roulette, baccarat,
defined as the taxation system for Danish gambling activ
punto banco, blackjack, poker and gaming on gaming
ities. The Gaming Duties Act aims at regulating the
machines — form part of the same activity of
payment of duties on all gambling activities provided
gambling, regardless of their online or land-based
or arranged in Denmark, be it online or through land-
settings. Moreover, from a technical point of view,
based activities. It is therefore against this reference tax
casino games offered online and in land-based premises
system that the measure at issue (i.e. the differential tax
appear to be comparable in terms of the technological
treatment in favour of online gambling activities) should
platforms, formats and parameters.
be assessed.
Departure from the general tax system
(89) In
that
respect,
the
Commission
considers
that,
as
far
as
the taxation of gambling activities is concerned, online
(84) Since
the
notified
Act
provides
that
holders
of
a
licence
gambling emerges as another distribution channel of a
to provide games in online casinos are subject to a
similar type of gaming activities. In support of this
charge of 20 per cent of the GGR, whereas holders of
position, the Commission notes the substantial efforts
a licence to provide games in land-based casinos are
carried out by online casinos to simulate the land-
subject to a basic charge of 45 per cent of GGR and
based casino experience in such a way that online
an additional charge up to 30 per cent of GGR, the
players feel as if they were playing in land-based casino
question arises as to whether online and land-based
surroundings, rather than in virtual environments.
gambling operators, which are subject to different tax
duties, should be regarded as being legally and factually
comparable.
(90) In
order
to
support
their
view
that
online
and
land-based
gambling are legally and factually not comparable activ
(85) In
this
regard,
the
Danish
authorities
have
consistently
ities, the Danish authorities have referred, among others,
argued that online and land-based gambling activities are
to a decision by the British Office of Fair Trading
not legally and factually comparable in terms of plat
drawing a distinction between licensed betting shops
forms, costs, financial margins, social experience,
on the one hand and telephone or Internet betting on
suppliers or products.
the other ( 36 ). However, this reference contradicts the
Danish authorities’ position that online and offline
betting are identical services ( 37 ). In this regard, it is
( 33 ) Case C-88/03 Portuguese Republic v Commission of the European
also contradictory that the Danish authorities should
Communities [2006] ECR I-7115, paragraph 54; Case C-172/03
consider offline and online betting services to be
Wolfgang Heiser v Finanzamt Innsbruck [2005] ECR I-1627,
paragraph 40; Case C-169/08 Presidente del Consiglio dei Ministri v
similar activities and so subject them to the same tax
Regione Sardegna [2009] ECR I-10821, paragraph 61.
treatment while regarding other types of online and
( 34 ) Case C-487/06 P British Aggregates Association v Commission, [2008]
land-based gambling activities as distinct activities and
ECR-10515, paragraph 83.
subjecting them to different tax rates.
( 35 ) Case 173/73 Italian Republic v Commission of the European Commu
nities [1974] ECR 709, paragraph 15; Commission Notice on the
application of the State aid rules to measures relating to direct
( 36 ) See footnote 28.
business taxation, OJ C 384, 10.12.1998, paragraph 23.
( 37 ) Article 6 of the Gaming Duties Act.

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L 68/12
EN
Official Journal of the European Union
7.3.2012
(91) The
Danish
authorities
also
relied
on
the
Candover-
(94) On the basis of the foregoing, the Commission concludes
Cinven-Gala decision ( 38 ), which held that gambling
that online and land-based casinos should be perceived as
machines (jackpot machines, token machines and all-
legally and factually comparable. As both online and
cash or AWPs) constituted an independent product
land-based gambling pose the same risks, the notified
market ( 39 ). However, apart from the fact that this
measure addresses both online and land-based
decision did not concern the application of State aid
gambling. The measure at issue introduces differential
rules nor the issue of selectivity, it must be noted that
tax treatment favouring online gambling operators to
although the decision states that ‘gaming machines
the detriment of land-based casinos. It follows that the
(jackpot machines, token machines and all-cash or
measure under review should be regarded prima facie as
amusement with prize (AWP) machines) constitute a
selective within the meaning of article 107 TFEU, since it
separate product market, it also states that they can be
constitutes a departure from the general tax regime.
regarded as integrated in the gambling package at the
respective sites where they are situated, i.e. in casinos,
bingo clubs, arcades, pubs, betting shops etc.’ ( 40 ).
Justification by the logic of the tax system
(95) Whether a measure that appears prima facie to be
(92) The
alleged
differences
in
the
socioeconomic
profiles
of
selective can be justified by the nature and general
consumers, addiction risks, or market evolution are
scheme of the system has to be assessed in the light of
likewise insufficient to demonstrate that online and
existing case law. The guiding principles or rationales of
land-based gambling constitute two different types of
the tax system can be relied upon to justify the selectivity
activities that are not legally and factually comparable.
of the measure.
