European Union (EU) member states have retained the power to ban online betting operators based in other countries following a ruling by the European Court of Justice (ECJ).

The ECJ has backed the Dutch government's decision to prohibit UK-based operators Betfair and Ladbrokes on the grounds that it aims to protect consumers in the Netherlands. According to the court's ruling, national judiciaries should be able to determine whether a ban on foreign-based companies aims to help combat fraud and addiction.

The ECJ also ruled that a UK licence does not give either Betfair or Ladbrokes the right to operate in another country, but said all member states must allocate licences in a "transparent" manner. Betfair director of European public affairs Tim Phillips said: "While the confirmation that licences must be allocated fairly is a new and welcome development, these rulings do not address the realities of online betting.

"ECJ rulings are not addressing the simple fact that consumer choice between regulated products is being dictated to in a manner which no other industry has to accept." Ladbrokes managing director John O'Reilly added: "[The] ruling confirms the need for its replacement with a system that incorporates strong regulation and licensing, but also introduces competition for the benefit of consumers.

"Other EU countries have introduced new licensing and regulation systems that embrace competition - it is now time for the Netherlands to do the same."