worldonline gamblinglawreport                                                               FEATURED ARTICLE              ...
GERMANYInterstate treaty on gambling:regulations and issuesGermany decided last year on a            The new Interstate Tr...
GERMANYmatters, e.g. the Interstate Treaty     Several          illegal games of chance and              for a waiting per...
GERMANYbookmakers. From a constitutional     proceeding. The Administrative                12. Wissenschaftlicher Dienst, ...
cecile park publishing                                                                                                    ...
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Germany: Interstate Treaty on Gambling


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Germany: Interstate Treaty on Gambling

  1. 1. worldonline gamblinglawreport FEATURED ARTICLE 01/08 cecile park publishing Head Office UK Cecile Park Publishing Limited, 17 The Timber Yard, Drysdale Street, London N1 6ND tel +44 (0)20 7012 1380 fax +44 (0)20 7729 6093
  2. 2. GERMANYInterstate treaty on gambling:regulations and issuesGermany decided last year on a The new Interstate Treaty on the end of 2007. Gambling (Glücksspielstaats- As a result of the decision of thenew legal framework designed to vertrag1) came into force on 1 Federal Constitutional Court, auphold its state gambling monopoly January 2008. However, the main new legal framework for gamblingusing a new interstate treaty banning aim of the Treaty, upholding the has been decided by the primeinternet gambling, which was state monopoly on gambling, has ministers of the German states at aapproved by the 16 German states already been challenged by the meeting in Bad Pyrmont, in courts. On 7 January 2008, the October 2006, upholding the statein the weeks before Christmas. Administrative Court of Stuttgart monopoly. The draft of anMartin Arendts, an attorney with decided to protect a betting shop Interstate Treaty on Gambling hasArendts Anwälte, examines the key against a prohibition order, been discussed and approved by 15points of the regulations, legal issues effectively undermining the of the 16 state prime ministerswith them under EU law and monopoly. Also, the European Commission regards the main (Schleswig-Holstein raised legal objections, but gave way in Julyassesses the outlook for the future. provisions of the Treaty as contrary 2007, citing fiscal reasons)5. to EU law and announced it would A licensing system, allowing initiate a further infringement private sports betting operators to procedure against Germany. be licensed as well (in return for taxes), was rejected by the majority. Background An alternative draft of an Interstate Germany has an exclusive rights Treaty on Sports Betting system with regard to gambling (Sportwettenstaatsvertrag), (which includes sports betting, presented by the CDU Schleswig- which is now legally defined by the Holstein in February 2007, failed to Interstate Treaty as being a game of win support. The idea behind the chance). The 16 German lottery alternative draft was to open up operators (one in each state, either the sports betting market in order a private company or an to keep the monopoly on lotteries authority), cartelised in the (which generate much more Deutscher Lotto- und Totoblock, earnings for the states than sports have used this legal position to betting). fight the cross-border provision of gambling and sports betting Regulations services2. German authorities have Jurisdiction issued thousands of prohibition In Germany, gambling and sports orders against private operators betting (with the exception of licensed in other EU member horse betting6) has been regulated states, their betting shops and by the states (however, the Federal advertising partners (football Constitutional Court expressly clubs3, affiliates, broadcasters etc.). mentioned the possibility of a new The Federal Constitutional Court regulation by the Federal (Bundesverfassungsgericht) held Parliament, as sports betting has to the state monopoly, in its be regarded as a business matter). landmark sports betting decision Matters, falling under the of 20064, to be unconstitutional. jurisdiction of the states, can be Fiscal reasons, such as the regulated not only by normal state promotion of sports, cannot justify acts, but also by interstate treaties. the state monopoly. However, The idea behind interstate treaties instead of declaring the act in is the creation of uniform law, question, the Bavarian Act on without giving the jurisdiction to Lotteries (Staatslotteriegesetz), to the federal level (conserving the be null and void, the Federal checks and balances of the federal Constitutional Court ordered the system). Interstate treaties are quite legislator to change the law before commonly used to regulate mediaworld online gambling january 2008 05