Some of the studies relied upon by the Danish authorities
and the complainants alike, appear to contain enough
findings to support opposing conclusions. Thus, with
regard to the 2006 Commission Study on Gambling
(96) In this regard, the Danish authorities argued that, given
Services in the Internal Market ( 41 ), the Danish authorities
the peculiarities of the sector involved, the differential tax
claim that the study tends to show that online and land-
treatment in favour of online gambling operators
based markets are separate ( 42 ). By contrast, the same
constitutes the only way to ensure the efficiency of
report is cited by some interested parties ( 43 ) to show
their tax regime. Setting a higher tax rate would
that the online gambling market should not be
discourage online gambling operators from applying for
regarded as a new market but rather as the evolution
a Danish licence, whereas introducing a lower tax burden
of the same gambling market, marked by the devel
for all operators concerned would be contrary to the
opment of new hybrid gaming venues ( 44 ).
overall objective of keeping gambling at a reasonable
level.
(93) Likewise,
contradictory
statements
are
found
in
the
study
carried out by the Danish National Centre for Social
(97) The Danish authorities have also asserted that the
Research ( 45 ), which is cited by the Danish authorities
financial capacity of online gambling operators, being
and the complainants. Whereas the Danish authorities
allegedly lower than that of land-based casino operators,
claim that gamblers in land-based casinos differ from
justified the different tax rates between the two categories
those in online casinos in terms of age, gender and
of operators.
education level, the complainants, relying on the same
study, come to the opposite conclusion, claiming that the
study demonstrates that there are no major distinctions
between the profiles of the consumers playing in land-
based or online casinos. In their view, the study shows
(98) In the light of the foregoing arguments, the Commission
that gamblers playing games both in land-based and
recalls that, according to case law
( 47 ) and the
online casinos would typically be the same young men
Commission Notice on the application of the State aid
between 18 and 24 years old ( 46 ).
rules to measures relating to direct business taxation ( 48 ),
a Member State has to establish whether the measure
under consideration derives from the basic or guiding
( 38 ) See paragraph 64 above.
principles of that system. A justification based on the
( 39 ) See footnote 26.
( 40 ) Ibid.
nature or overall structure of the tax system in
( 41 ) Swiss Institute of Comparative Law, Study of Gambling Services in
question constitutes an exception to the principle that
the Internal Market of the European Union 2006.
State aid is prohibited. It must therefore be subject to a
( 42 ) See answers to request for information sent by the Danish auth
strict interpretation ( 49 ).
orities, 20 October 2010, paragraph 2.10; Observations sent by the
Danish authorities, 14 January 2011, p. 9, paragraph 42.
( 43 ) See comments from the Danish Amusement Machine Industry
( 47 ) Case 173/73 Italian Republic v Commission of the European Commu
Association and Royal Casino, sent on 18 February 2011, p. 1.
nities [1974] ECR 709, paragraph 15.
( 44 ) Ibid, p. 1403.
( 48 ) Commission Notice on the application of the State aid rules to
( 45 ) Study by the Socialforskningsinstituttet (National Centre for Social
measures relating to direct business taxation, OJ C 384,
Research), 2007.
10.12.1998, paragraph 23.
( 46 ) See for instance the observations sent by nine Greek casinos,
( 49 ) Joined Cases T-127/99, T-129/99 and T-148/99 Diputación Foral de
21 February 2011, p. 18.
lava and others v Commission [2002] ECR II-1275, paragraph 250.

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EN
7.3.2012 Official
Journal
of
the
European
Union L
68/13
(99) It follows that it is incumbent upon the Danish auth
(105) The Commission notes that the measure does not fall
orities to prove that the tax measure in question is
within the scope of existing guidelines for the application
justified by the logic of the tax system. However, the
of Article 107(3)(c) of the TFEU. It therefore has to be
Danish authorities did not adduce any sufficient and
assessed directly under this Treaty provision. To be
convincing evidence to support their assertion that
compatible under Article 107(3)(c) TFEU, an aid
lowering the tax rate for a particular segment (online
measure must pursue an objective of common interest
operators) of a wider category (gambling operators) as
in a necessary and proportionate way. When assessing a
a means to ensure that the former would apply for a
measure’s compatibility with the internal market, the
license derives from the principles and the logic under
Commission balances its positive impact in terms of
pinning their tax system. In particular, the objective of
attaining an objective of common interest against its
attracting foreign online gambling service providers in
potentially negative side effects, such as distortion of
Denmark and making them subject to the Danish rules
trade and competition. This test is based on a three-
should be regarded as a public policy objective that falls
stage examination. The first two stages address the
outside the logic of the tax system.
