The European Commission (EC) confirmed Thursday that it will drop infringement proceedings relating to online gambling and the treatment of relevant complaints against a number of Member States.
This means that operators will no longer be able to file claims against European Union Members States in the European Court of Justice over breaches of EU rules on state aid and the freedom of moment of services.
The EC explained that under Commission President Jean-Claude Juncker, the Commission had assessed its political priorities, based on the public and private interests involved. This has seen infringement proceedings relating to online gambling closed as they were deemed low-priority.
"The Court of Justice of the European Union has repeatedly recognised Member States' rights to restrict gambling services where necessary to protect public interest objectives such as the protection of minors, the fight against gambling addiction and the combat of irregularities and fraud," it explained.
The Commission said that Member States are granted a degree of autonomy in the regulation of gambling, allowing them to set their own tax rates, and pass legislation that suits their country's needs. The Court of Justice has already clarified that certain restrictions on Single Market principles are justified, provided they are used to protect minors and consumers, it added.
"With that in mind, it is not a priority for the Commission to use its infringement powers to promote an EU Single Market in the area of online gambling services."
In light of this decision, operators are instead advised to make use of "national remedies" when facing problems with EU law in the iGaming industry.
The EC will however continue to aid Member States in efforts to combat illegal gambling, as well as facilitating cooperation between countries. EU rules in areas such as anti-money laundering will also continue to apply.
The Commission's decision was welcomed by the European Lotteries Association (EL), with secretary general Arjan van't Veer saying the move "makes sense".
"Concerns about public order and consumer protection are best dealt with by controls and regulation at the level of the Member State," he said.
The EL also said the decision acknowledged the “broader political legitimacy” of public interest objectives when regulating gambling services.
However the German Sports Betting Association (DSWV) criticised the move as "short-sighted".
"The Commission is disregarding its duty as the Guardian of the Treaties, and therefore is disregarding fundamental freedoms in Europe," DSWV president Mathias Dahms said.
A number of online gaming operator associations had spoken out last year against a perceived lack of enforcement action by the EC against non-compliant gambling regimes in Europe.
They highlighted a number of cases in particular - formal infringement proceedings against Belgium, Cyprus, the Czech Republic, Lithuania, Poland and Romania, as well as detailed opinions against Sweden - as a result of each country's failure to enforce EU-compliant gambling regulations.