  3. 3. GERMANYmatters, e.g. the Interstate Treaty Several illegal games of chance and for a waiting period of at leaston Broadcasting bookmakers, payouts from the same; and three months. The European(Rundfunkstaatsvertrag). in particular G prohibit the providers of Commission has expressly stated bwin, have announced services ... from cooperating as that not only the Interstate Treaty,Key points that they will regards access to unauthorised but also the execution acts have toThe Interstate Treaty on Gambling fight the offers of games of chance’. be submitted. So, the states decidedreplaced the Interstate Treaty on Interstate to take the relevant provisions outLotteries (Lotteriestaatsvertrag7), Treaty Legislative procedure of the drafts of the execution actswhich came into effect on 1 July The European Commission was and to decide on them in 2008,2004. According to the will of the notified of the draft in December after these provisions have beenstates, the state monopoly shall be 2006 (in accordance with directive formally submitted to theupheld for (at least) a further four 98/48/EC). The European European Commission.years8. Commission held that the The Interstate Treaty now infringement of the freedom to Legal problemsexpressly covers sports betting provide services, as provided by the The content of the new Interstate(betting is legally defined as a game Interstate Treaty (no provision of Treaty on Gambling is highlyof chance, § 3 par. 1) and also any gaming services over the problematic from a legal point ofcontains certain provisions for internet), is not justified10. It also view. It contravenes constitutionalcasinos (§ 1, 3 - 8, 20 and 23). raised serious further objections in law, EU law, as well as competition According to the Treaty, offering the infringement procedure against law. The following legal aspectsgambling services over the internet Germany11. have to be considered:is illegal (§ 4 par. 4), as well as After the signing of the draft byadvertising it. This is clearly meant all state prime ministers (including Is market foreclosure compatibleto restrict foreign operators and the prime minister of Schleswig- with EU law?the cross-border offering of Holstein, who finally signed the The Interstate Treaty leads to agambling (which is regarded as draft he vehemently opposed in foreclosure of the Germanillegal gambling by the authorities, 2006), the draft and relevant gambling and sports bettingpunishable according to Art. 284 et ratification and execution acts were market with regard to operatorsseq. German Criminal Code). This introduced in the state from other EU Member States asprohibition, however, poses parliaments. The Treaty was well as those from the Europeantechnical problems to foreign ratified by all state parliaments in Economic Area (EEA). Onlyoperators, as they cannot close the week before Christmas 2007. German state operators or thosetheir websites to German Even the state parliament of related to them are legally allowedcustomers. The Administrative Schleswig-Holstein ratified it, to offer sports betting and otherCourts of Appeal of Bavaria and despite its legal doubts. The games of chance, whereas privateHesse, therefore, have recently president of the state parliament operators as well as state operatorsruled that a prohibition which is commissioned a legal opinion from other Member States are lefttechnically not feasible cannot be from the Academic Service out by the monopoly.legally expected from an operator9. (Wissenschaftlicher Dienst) of the The evidently intended market According to several reports, the parliament12, which came to the foreclosure by the states is inauthorities have already discussed conclusion that the regulations are particular a violation of thehow to block gambling websites against EU law and German freedom to provide services and isand how to restrict payments to constitutional law (freedom to therefore neither compatible withforeign operators (following the chose one’s profession, as EU law nor with EEA law.ideas behind the US Unlawful guaranteed by Art. 12 of theInternet Gambling Enforcement German Constitution). Are the requirements beingAct). The Treaty contains Apart from that, the European implemented?provisions with regard to payments Commission has yet to be notified The Interstate Treaty does notto and from private operators. Art. of the state execution acts that provide a coherent,9 of the draft states: contain further regulations with comprehensible and systematic ‘The authority may specifically regard to the online offering of legal regulation. The legal regimeG prohibit banks and financial services (fines of up to €500,000), for gambling machines has recentlyservice institutes from being in accordance with directive been liberalised. Also, horse bettinginvolved in payments relating to 98/48/EC. This directive provides can be offered by private06 world online gambling january 2008