positive effects of the State aid and the third stage
deals with the negative effects and the resulting balance
of positive and negative effects ( 50 ). The test is structured
as follows:
(100) Likewise, with regard to online gambling operators’
alleged lower capacity to pay, the Danish authorities
failed to establish that there is a difference in profitability
(1) Does the aid measure have a well-defined objective of
between online and land-based casino activities that
common interest?
would justify the differential tax treatment. Nor have
the Danish authorities demonstrated that the financial
capacity to pay is a principle embedded in their system
of direct business taxation that could be relied upon in
(2) Is the aid well suited to attain the objective of
the present case as a justification for the differential tax
common interest i.e. does the proposed aid address
treatment of online and land-based casinos.
a market failure or other objective? In particular:
(a) is the aid measure an appropriate instrument, i.e.
(101) It follows from the foregoing that the Commission does
are there other, better placed instruments?
not consider that the selectivity of the notified Act is
justified in the light of the logic of the tax system.
(b) is there an incentive effect, i.e. does the aid
change the behaviour of potential beneficiaries?
7.1.5. Conclusion
(102) In the light of the foregoing, the Commission considers
(c) is the aid measure proportional, i.e. could the
that the criteria set out in Article 107(1) TFEU are
same change in behaviour be obtained with less
fulfilled and that the measure imposing a lower tax
aid?
rate on online gambling constitutes State aid for the
providers of online gambling services established in
Denmark.
(3) Are the distortions of competition and effect on trade
limited, so that the overall balance is positive?
7.2. Compatibility of the measure on the basis of
Article 107(3)(c) TFEU
7.2.1. Objective of common interest
(103) Article 107(2) and (3) of the Treaty on the Functioning
(106) The Danish authorities explained that they decided to
of the European Union lay down rules stipulating when
proceed with a reform of the existing legislation on
certain aid measures are compatible with the internal
gambling and betting services in order to replace the
market and what types of aid may be considered to be
existing monopoly regime with a regulated and
compatible with the internal market.
partially liberalised regime. Liberalisation was considered
necessary, inter alia, to comply with EU law following the
initiation of infringement proceedings and the issuing of
a reasoned opinion on 23 March 2007 ( 51 ), and to
respond to the threat posed by illegal online gambling
(104) The Commission considers that the measure at issue can
services provided by gaming service providers located in
be declared compatible with the internal market under
other countries.
the derogation provided for in Article 107(3)(c) TFEU,
which allows ‘… aid to facilitate the development of
certain economic activities or of certain economic
( 50 ) In this regard, see State Aid Action Plan — Less and better targeted
State aid: a roadmap for State aid reform 2005-2009, COM(2005)
areas, where such aid does not adversely affect trading
107 final.
conditions to an extent contrary to the common interest.’
( 51 ) See footnote 6.

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L 68/14
EN
Official Journal of the European Union
7.3.2012
(107) Up to now the Danish gambling sector has essentially
the scope of the fundamental freedoms of the Treaty,
been a State monopoly as only one licence has been
namely the freedom of establishment (Article 49 TFEU)
issued to a state-controlled company, ‘Danske Spil A/S’.
and the freedom to provide services (Article 56 TFEU).
Despite the regulatory framework prohibiting foreign
online gambling providers from marketing their services
to consumers resident in Denmark, many online
gambling providers established in other Member States
and also in third countries have offered their services via
(110) In principle, Article 56 TFEU requires the abolition of all
channels not located in Denmark, such as satellite
restrictions on the freedom to provide services, even if
television channels broadcast from the UK. The Danish
those restrictions apply without distinction to national
authorities stated in their notification that they could not
providers of services and to providers from other
in practice enforce the prohibition against other gaming
Member States, if the restrictions are liable to prohibit,
service providers marketing their services in Denmark
impede, or render less advantageous the activities of
because of Danish court proceedings in which it was
service providers established in another Member State
claimed that the current Danish gambling monopoly
where they lawfully provide similar services ( 53 ). It is
constituted a restriction of the free movement of
also settled case law that legislation by a Member State
services. As a result, an unsatisfactory situation
prohibiting providers established in other Member States
persisted whereby the legality of the existing monopoly
from offering services in the territory of that first
was challenged not only in administrative and judicial
Member State via the Internet constitutes a restriction
proceedings but also through the direct supply of
of the freedom to provide services enshrined in Article 56
online gambling services by unlicensed operators estab
TFEU ( 54 ). Moreover, the freedom to provide services is
lished in other jurisdictions.
for the benefit of both providers and recipients of
services ( 55 ).
