EU Lotto Ltd & Ors v Secretary of State for Digital, Culture, Media and Sport

A restriction on gambling services engaging Article 56 TFEU must be justified by proportionality, not merely by asking whether it is manifestly inappropriate. The court must identify a legitimate objective, assess whether the measure is suitable to achieve it, and determine whether a less restrictive measure would be equally effective. In gambling cases, consumer protection, eliminating consumer confusion, maintaining a distinct regulatory regime for the National Lottery, and preventing movement towards harder gambling may be legitimate objectives. Protection of good-cause funding may be relevant where it is incidental, but cannot be the sole or real justification. The court may consider current evidence and ex post facto justifications, while applying careful scrutiny. An outright prohibition was proportionate where lesser regulatory measures could not effectively address the identified risks.

The claimants, gambling businesses offering bets on non-UK EuroMillions draws, challenged the decision to lay the Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2018. The Regulations inserted a condition preventing betting operators from offering bets on EuroMillions draws to consumers in Great Britain.

The claim alleged that the measure unlawfully restricted the freedom to provide services under Article 56 TFEU, followed an unfair consultation, and could not be challenged by two of the claimants for want of standing. The central issues were whether the restriction was justified and proportionate, whether the consultation was legally fair, and whether the claimants had locus.

1. Disposition. Permission to apply for judicial review was granted, but the claims failed on their substantive merits. Regulation 4 was upheld.
2. Article 56 TFEU. Regulation 4 was prima facie a restriction because it prevented businesses, including businesses established outside the United Kingdom, from providing betting services to persons in Great Britain. The restriction therefore had to be justified under EU law.
3. Proportionality. The applicable test was proportionality, rather than the separate test of manifest inappropriateness. The court had to identify the objectives and their legitimacy, assess whether the measure was suitable to achieve them, and decide whether a less restrictive measure would be equally effective. The intensity of review and the margin of appreciation were fact- and context-sensitive.
4. Evidence and justification. The court could consider the most up-to-date evidence and justifications advanced during the litigation. It had to scrutinise ex post facto justifications carefully, but that did not eliminate the decision-maker’s margin of appreciation. The evidence did not need to be confined to quantitative material.
5. Legitimate objectives. Consumer protection and the elimination of confusion between participating in a lottery and betting on its outcome were valid objectives. Maintaining the deliberate regulatory distinction between the National Lottery and other gambling was also legitimate. Protecting good-cause funds could be taken into account as an incidental or secondary benefit, but could not itself constitute the real justification. Preventing a lead-in from lottery betting to harder forms of gambling was a valid consumer-protection concern, supported by the claimants’ own evidence, although it had not formed part of the consultation.
6. Necessity. The proposed alternatives, including additional licensing, advertising restrictions, education and a review period, would not have been equally effective. An ex ante prohibition was clearer, more certain and easier to enforce than partial restrictions dependent on lengthy ex post regulatory action. Regulation 4 was therefore proportionate.
7. Consultation and standing. The consultation challenge failed because the lead-in concern became a material justification only after the claimants’ evidence in the litigation and was properly assessed by the court as part of proportionality. The standing issue was academic because at least one claimant had standing; the court nevertheless indicated that the claimants had the better argument on locus.

First-instance judicial review claim. The court granted permission but dismissed the claims on their substantive merits.