  4. 4. GERMANYbookmakers. From a constitutional proceeding. The Administrative 12. Wissenschaftlicher Dienst, Gutachtenpoint of view, a coherent Court of Stuttgart raised doubts as über europa- und verfassungsrechtliche Aspekte zum Staatsvertrag zumregulation for the whole area of to the compatibility of the Glücksspielwesen in Deutschland, 11gambling is necessary to uphold Interstate Treaty with EU law15. October 2007.the monopoly. Therefore, it granted protection to 13. Oberlandesgericht (OLG) Düsseldorf, decision of 23 October 2006, file no.VI- a betting shop, arguing that the Kart 15/06 (preliminary proceeding) andMay private competition be European Court of Justice first had decision of 8 June 2007, file no. VI-Kartbanned? to decide the pending cases 15/06 (V) (main proceeding). The FederalThe projected Interstate Treaty brought by German courts. Court of Justice (Bundesgerichtshof) upheld the main points of the preliminarydoes not take into consideration The European Commission is decision of the OLG Düsseldorf, decisionconcerns and objections voiced by also expected to initiate an of 8 May 2007, file no. KVR 31/06.the Federal Cartel Office. The infringement procedure (as 14. Bundeskartellamt www.bundeskartellamt.deFederal Cartel Office repeatedly announced by the Internal Market 15. Administrative Court of Stuttgart,stressed that the rest of marginal commissioner McCreevy in 2006). decision of 7 January 2008, file no. 4 Kcompetition had to be upheld. The A letter of formal notice, the first 6081/07.complete ban of private step of an infringement procedure,competition is neither compatible will soon be served on the Germanwith German nor with EU government.competition law. In the anti-trustproceedings against Deutscher Martin Arendts Attorney at Law Arendts AnwälteLotto- und Totoblock, the Court of martin.arendts@anlageanwalt.deAppeal of Düsseldorf explicitlyheld that an interstate treaty 1. Official title: Staatsvertrag zumcannot suspend European Glücksspielwesen in Deutschland (Glücksspielstaatsvertrag - GlüStV).competition law13. 2. Arendts, A View of European The argument that only a state Gambling Regulation from theoperator can care about problem Perspective of Private Operators, in: Littler/Fijnaut, The Regulation ofgambling and the protection of Gambling: European and Nationalminors does not really hold water, Perspectives, 41, 43 et one of the German monopoly 3. Cf. Arendts, ‘bwin and VfB Stuttgart:operators, the operator in advertsing update’, World Online Gambling Law Report Volume 6, Issue 9,Rhineland-Palatinate, is a private September owned by the sports 4. Bundesverfassungsgericht, decision ofassociations of this state. In 28 March 2008, file no. 1 BvR 1054/01. 5. Cf. Arendts, ‘Interstate Treaty onDecember 2007, the Federal Cartel Lotteries: not signed, but passed’, WorldOffice14 prohibited the state from Online Gambling Law Report Volume 5,buying a majority of the shares Issue 12, December 2006, 15.(51%) of Lotto Rheinland-Pfalz 6. Which is regulated by a federal act, Rennwett- und LotteriegesetzGmbH (which, by the way, offers (RennwLottG) of 1922.its services cross-border to 7. Staatsvertrag zum Lotteriewesen inLuxembourg). The Cartel Office Deutschland.argued that the state would have 8. According to § 28, the Interstate Treaty expires after four years. If not, atbecome even more market least 13 states must decide to keep it indominating. force. 9. Bayerischer Verwaltungsgerichtshof, decision of 7 May 2007, file no. 24 CSOutlook 07.10. The Adminstrative Court ofThe legal battle is certainly not Appeal of Hesse pronounced a similarover. Several bookmakers, in decision in November 2007.particular bwin, have announced 10. European Commission, Stellungnahme zu dem notfiziertenthat they will fight the Interstate Entwurf für einen Staatsvertrag zumTreaty and filed suits. A first Glücksspielwesen, letter of 14 Maydecision has already been 2007.pronounced in a preliminary 11. European Commission, Ergänzendes Aufforderungsschreiben Vertragsverletzung-Nr. 2003/ online gambling january 2008 07
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