(108) According to explanatory memorandum accompanying
the Gaming Act, the liberalisation process was justified
(111) In the present case, although the provision of gambling
by reference to the latest technological developments,
services primarily falls under the scope of the funda
which meant that Denmark was now part of a global
mental freedom of Article 56 TFEU, the Danish legis
communication society where consumers have access to
lation also affects the freedom of establishment. Under
a wide range of services from providers of various juris
Article 27 of the Gaming Act, Denmark requires online
dictions. Over the past 10 years, gaming has developed
gambling providers either to be established in Denmark
into a major sales product on the Internet, especially after
or, if they are residents of another EU or EEA Member
the introduction of online poker. The Internet has
State, to appoint an approved representative. The justifi
provided Danish citizens with the opportunity to
cations for the restrictions are the same for the freedom
compare Danske Spil’s products and product range
of establishment as for the freedom to provide services.
with the products offered by online gambling providers
established in the UK, Malta, Gibraltar and other coun
tries. In recent years a rapidly growing number of Danes
have begun to gamble with the international gaming
providers. As explained by the Danish authorities, the
(112) Restrictions on these fundamental freedoms are only
government’s fear was that the provision of gaming, if
acceptable as exceptional measures expressly provided
not regulated and controlled effectively, could be linked
for in Article 52 TFEU or justified, in line with the
with negative effects on society in the form of crime and
case law of the Court, for reasons of overriding general
a breakdown of public order, and could cause vulnerable
interest. Article 52(1) TFEU allows restrictions justified
individuals to become addicted to gambling. At the same
on grounds of public policy (‘ordre public’), public
time, the profits of Danske Spil have been steadily
security, or public health.
declining. The Danish authorities therefore needed to
be able to regulate and control the gaming offered to
Danish citizens in order to channel gaming into a
controlled framework and so prevent negative
consequences for society.
(113) In so far as gambling activities are concerned, a certain
number of reasons of overriding general interest have
been recognised by the Court of Justice in its rulings,
such as the objectives of consumer protection and the
prevention of both fraud and incitement to squander on
(109) In this connection, the Commission recalls that the
gaming, as well as the general need to preserve public
gambling sector has never been subject to any harmon
order. In that context, moral, religious and cultural
isation within the European Union. Under Article 2 of
factors, and the morally and financially harmful
the Services Directive, gambling is even explicitly
consequences for the individual and society associated
excluded from the Directive’s scope
( 52 ). However,
with gaming and betting, could serve to justify
despite the lack of any kind of secondary legislation in
this field, cross-border gambling activities may fall within
( 53 ) Case C-76/90 Sger [1991] ECR I-4221, paragraph 12; Case
C-58/98 Corsten [2000] ECR I-7919, paragraph 33.
( 52 ) Directive 2006/123/EC of the European Parliament and of the
( 54 ) Case C-243/01 Gambelli [2003] ECR I-13031, paragraph 54.
Council of 12 December 2006 on services in the internal market
( 55 ) Joined Cases 286/82 and 26/83 Luisi and Carbone [1984] ECR 377,
(OJ L 376, 27.12.2006, p. 36).
paragraph 16.

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the existence on the part of the national authorities of a
conditions laid down in the case law of the Court as
margin of appreciation sufficient to enable them to
regards their proportionality (Placanica and Others,
determine what consumer protection and the preser
paragraph 48).
vation of public order require. Accordingly, the
restrictions must in any event be justified by imperative
requirements in the general interest, must be suitable for
achieving the objective they pursue, and must not go
(…)
beyond what is necessary in order to attain it. They
must also be applied without discrimination ( 56 ).
69. In that regard, it should be noted that the sector
involving games of chance offered via the Internet
has not been the subject of Community harmon
(114) It should be noted, however, that loss of tax revenue is
isation. A Member State is therefore entitled to take
not one of the grounds listed in Article 52 TFEU nor
the view that the mere fact that an operator (…)
accepted in case law ( 57 ) and cannot therefore be
lawfully offers services in that sector via the Internet
regarded as an overriding reason in the public interest
in another Member State, in which it is established
which could be relied upon to justify a measure which is,
and where it is in principle already subject to
in principle, contrary to a fundamental freedom.
statutory conditions and controls on the part of
the competent authorities in that State, cannot be
regarded as amounting to a sufficient assurance that
national consumers will be protected against the
(115) As regards specifically the justification for restrictions on
risks of fraud and crime, in the light of the
the provision of cross-border gambling, the Court of
difficulties liable to be encountered in such a
Justice has held as follows (
context by the authorities of the Member State of

58 ):
establishment in assessing the professional qualities
and integrity of operators.
‘57. In that context (…) it also should be noted that the
legislation on games of chance is one of the areas in
70. In addition, because of the lack of direct contact
which there are significant moral, religious and
between consumer and operator, games of chance
cultural differences between the Member States. In
accessible via the Internet involve different and
the absence of Community harmonization in this
more substantial risks of fraud by operators
field, it is for each Member State to determine
against consumers compared with the traditional
those areas, in accordance with its own scale of
markets for such games.’
values, what is required in order to ensure that
the interest in question are protected.
