Gibraltar Betting & Gaming Association Ltd v (1) The Secretary of State for Culture, Media & Sport (1st Defendant) (2) The Gambling Commission (2nd Defendant) (1) The Government of Gibraltar and Another (Interested Parties)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Green |
| Judgment Date | 10 October 2014 |
| Neutral Citation | [2014] EWHC 3236 (Admin) |
| Date | 10 October 2014 |
| Docket Number | Case No: CO/3807/2014 |
| Court | Queen's Bench Division (Administrative Court) |
[2014] EWHC 3236 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Green
Case No: CO/3807/2014
and
Dinah Rose QC, Brian Kennelly and Jessica Boyd (instructed by Olswang LLP) for the Claimant
Kieron Beal QC and Oliver Jones (instructed by The Treasury Solicitor) for the 1 st Defendant
Adam Lewis QC and Tom Cleaver (instructed by The Gambling Commission Legal Department) for the 2 nd Defendant
Lord Pannick QC and Ravi S Mehta (instructed by Mishcon De Reya) for the 1 st Interested Party
Charles Brasted (instructed by Hogan Lovells International LLP) for the 2 nd Interested Party
Hearing dates: 23 rd & 24 th September 2014
| INDEX | |
| A. Introduction: Issues and conclusion | 1–19 |
| (i) The Parties | 1–3 |
| (ii) The Claimant's challenge | 4–9 |
| (iii) The expedited nature of the claim | 10–12 |
| (iv) Summary of issues | 13 |
| (v) Conclusion/outcome | 14–19 |
| B. The regulatory regime under challenge | 20–71 |
| (i) Introduction | 20–21 |
| (ii) The Gambling Act 2005 ("GA 2005") and relevant changes brought about by the Gambling (Licensing and Advertising) Act 2014 ("GLAA 2014") | 22–50 |
| (iii) Statement of principles for licensing and regulation: September 2009 | 51–55 |
| (iv) Licensing compliance and enforcement policy statement: September 2009 | 56–60 |
| (v) Licence conditions and codes of practice (consolidated version): May 2014 | 61–62 |
| (vi) The scope for the exercise of discretion in implementation and enforcement | 63–67 |
| (vii) The fees payable under the regulatory regime | 68–71 |
| C. The Claimant's passporting proposal | 72–81 |
| (i) Introduction | 72 |
| (ii) The initial proposal | 73 |
| (iii) The submission that point of consumption regulation would generate an illicit market | 74 |
| (iv) The recognition of foreign licensing as sufficient | 75–77 |
| (v) The evolution in the proposal to dual licensing | 78–79 |
| (vi) The rejection of the passporting proposal by the Minister: 26 th February 2014 | 80 |
| (vii) The Claimant's submission that the Defendants misunderstood the passporting proposal | 81 |
| ISSUE I: WHETHER THE MEASURES ARE | |
| DISPROPORTIONATE, DISCRIMINATORY | |
| OR IRRATIONAL | |
| D. The prima facie application of Article 56 TFEU to the new licensing regime | 82–86 |
| (i) Article 56 TFEU | 82–83 |
| (ii) The Claimant's case in outline as to the restrictive effects of the new regime | 84 |
| (iii) The concession by the UK Government that the new regime is prima facie prohibited under Article 56 TFEU | 85–86 |
| E. The proportionality test: The relevant law | 87–131 |
| (i) The scope for justification: legislative basis | 87–88 |
| (ii) Acceptable grounds of justification: Consumer protection, prevention of fraud curtailment of the inducement to squander funds, other overriding public interest grounds | 89 |
| (iii) The inadmissibility of economic grounds of justification | 90–91 |
| (iv) The proportionality test: Constituent parts | 92–95 |
| (v) The evidential task of the national Court: Full assessment | 96–98 |
| (vi) The margin of appreciation to be accorded to the decision maker: The meaning of "manifest" as in "manifestly inappropriate" | 99–101 |
| (vii) Guidance from European jurisprudence | 102–105 |
| (viii) Guidance from domestic jurisprudence | 106–110 |
| (ix) Factors in the present case relevant to margin of discretion | 111–131 |
| 1. The GA 2005 as amended is an Act of Parliament | 112 |
| 2. The risk associated with the service being regulated – remote internet gambling | 113–114 |
| 3. Guidance from jurisprudence at the EU level | 115 |
| 4. The inability to achieve 100% efficiency | 116 |
| 5. Willingness to review the situation | 117 |
| 6. Materiality | 118 |
| 7. The type of reasoning required of the State to justify a measure | 119–120 |
| 8. The extent to which facts underlying the policy choice are justiciable | 121 |
| 9. Avoiding second guessing predictions as to the future success of a measure | 122 |
| 10. Views of the European Commission | 123 |
| 11. The relevance of the position of foreign regulators | 124–131 |
| F. Proportionality: Does the new place of consumption based regime serve a legitimate objective? | 132–159 |
| (i) The issue: The legitimacy of the objective pursued | 132 |
| (ii) Conclusion on the issue of legitimate objective | 133–134 |
