The Government is being challenged by German lottery agents whose tickets were seized by Customs and Excise in 1990. The agents, who sell tickets for a German state lottery, claim the Government's action contravenes the Treaty of Rome. The case is due to be heard in the European Court on 22 September.
Despite the Government's introduction of legislation for a national lottery - expected towards the end of next year - it is still illegal under the Lotteries and Amusements Act of 1976 to promote foreign lotteries in Britain. There are also restrictions under the Revenue Act of 1898.
Marian Joseph, a partner with Pannone & Co, London solicitors representing the German agents, Jorg and Gerhard Schindler, said: 'The essence of the case is that UK law is contrary to the free movement of goods and services in the European Community.' She said the case could lead to the dismantling of lottery barriers in other EC states, as well as Britain.
State lotteries are well established in Germany, where prizes worth millions of pounds help raise money for municipal services. Lotteries are also big business in Spain and Ireland.
Britain's Lottery Bill is awaiting Royal Assent.