(116) In a recent judgment, the Court also referred in detail to
the risks of online gambling ( 59 ):
58. The mere fact that a Member State has opted for a
system of protection which differs from that
adopted by another Member State cannot affect
‘103. It should be noted that, in the same way, the
the assessment of the need for, and proportionality
characteristics specific to the offer of games of
of, the provisions enacted to that end. Those
chance by the Internet may prove to be a source
provisions must be assessed solely by reference to
of risks of a different kind and a greater order in
the objectives pursued by the competent authorities
the area of consumer protection, particularly in
of the Member State concerned and the degree of
relation to young persons and those with a
protection which they seek to ensure.
propensity for gambling or likely to develop
such a propensity, in comparison with traditional
markets for such games. Apart from the lack of
direct contact between the consumer and the
59. The Member States are therefore free to set the
operator, previously referred to, the particular
objectives of their policy on betting and gambling
ease and the permanence of access to games
and, where appropriate, to define in detail the level
offered over the Internet and the potentially high
of protection sought. However, the restrictive
volume and frequency of such an international
measures that they impose must satisfy the
offer, in an environment which is moreover char
acterised by isolation of the player, anonymity and
an absence of social control, constitute so many
( 56 ) See Case C-243/01 Gambelli [2003] ECR I-13031, paragraphs 63 to
factors likely to foster the development of
65 and Joined Cases C-338/04, C-359/04 and C-360/04 Placanica
and Others [2007] ECR I-1891, paragraphs 46 to 49.
gambling addiction and the related squandering
( 57 ) Case C-446/03 Marks & Spencer [2005] ECR I-10837, paragraph 44;
of money, and thus likely to increase the
Case C-319/02 Manninen [2004] ECR I-7477, paragraph 49 and
negative social and moral consequences attaching
the case-law cited. In so far as restrictions on gambling activities are
thereto, as underlined by consistent case-law.
concerned, see Case C-243/01 Gambelli [2003] ECR I-13031, para
graphs 61 and 62.
( 58 ) Case C-42/07 Liga Portuguesa de Futebol Profissional [2009] ECR
( 59 ) Case C-46/08 Carmen Media Group [2009] not yet published,
I-10447, paragraphs 57 ff.
paragraph 103.

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Official Journal of the European Union
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104. Moreover, it should be noted that, having regard
(120) These figures are expected to increase. The Green Paper
to the discretion which Member States enjoy in
reports that online gambling is the fastest growing
determining the level of protection of consumers
segment of the gambling market, accounting for 7,5
and the social order in the gaming sector, it is not
per cent of the annual revenues of the overall
necessary, with regard to the criterion of propor
gambling market in 2008 (EU-27) and it is expected to
tionality, that a restrictive measure decreed by the
double in size by 2013 ( 62 ). Second, the proportion of
authorities of one Member State should
national gambling consumption attributable to online-
correspond to a view shared by all the Member
gambling is estimated to be 21,9 per cent in Denmark,
States concerning the means of protecting the
i.e. the second highest rate within the EU, which posts an
legitimate interest at issue (see, by analogy, Case
average of 7,5 per cent ( 63 ).
C-518/06 Commission v Italy [2009] ECR I-3491,
paragraphs 83 and 84).
(121) Taking into consideration the above-mentioned case law,
105. Having regard to the whole of the above, it must
as well as the overall characteristics of the gambling
be acknowledged that a prohibition measure
market in the EU, the Commission takes the view that
covering any offer of games of chance via the
the arguments put forward by the Danish authorities to
Internet may, in principle, be regarded as suitable
justify the adoption of the notified measure are well-
for pursuing the legitimate objectives of preventing
founded. In particular, the Commission is aware of the
incitement to squander money on gambling,
peculiarities of the activities at issue: online gambling
combating addiction to the latter and protecting
provided via the Internet has transformed the sector,
young persons, even though the offer of such
bringing about a global marketplace where physical
games remains authorised through more tradi
borders are blurred. In this context, as stated in the
tional channels.’
2011 Green Paper ( 64 ), the Commission also notes the
need to control the online gambling sector in order to
prevent harmful negative consequences that online
gambling can have on consumers. In addition to the
significant risk of online gambling addiction that
(117) The lack of harmonisation in the field of gambling and
various social studies have established
( 65 ), special
the Member States’ different approaches regarding the
attention should be given to minors and other vulnerable
range of games permitted and the operators authorised
persons, including players on low incomes, gamblers
to offer them paints a picture of a very fragmented
with previous gambling addiction and young adults
internal market for the provision of cross-border
unaware of the risks associated with gambling
gambling services. While some Member States restrict
problems. In order to protect these categories of
or even ban the offer of certain games of chance,
potential players, the Member States should be able to
others have opted for more open markets. Many
control the online gambling sector, amongst other things
Member States have also recently reviewed their
by imposing age limits or licence conditions, controlling
gambling legislation or are in the process of doing so
payment processing systems and limiting marketing or
in view of the growth of online gambling services.
promotion of online gambling.
