Norwegian govt wins partial victory in payment blocking suit

The Oslo District Court has ruled that the Norwegian Ministry of Culture, Agriculture and Food does have the right to block payments to offshore igaming operators, and that the move does not contravene EU law.

However the plaintiffs in the case, Entercash and the European Betting and Gaming Association (EGBA), could still prevail in a second hearing. This will examine whether the blocking measures constitute an illegal restriction on the provision of services within the European Economic Area (EEA).

The case was split into two, with the first hearing examining two elements: whether payment blocking violates the European Union Payment Services Directive and whether the government lacks the legal authority to implement the ban.

The court ruled that the block does not violate the EU Payment Services Directive, as member states may still apply national laws that “may affect the functioning of the common [payment] market.”

“The State […] is acquitted in so far as the allegations are based on the assertion that the decisions are invalid because they lack internal legal authority and contravene the Payment Services Directive,”  District Court Judge Anne Cathrine Haug-Hustad said.

The court also ruled that the Ministry did have the legal authority to block the payment services.

“There is no doubt that the regulations, and thus the decision, are based on law,” Haug-Hustad continued. “The regulations are laid down on the basis of Section 2 of the Gambling Act, Section 11 of the Lottery Act and Section 3 of the Totalizator Act.”

However, she added, the Norwegian government could not claim victory in the case due to the second hearing, which is yet to be scheduled. This will see the court ultimately rule on whether the payment blocking measures are suitable, necessary and consistent with rules governing the free movement of services within the EEA. As such EGBA and Entercash could still secure a significant victory through their legal action.

“As a result, it is not possible now to determine whether any of the parties have ‘won the case’ or ‘been granted a significant claim’,” Haug-Hustad said.

EGBA and Entercash filed the lawsuit against the Ministry in June this year, after efforts to block transactions between Norwegian banks and financial institutions and offshore gaming operators were stepped up. This comes as part of a wider enforcement drive by the Norwegian authorities to stamp out offshore activity to preserve the state-owned operator Norsk Tipping's gambling monopoly. 

“In today’s digital age it is virtually impossible to enforce national borders on the internet but that’s what the Norwegian authorities are trying to do by introducing payment blockings for online betting,” EGBA secretary general Maarten Haijer said at the time. “Rather than being a tool to benefit consumers, such restrictive measures are aimed at protecting the revenues of the state-owned monopoly by cutting off outside competition from reputable EU-licensed operators.

“This is not only in breach of the EU’s internal market principles but out of step with the reality of a consumer-driven betting market, where players will inevitably search around the internet for value and choice in the games they play,” he added.

Recent reports conducted by Oslo Economics have suggested that implementing a blanket ban on offshore operator advertising could cut broadcasters' ad revenue by as much as NOK500m per year. However a report into the risks of opening up the market to foreign operators then concluded there was not enough evidence that such a move would benefit player protection efforts or raise additional funds for social causes through taxation.