Case Focus : Berlington Hungary Tanácsadó és Szolgáltató Kft. a nd Others v Magyar Állam (11 June 2015)

Focus on the Berlington’s case (Court of Justice) of the 11th June 2015¹.

Up until 9 October 2012, slot machines could be operated in Hungary either in casinos or in amusement arcades. Tax on these machines were raised several times between 2011 and 2012. Since the 12th October 2012, slot machines cannot be operated in amusement arcades at all anymore.
The slot machines operators brought an action before national courts. The Fővárosi Törvényszék (Budapest Municipal Court, Hungary) asked the Court of Justice whether those measures are compatible with EU law.

The Court found that national legislation which authorises the operation and playing of certain games of chance only in casinos constitutes a restriction on the freedom to provide services.
Likewise, a measure that drastically increases the amount of taxes levied on the operation of slot machines in amusement arcades can also be considered restrictive if it is liable to prohibit, impede or render less attractive the exercise of the freedom to provide the services of operating slot machines in amusement arcades.
In that regard, the Court observed that that would be the case if the national court found that the tax increase prevented profitable operation of slot machines in amusement arcades, thereby effectively restricting it to casinos.

The Court also pointed out that the objectives pursued by the contested measures, namely the protection of consumers against gambling addiction and the prevention of crime and fraud linked to gambling, are, in principle, capable of justifying restrictions on gambling.
The national court must control whether the measures are capable of remedying, in Hungary, a real problem linked to criminal and fraudulent activities concerning gambling and addiction to gambling. The national court must also control whether it is not on such a scale as to make it impossible to reconcile with the objective of curbing addiction to gambling, which it is for the national court to determine.

The Court judged finally that when the national legislature revokes licences that allow their holders to exercise an economic activity, it must provide a reasonable compensation system or a transitional period of sufficient length to enable that holder to adapt.