(118) The Danish authorities did not provide detailed figures
on the size of illegal gambling by Danish residents, but
(122) The reform undertaken in Denmark, resulting in the
instead they pointed out that the development of the
adoption of the notified Act, is therefore in line with
unregulated online gambling sector was a worrying
the objective of the European Commission’s Green
aspect from a societal perspective.
Paper of 24 March 2011 on ‘On-line gambling in the
Internal Market’, which was to contribute to the
emergence in the Member States of a legal framework
for online gambling providing for greater legal certainty
for all stakeholders ( 66 ). The Green Paper was a response
(119) This trend is confirmed by the European Commission’s
to the Council Conclusions of December 2010
Green Paper of March 2011 ( 60 ). The accompanying
welcoming a broad consultation by the European
Commission Staff Working Paper cites a total Gross
Commission on online gambling in the internal market
Gaming Revenue for Online Gambling in Denmark of
EUR 250 m in 2008, of which 14 % (i.e. EUR 34 m)
( 62 ) See footnote 60.
related to casino games and 22 per cent (i.e.
( 63 ) European Commission, Green Paper on Online Gambling in the
EUR 56 m) to poker ( 61 ). By definition, both online
Internal Market, Commission Staff Working Paper SEC(2011)
casino games and online poker are prohibited activities.
321, p. 9.
( 64 ) European Commission, Green Paper on Online Gambling in the
Internal Market, COM(2011) 128 final, p. 19.
( 60 ) European Commission, Green Paper on Online Gambling in the
( 65 ) For further details on these studies, see European Commission,
Internal Market, COM(2011) 128 final, p. 8.
Green Paper on Online Gambling in the Internal Market,
( 61 ) European Commission, Green Paper on Online Gambling in the
COM(2011) 128 final, pp. 19 ff.
Internal Market, Commission Staff Working Paper SEC(2011)
( 66 ) European Commission, Green Paper on Online Gambling in the
321, p. 10.
Internal Market, COM(2011) 128 final, p. 7.

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which would allow for an in-depth discussion of the
communication’ blocking (domain name system filtering,
issues raised by online gambling services in particular ( 67 )
Internet protocol blocking and payment blocking) or by
and to the resolution of the European Parliament adopted
limiting the number of licences to be issued.
on 10 March 2009 that called on the Commission,
working in close cooperation with national governments,
to study the economic and non-economic effects of the
provision of cross-border gambling services ( 68 ). It must
(126) With regard to the use of ‘blocking systems’, the
be stressed that the legislative reform implemented
Commission Green Paper states that the efficiency of
through the notified Act is in line with the objectives
blocking systems depends on a pre-defined and
advocated by the Commission which led to the initiation
updated list of items to block as well as efficient
of infringement proceedings and the sending of a
software systems. However, as the Danish authorities
reasoned opinion to the Danish authorities in March
pointed out, it is questionable whether these blocking
2007 ( 69 ).
systems could produce the expected results, since
online gamblers could circumvent Internet blocking by
changing the ‘ports’ used and prohibiting certain
payments could block perfectly lawful commercial trans
(123) For these reasons, the Commission considers that the
actions other than payments relating to stakes and prizes.
notified Gaming Duties Act, to the extent that it will
liberalise the market and allow Danish and foreign
online gambling operators to provide their services to
Danish residents, while ensuring that they will they
fulfil the necessary conditions to be licensed by the
(127) With regard to the possibility of issuing a limited number
of online licences, the effects depend on the numbers of
Danish authorities, serves a well-defined objective of
licences to be issued. If the number is restricted to only a
common interest.
few licences, the small number of competitors will reduce
competition and influence supply, which would mean a
higher cost for consumers, in the form of a lower payout
7.2.2. Aid well suited for the desired objective
ratio, than with an unlimited number of licences. A
reduced number of licences also limits the variety and
(124) An aid measure is considered necessary and proportional
quality of choice available to consumers in the
when it constitutes an appropriate instrument to achieve
marketplace and encourages producers to be less
the identified objective of common interest, when it has
diligent in responding to consumer wants and needs ( 70 ).
an incentive effect on the beneficiaries and when it does
Limiting the number of licences also raises questions
not introduce unnecessary distortions of competition.
regarding the criteria for determining the number of
licences in a non-arbitrary manner, how and by which
institutions the licensing requirements are monitored,
and how illegal provision is dealt with, i.e. who takes
Appropriate instrument
what measures against illegally provided gambling
services (
(125) The Danish government decided to liberalise the Danish

71 ).
