Almost every country in the EU has charity lotteries at a local level, frequently organised by clubs and associations themselves. Unfortunately, charity lotteries on a national scale are often not able to operate because:
- States tend to protect state lotteries as monopolies;
- Domestic legislation tends to prevent charity lotteries from “competing” with state lotteries;
The degree of discrimination is very variable across the EU and a level playing field is required. Only the Netherlands, Sweden, Denmark, UK, Ireland, Spain and Germany allow - and do have - nationwide charity lotteries. That’s only 7 out of 28 Member States, whereas almost all Member States have state lotteries.
Even though some state lotteries earmark a (small) part of the revenues for fields like culture or sports, ACLEU members do not consider these state lotteries to be charity lotteries, as the lottery revenues could be used to replace government subsidies. The funds generated by charity lotteries should be additional to, and definitely not replacing, subsidies for NGOs.
Recognition of lottery contributions at EU level
Lotteries in Europe are subject to national legislation since gambling in general is excluded from EU secondary legislation. Nevertheless, the EU institutions are dealing with the topic in different ways, especially when it comes to online gambling because of its cross-border nature. A number of Member States are partly opening up their markets by legalizing online gambling, but so far lottery markets remain (state) monopolized in most Member States. Below you find an overview of development regarding lotteries and the European institutions:
European Court of Justice
Legal proceedings at the Court of Justice of the European Union (CJEU) and several national courts following complaints from commercial (online) operators who were refused entry to foreign markets, have increased the pressure on state monopolies.
Although gambling is a competence of the individual Member States, the rules of the Treaty such as the freedom of establishment (art. 49 TFEU) and the freedom to provide services (art. 56 TFEU) must be obeyed.
However, Member States may impose restrictions on these freedoms (such as a monopoly or a limited number of licenses) if such restrictions can be justified by imperative requirements in the general interest. These include consumer protection, fraud prevention and preservation of public order. The restrictions must be applied proportional, consistent and non-discriminatory. According to the CJEU, fundraising for good causes is not considered a justified reason to impose restrictions on gambling markets.
ACLEU regrets the fact that fundraising for good causes is considered a mere ancillary effect. For the members of ACLEU fundraising is the main purpose, the lottery is just a tool.
Council of the European Union
In December 2010, for the first time the Council produced conclusions on gambling related issues. One of the conclusions stated that contributions from lotteries to society should be recognized in the discussions at the EU level:
III. THE SUSTAINABLE CONTRIBUTION OF LOTTERY AND RELATED SERVICES TO SOCIETY
13. RECALLS that all EU Member States have different types of state lotteries or lotteries licensed by the competent state authorities, providing lottery services.
14. NOTES that a few Member States temporarily or permanently authorize smaller scale lotteries for the benefit of charitable or philanthropic purposes. In the same manner, certain Member States allow for other games of chance to fund such benefits.
15. RECOGNIZES that contributions, in particular from state lotteries or lotteries licensed by the competent state authorities play an important role for society, via for example the funding of good causes, directly or indirectly where applicable.
16. AGREES that this specific role should be recognized in discussions at the European level.
Although not binding to the European Commission, the Conclusions express the common political view of all Member States. The members of ACLEU hope that this recognition will be capitalized in the future.
Since gambling is not regarded a normal economic activity, the European Parliament voted against a proposal to include gambling in the Services Directive in 2006, leaving it up to the Member States to regulate gambling (and lotteries) at the national level.
In 2009, the Parliament adopted an own-initiative report, the so-called Schaldemose report, in which Member States were called upon to cooperate more closely when it comes to online gambling and the prevention of its negative aspects such as addiction, fraud and crime. The positive aspect of fundraising for charities was unfortunately not part of the discussion.
In 2011, as part of the consultation of the Green paper (see below) the Parliament drafted another report on this subject. The Creutzmann report fortunately does recognize the fact that gambling represents a considerable source of revenue which most Member States channel to publicly beneficial and charitable purposes such as sport. The report also takes the view that efficient regulation of the online gambling sector should in particular "ensure that a considerable proportion of government revenue from gambling is used for publicly beneficial and charitable purposes."
In 2013, the European Parliament drafted another report on gambling, the Fox report. This report also mentions the contributions from lotteries, although mainly focused on sports related to online betting:
Recognises that in some Member States gambling revenues and lotteries represent a considerable source of income that can be channelled to support publicly beneficial and charitable purposes, cultural works, grassroots sports and horse racing and equine sector; underlines, furthermore, the significance of this sustainable contribution and specific role that should be acknowledged in discussions at the European level; reaffirms its position that sports bets are a form of commercial use of sporting competitions; recommends, while fully respecting the Members States’ competence on the issue, that sporting competitions should be protected from any unauthorised commercial use, notably by recognising the property rights of sports event organisers, not only in order to secure a fair financial return for the benefit of all levels of professional and amateur sport but also as a means of strengthening the fight against sports fraud, particularly match-fixing;
The current European Parliament (2014-2019) has so far not taken any initiative on the subject.
In response to the Schaldemose report (2009), the Council conclusions (2010) and the growing amount of jurisprudence from the CJEU, the European Commission (with Internal Market Commissioner Michel Barnier) drafted a Green paper in 2011 on online gambling, followed by a public consultation in which ACLEU participated. The paper dealt with several aspects of (online) gambling including the benefits for society coming from games of chance.
To complement the consultation, the Commission organised expert workshops on specific themes. ACLEU participated in the workshop on revenue distribution.
The Green paper was considered a first step to future EU legislation in the field of online gambling but the only step the Commission took next was the Communication Towards a comprehensive European framework for online gambling in 2012.
ACLEU welcomed many of the initiatives outlined in the Communication, such as the enhancement of administrative cooperation between national regulators and the recommendation of common consumer protection standards. However, we regret the fact that the Commission did not recognize the importance of the contributions to society from lotteries. Neither did the Commission notice that the developing online gambling market could have consequences for land based lotteries, and consequently for the income of the benefitting good causes.
The latest step taken by the Commission in the field of gambling was the Recommendation on protecting consumers and minors (2014) but this did not deal with contributions from lotteries to society at all.
The current Commissioner responsible for Internal Market issues, Elzbieta Bienkowska has to date not presented any views on the subject of gambling or lotteries.
The members of ACLEU are pleased to see a growing recognition at the EU institutions of contributions to society from lotteries and will continue their efforts in increasing awareness for the concept of private charity lotteries, next to state lotteries, as sustainable funding mechanisms for civil society organisations throughout the EU.