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Statement of Defence by the Government of the Kingdom

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Statement of Defence by the Government of the Kingdom THE ATTORNEY GENERAL (CIVIL AFFAIRS) To the EFTA Court Oslo, 18 May 2006 STATEMENT OF DEFENCE BY THE GOVERNMENT OF THE KINGDOM OF NORWAY represented Mr Fredrik Sejersted, Advocate, the Attorney General for Civil Affairs, acting as agent, and Ms Hanne Ørpen, Adviser, the Ministry of Foreign Affairs, acting as agent, in Case E-1/06, The EFTA Surveillance Authority v The Government of the Kingdom of Norway in which the EFTA Surveillance Authority has submitted an application pursuant to the second paragraph of Article 31 of the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice, the Government of the Kingdom of Norway hereby submits a defence pursuant to Article 35 of the Rules of Procedure of the EFTA Court. * * * * * THE ATTORNEY GENERAL (CIVIL AFFAIRS) Statement of Defence to the EFTA Court in Case E-1/06 Page 2 of 225 TABLE OF CONTENTS 1. Introduction....................................................................................................................... 5 2. Overview of the case .........................................................................................................8 I. FACTS 3. The Norwegian gaming and lottery sector ..................................................................... 16 3.1 The regulation of gaming and lotteries in Norway ................................................... 16 3.2 Main principles and instruments............................................................................... 20 3.3 The Norwegian gaming market ................................................................................. 25 3.4. The slot machine market ........................................................................................... 31 3.5 Problem gambling in Norway ................................................................................... 37 3.6 Different forms of gambling – “hard” and “soft”.................................................... 44 3.7 Crime and malpractice in the Norwegian gaming and lottery sector....................... 47 3.8 The existing exclusive rights system (Norsk Tipping) ............................................... 49 4. The 2003 slot machine reform ........................................................................................ 58 4.1 Introduction............................................................................................................... 58 4.2 Previous regulation of slot machines........................................................................ 59 4.3 Preparing the reform 2002-2003 .............................................................................. 62 4.4 The Ministry’s white paper of March 2003 (Ot.prp. nr 44)...................................... 68 4.5 The parliamentary process and vote ........................................................................ 74 4.6 Main contents of the reform ...................................................................................... 79 4.7 Economic consequences ...........................................................................................83 4.8 The fate of the reform so far (2003-2006)................................................................. 86 5. The reform as part of broader national gambling policy ............................................. 92 5.1 New challenges for national gambling policy........................................................... 92 5.2 The 2003 White Paper (Ot.prp. 44) on gambling policy in general ........................ 93 5.3 Recent public measures tightening gambling policy................................................. 95 5.4 Other legal challenges to the Norwegian system – the Ladbrokes case ................... 102 5.5 Concluding remarks .................................................................................................. 103 6. The comparative perspective – gambling restrictions in other countries ................... 104 6.1 Introduction............................................................................................................... 104 6.2 Gambling restrictions in the other EFTA states........................................................ 104 6.3 Gambling restrictions in the EU member states ....................................................... 106 6.4 More on slot machine restrictions............................................................................. 108 6.5 The Swedish model for regulating slot machines...................................................... 110 6.6 The debate and struggle on the future of gambling in Europe.................................. 111 6.7 Gambling restrictions in the United States ............................................................... 113 THE ATTORNEY GENERAL (CIVIL AFFAIRS) Statement of Defence to the EFTA Court in Case E-1/06 Page 3 of 225 II. THE LAW 7. The gambling sector under EU/EEA law ....................................................................... 116 7.1 The legislative framework ......................................................................................... 116 7.2 The case-law of the ECJ – from Schindler to Gambelli............................................ 117 7.3 Legal doctrine........................................................................................................... 132 7.4 The EU legislator’s approach to gambling............................................................... 133 7.5 The Commission’s approach to gambling................................................................. 136 7.6 Relevant case-law from national courts.................................................................... 140 7.7 Conclusions ............................................................................................................... 148 III. ASSESSMENT OF THE CASE 8. Legal assessment of the Reform under EEA law........................................................... 149 8.1 The scope and subject of the present action.............................................................. 149 8.2 The relevant articles of the EEA Agreement ............................................................. 156 8.3 What kind of “restriction” is the slot machine reform? ........................................... 157 8.4 What kind of “service” is the operation of slot machines? ...................................... 159 8.5. Assessing the legitimacy, suitability and legitimacy of the reform ........................... 160 8.6 The dynamic elements of the case ............................................................................. 161 8.7 On the factual assessments and “burden of proof” .................................................. 163 9. The legislative reasons for the reform ............................................................................ 168 9.1 The legal test ............................................................................................................. 168 9.2 General comments on the legislative reasons for the reform.................................... 172 9.3 Fighting gambling addiction..................................................................................... 175 9.4 Reducing slot machine gambling to a defensible level ............................................. 176 9.5 Strengthening public control and responsibility ....................................................... 178 9.6 Reducing crime and malpractice............................................................................... 179 9.7 Enforcing the 18 year limit........................................................................................ 180 9.8 Eliminating private profit as a market incentive....................................................... 181 9.9 Limiting the reduction in revenue for the former charitable and beneficial licence-holders ......................................................................................... 182 9.10. Summary and conclusions......................................................................................... 185 THE ATTORNEY GENERAL (CIVIL AFFAIRS) Statement of Defence to the EFTA Court in Case E-1/06 Page 4 of 225 10. The suitability and consistency of the reform ................................................................ 186 10.1 The legal test – “suitability” or “consistency”? ...................................................... 186 10.2 The correct test – the suitability of the reform.......................................................... 188 10.3 The consistency test................................................................................................... 189 10.4 The reform as a consistent and systematic restriction in itself ................................. 191 10.5 The reform as a consistent and systematic part of national gambling policy and legislation ................................................................................ 192 10.5 Summary and conclusions......................................................................................... 201 11. The proportionality and necessity of the reform ........................................................... 202 11.1 Introduction............................................................................................................... 202 11.2 The legal test ............................................................................................................. 204 11.3 The proper proportionality review...........................................................................
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