online gambling market and to allow an unlimited
number of online licences to be issued. However, the
issue of such a licence is subject to a number of
conditions relating, inter alia, to the trustworthiness of
(128) In view of these considerations, the Commission
the managers of the company applying for a licence.
considers that the lower tax rate applicable to online
To make the liberalisation successful, the Danish
gambling activities is an appropriate instrument to
government also decided to lower the taxation for
attain the liberalisation objectives of the new Gaming
online operators, only leaving intact the tax rates
Act. The aid measure will ensure that online operators
applicable to land-based gambling operators. In this
wishing to provide gambling services for Danish residents
regard, the complainants argued that lowering the tax
will apply for a licence and comply with the applicable
rate for online operators was not the most appropriate
national regulations.
solution. For instance, blocking payment and communi
cation (ring-fencing instruments) could still be used to
achieve the objectives of the liberalisation process
without a need to introduce lower tax rates for online
Incentive effect
operators. According to the complainants, Denmark
(129) The Commission considers that the aid measure is
could therefore have chosen to enforce the prohibition
capable of modifying the behaviour of foreign
of illegal online gambling by resorting to ‘payment and
providers of online gambling services, since the lower
tax rate constitutes an incentive for such operators to
( 67 ) Conclusion on the framework for gambling and betting in the EU
obtain a licence in Denmark and thus for the first time
Member States, adopted at the 3057th Competitiveness Council
to provide online gambling services legally.
meeting, Brussels, 10 December 2010, Council document
16884/10.
( 68 ) European Parliament resolution of 10 March 2009 on the integrity
( 70 ) Swiss Institute of Comparative Law, Study of Gambling Services in
of online gambling. (2008/22125(INI)), P6-2009-0097. These
the Internal Market of the European Union, European Commission
issues include advertising and marketing, under-age persons, fraud
2006, p. 1108.
and criminal behaviour and integrity, social responsibility,
( 71 ) Swiss Institute of Comparative Law, International Vergleichende
consumer protection and taxation.
Analyse des Glücksspielwesens, 2009, p. 18. http://mpk.rlp.de/
( 69 ) See paragraph 7 above.
mpkrlpde/sachthemen/studie-zum-gluecksspielwesen/

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Proportionality of the aid
market can have a tangible impact on operators’ will
ingness to enter a market even if there is a higher tax
(130) Aid is deemed proportionate only if the same change in
rate, as costs which are always associated with setting up
behaviour could not be achieved with less aid and less
operations in a new market tend to be comparatively
distortion. The amount of the aid must be limited to the
higher for entry into smaller markets.
minimum needed for the aided activity to take place. In
the present case, the Commission considers that the
Danish authorities have designed the measure in such a
way as to diminish the possible amount of State aid
(134) The memorandum includes a simulation of the possible
involved and to minimise the distortions of competition
revenue effect of tax rates of 15, 20 and 25 per cent,
arising from the measure.
also taking into account possible changes in gamblers’
gambling patterns and operators’ actions. The simulation
exercise concludes that a tax rate of 20 per cent will
(131) In the memorandum submitted by the Danish Ministry
presumably still make it sufficiently attractive for
of Taxation of 6 March 2010 to the Policy Spokesmen of
gambling providers to apply for a Danish licence and
the political parties of the Danish Parliament on the level
for gamblers to be offered attractive services. Setting a
of duty to be set (
higher tax rate (i.e. 25 per cent) can be expected to

72 ), the choice of the lower tax rate of
20 per cent of GGR for the online gambling was justified
increase pressure on payout ratios with the result that
by reference to the following criteria:
the positive revenue effect of a 25 per cent rate may turn
out to be lower than with a 20 per cent rate.
(a) Gambling provided under Danish licences should be
adapted to the current offering from online gambling
(135) The Danish legislator therefore concluded that setting the
providers abroad, i.e. the tax rate needs to be adjusted
tax rate for online gambling higher would most likely
in order to match the high payout ratios offered by
result in a gambling product that would not be attractive
foreign online gambling providers, inducing them to
enough to gamblers, leading in turn to lower turnover,
actually apply for a licence.
offsetting the immediate prospect of higher tax revenues.
(b) The total number of games offered should be
(136) The conclusions reached by the Danish legislator as to
increased, leading overall to an increase in turnover.
the appropriate level of taxation for online gambling
activities are also confirmed by a report from an
industry consulting company, which found that a tax
(c) The gambling products should be so attractive that
rate of 20 per cent would not mean that the State
players would not want to gamble on sites of foreign
would forego revenue it would otherwise have
(illegal) operators.
received ( 73 ). According to that report, this was the
highest rate economically feasible — a higher rate
would be a ‘rate of no return’, i.e. a tax rate that was
(d) Blocking instruments should be used to ensure, in
simply too high for there to be a valid business case for
combination with items (a)-(c), that gambling on
operators to enter the market. Above this rate, the tax
the sites of illegal operators is reduced to a
revenue would start to fall.
minimum.