| (iii) The source of relevant evidence: Parliamentary privilege | 135–140 |
| (iv) The legislative objectives of the GA 2005 | 141 |
| (v) Consultation papers | 142–146 |
| (vi) Impact Assessment: June 2011 | 147–150 |
| (vii) The position of the UK Government in communications with the European Commission | 151 |
| (viii) Impermissible economic objectives | 152–153 |
| (ix) Other source material which is to the same effect | 154 |
| (x) The validity of the precautionary approach | 155–157 |
| (xi) Conclusion | 158–159 |
| G. Proportionality: Will the new regime be ineffective because it will lead to the growth of illicit trade | 160–172 |
| (i) The issue | 160 |
| (ii) Claimant's submissions | 161–162 |
| (iii) The fallacy in the Claimant's economic assumptions | 163–168 |
| (iv) The comparables | 169 |
| (v) Did the Secretary of State have to disprove the Claimant's theses about the risk of diversion to illicit trades? | 170–172 |
| H. Proportionality: Whether the new regime will prove to be unenforceable | 173–181 |
| (i) The issue | 173 |
| (ii) Conclusion | 174 |
| (iii) The unproven assumption as to the scale of the enforcement problem | 175 |
| (iv) The GC's powers should be reasonably effective | 176 |
| (v) The relevance of the obligation to review and repair | 177–179 |
| (vi) The Claimant's specific criticisms | 180–181 |
| I. Proportionality: Is the new regime the least restrictive means for securing the legitimate objectives? | 182–190 |
| (i) The issue | 182–183 |
| (ii) Conclusion | 184–186 |
| (iii) Ancillary points | 187–190 |
| J. Discrimination/Equality: Is the new licensing regime discriminatory as being contrary to the principle of equal treatment? | 191–196 |
| (i) The issue | 191 |
| (ii) Conclusion | 192 |
| (iii) Analysis | 193–196 |
| K. Rationality under domestic law: Is the refusal of the Minister and/or GC to adopt the passporting approach irrational? | 197–200 |
| ISSUE II: WHETHER THE CLAIMANT HAS LOCUS TO SEEK A JUDICIAL REVIEW | |
| L. Introduction: The Secretary of State's objection | 201–202 |
| M. Conclusion on locus | 203–215 |
| (i) In this case locus should not be revisited following the grant of permission | 205–206 |
| (ii) At least one member of the Claimant association has an acknowledged direct right of action under Article 56 TFEU | 207 |
| (iii) Other members of the Claimant association have a clear economic and commercial interest in the outcome | 208 |
| (iv) The Claimant has an interest by reason of prior involvement in the consultation and scrutiny processes | 209 |
| (v) The fact that the Claimant is a representative body is not determinative | 210–215 |
| N. The distinction between locus and relief | 215–220 |
| ISSUE III: THE CONSTITUTIONAL RELATIONSHIP BETWEEN THE UNITED KINGDOM AND GIBRALTAR | |
| O. The issue | 221–228 |
| P. Legislative framework | 229–233 |
| Q. Relevant Case law | 234–260 |
| (i) EU jurisprudence | 234–258 |
| (ii) Domestic jurisprudence | 259–260 |
| R. The evidential dimension: What sorts of facts will be sufficient to engage Article 56 TFEU in relation to the provision of services between Gibraltar and the UK? | 261–267 |
| CONCLUSION | 268 |
A. Introduction, issues and conclusion
(i) The Parties
The Claimant is the Gibraltar Betting and Gaming Association Limited ("GBGA" or "the Claimant"). It is a Gibraltar-incorporated trade association which represents the collective interests of international online gambling operators licensed or intended to be licensed in Gibraltar. The members are predominantly companies incorporated within Gibraltar. Its members, some of whom are familiar British names, provide gaming services to consumers in the UK. One of its members, Yggdrasil Gaming Limited ("Yggdrasil"), is situated, registered and licensed in Malta. It offers services to other gambling operators situated in Malta which in turn provide gambling services including to British customers. Yggdrasil is in the process of applying to be licensed in Gibraltar in order that it may provide business-to-business services to operators licensed in Gibraltar and providing services elsewhere.
The First Defendant is the Secretary of State for Culture, Media and Sport ("Secretary of State" or "First Defendant") and is responsible for policy making and legislative proposals with respect to gambling, racing and entertainment licensing. For the purposes of this case the Secretary of State appears in order to defend the Act of Parliament from this challenge. The Second Defendant is the Gambling Commission ("GC"). The GC was established pursuant to the Gambling Act 2005 ("GA 2005"). It is statutorily required to regulate commercial gambling in Great Britain and to exercise the powers granted to it by statute.
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