(137) In view of the foregoing, the Commission considers that
(132) In this memorandum, the Danish authorities note that
the tax rate of 20 per cent of GGR applicable to online
the legislation in the UK, which should be regarded as
operators is not lower than is necessary to ensure that
being very close to the Danish gambling regulation,
the objectives of the Gaming Act are achieved. Therefore,
provides for a tax rate of 15 per cent for online
the aid measure meets the proportionality requirement
gambling. The Danish authorities considered that the
set out in the case law of the Court of Justice.
tax rate for online gambling could be set higher than
in the UK since Denmark, in contrast to the UK, will
also introduce complementary blocking measures to
make it more difficult for players to gamble on sites of
7.2.3. Impact on competition and trade between Member
foreign operators that have not obtained a Danish
States
licence.
(138) With regard to the impact of the aid measure on
competition and trade, a distinction has to be made
between possible distortions of the trade between
(133) Similarly, the Danish authorities cite the examples of
Member States and distortions of competition within
France and Italy, which have liberalised their markets
Denmark, especially with existing land-based gambling
and imposed higher rates of duty than the UK. The
operators.
Danish authorities note that these markets are signifi
cantly bigger than the Danish market. The size of a
( 73 ) H2 Gambling Capital, An independent model assessment of various
taxation/licensing models for regulating remote gambling in the
( 72 ) See paragraph 38 above.
Netherlands, February 2011.

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(139) With regard to trade between Member States, no negative
(143) Accordingly, the Commission concludes that the measure
impact is to be expected. The Gaming Act enables
is compatible with the internal market under
Danish residents to gamble legally on websites of
Article 107(3)(c) TFEU.
licensed online gambling operators. Those websites are
not restricted to Danish resident users but can be
accessed by residents of all EU Member States, subject
8. CONCLUSION
to the restrictions imposed by their national law. By
setting the tax rate on online gambling operators at 20
(144) The Commission considers that the notified Act confers a
per cent of GGR, the Danish aid measure is broadly in
tax advantage on online gambling operators that is
line with the rates of similar taxes applied by other
granted through State resources. The measure is
Member States that have already reformed their online
regarded prima facie as selective, since it differentiates
gambling legislation. For example, both Belgium and the
between online gambling operators and land-based
UK apply a tax rate of 15 per cent of GGR to online
casino operators who, in the light of the objective
gambling, whereas other Member States apply even lower
pursued by the measure, are in a comparable factual
rates (for example, Estonia 5 per cent of GGR, Latvia 10
and legal situation. The Danish authorities have failed
per cent of GGR, Finland 8,25 per cent of GGR). Only
to demonstrate that the prima facie selectivity of the
Slovakia has set its a higher tax rate of 27 per cent of
notified act is justified by the logic of the tax system.
GGR.
Hence, the notified Act is regarded as State aid within the
meaning of Article 107(1) TFEU.
(140) With regard to distortions of competition within
(145) However, the Commission considers that the aid fulfils
Denmark, the measure will potentially benefit a
the conditions required for it to be regarded as
considerable number of different Danish and foreign
compatible with the internal market under
online gambling operators who up to now were
Article 107(3)(c) TFEU,
prohibited from providing their services to Danish resi
dents. Denmark submitted a list of online gambling
HAS ADOPTED THIS DECISION:
providers who have already indicated their willingness
to apply for a licence. As only the State- controlled
company has hitherto been allowed to provide online
Article 1
gambling services, the liberalisation will increase overall
competition in the market.
The measure C 35/10 which Denmark is planning to
implement in the form of duties for online gambling in the
Danish Gaming Duties Act is compatible with the internal
market within the meaning of Article 107(3)(c) of the Treaty
(141) Although the measure constitutes a State aid and its
on the Functioning of the European Union.
implementation may not be without repercussions for
existing land-based gambling operators, who are taxed
at a tax rate of up to 75 per cent of GGR, the
Implementation of the measure is accordingly authorised.
Commission considers that the overall balance of imple
menting the measure is positive.
Article 2
This Decision is addressed to the Kingdom of Denmark.
(142) As shown above, setting the tax rate for online gambling
at the same or a similar level as the rate for land-based
gambling operators would have led to a situation where
Done at Brussels, 20 September 2011.
the industry and players would not have responded to
the possibility of legally providing online gambling
For the Commission
services on the Danish market, thus defeating the
identified objectives of common interest pursued by the
Joaquín ALMUNIA
Gaming Act.
Vice-President

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