Category Archive: Germany
The Higher Administrative Court of North Rhine-Westphalia (OVG NRW) ruled in a recent decision that sports betting intermediation by an EU-licensed provider does not require a(n additional) German gambling license in North Rhine-Westphalia at the moment. With this decision the court takes a very liberal stance. Yet, this is consistent with last year’s decisions by the ECJ and the German Federal Administrative Court (BVerwG). As a result the operation of sports betting in North Rhine-Westphalia on the basis of an EU-license (and without a German license) cannot be prosecuted as a criminal offense and it cannot be subject to an administrative prohibition.
The decision is anticipated by other EU-licensed sports betting operators that are now able to offer their services at least in the German state North Rhine-Westphalia until the new State Treaty on Gambling enters into force in 2018 when a new sports betting licensing procedure is expected to start. Although the decision is limited to only one of the 16 German states (i.e. North Rhine-Westphalia) it would be consistent to apply it to the other German states, too.
Update: Dr. Michael Stulz-Herrnstadt and Christoph Engelmann commented on the decision of the BVerwG in the German magazine “GRUR-Prax” 2017 p. 132. The article can be viewed here (in German, subscription based).
The draft of the “Second State Treaty Amending the State Treaty on Gambling” provides for a few changes of the German gambling regulation that try to answer criticism by the European Court of Justice. Sports betting concessions will not be issued on a quantitative but on a qualitative basis in the future. This includes lifting the limit of 20 sports betting concessions and even issuing preliminary concessions for the 35 operators that have been found to meet the requirements for a concession and that are listed in the draft. In addition the German state of Hesse will hand over its competence to issue the sports betting concessions to another German state.
Unfortunately the German states decided to leave it at these minimal changes. They are looking into strengthening the enforcement against unlicensed gambling and into amending the regulation of online casinos. But the draft does not included changes in this regard and it does not address the criticism of the Council of Games of Chance (Gluecksspielkollegium) and the advertising guidelines (Werberichtlinie).
The standstill period of the EU notification procedure lasts until February 2017. The German states aim at a ratification of the new law until 31 December 2017. This means that the amended State Treaty on Gambling will not enter into force before 1 January 2018 and that the interim measure of getting orders of approval for sports betting will become more relevant until the concession procedure is realigned by the new State Treaty.
The UK’s vote to leave the European Union in a so-called Brexit Referendum might also impact companies that provide gambling services in Germany.
Three of the main consequences of Brexit for gambling companies might be:
- Companies applying for a German gambling license need a registered office in a member state of the European Union or a state that is a party to the Treaty on the European Economic Area. The UK, Gibraltar and the Isle of Man might not fulfill this requirement anymore after an exit depending on the content of the contracts they will negotiate with the EU in the future. So it might be necessary to move the registered office to another EU country.
- Gambling companies with licenses from the UK, Gibraltar and/or the Isle of Man might not be able to refer to the single market and the EU’s freedom to provide services any more if those states are not able to negotiate participation at the single market with the EU. This becomes relevant in court proceedings where EU licensed gambling companies argue that they are allowed to operate in Germany with the non-German but EU license.
- In the event of exit companies that collect sporting bets on behalf of UK-licensed operators in Germany will not be able to defend their business with the recent ECJ decision that ruled that EU law may preclude the imposition of penalties in respect of the unauthorised cross-border intermediation of sporting bets carried out in Germany. One strategy against those impacts (2. and 3.) might be to switch from a UK or Gibraltar license to a license from another EU country.
There is still time to look out for the possible changes and adapt the business accordingly. For the moment EU law remains valid and enforceable in the UK and there is no immediate loss of protection. There will be a two year period to negotiate the terms of UK’s exit from the EU, which starts from the date the UK Government officially notifies the EU of its intention to leave. The negotiations need to be completed within two years, although this period can be extended if the negotiations are on-going and if all 28 EU member states agree. We will continue to post updates on developments in this matter here as they arise.
Nearly four years have passed since the new State Treaty on Gambling (GlueStV) came into force allowing up to 20 sports betting licenses. The German gambling authorities reviewed the applications for sports betting licenses, decided that 35 companies meet the requirements and selected 20 companies to receive a license. But because of court challenges no license has been issued which led to criticism by the European Court of Justice (ECJ).
On Friday (15 April 2016) the administrative court of Wiesbaden (VG Wiesbaden) ordered the German gambling authorities to issue a sports betting license for one of the companies in the places 21 to 35. The court held that the limitation to only 20 licenses is contrary to EU law. Because the gambling authorities already decided that the company meets the requirements for a sports betting license they are required to issue the license without applying the limit of 20.
This is the first decision that orders German gambling authorities to issue a sports betting license under the current gambling regulation. With its decision the court “anticipates” the next move of the German gambling legislator which is rumored to be the extension of the limit of 20 to at least double the size. The legislator’s decision is expected in June.
Germany: EU Court rules against German sports betting regulation/new German legislation strongly needed
The European Court of Justice (ECJ) ruled that EU law may preclude the imposition of penalties in respect of the unauthorised cross-border intermediation of sporting bets carried out in Germany (judgment in case C-336/14). The case has been referred to the ECJ by a German local court (AG Sonthofen). AG Sonthofen had to decide whether someone who carries out sporting bet intermediation activities by means of a gaming machine installed in a sports bar located in Germany without the necessary German gambling license could be prosecuted. The sporting bets have been collected on behalf of a company established in Austria and holding an Austrian but not a German sporting bets license.
In Germany it is a criminal offense to collect sporting bets without the necessary German gambling license. Following an ECJ decision in 2010 the German courts ruled that the former state monopoly for sporting bets was contrary to EU law. That is why in 2012 a new State Treaty on Gambling came into force that allows 20 sporting bets licenses for private organizers as an “experimental clause” for seven years. However no license has been issued because of court rulings finding the licensing procedure to be intransparent, discriminating and unconstitutional. The state sporting bets organizer on the other hand was able to continue its business because of a transitional provision.
The ECJ ruled that a prosecution of the sporting bets intermediate is contrary to EU law under this circumstances. The reason is that the licensing process for private organizers has been held to not conform with EU law by national courts. In addition the state monopoly for sporting bets that has already been decided by national courts to not conform with EU law persists because of the transitional provision. As a result the prosecution would only rely on a formality – no license – that roots in an infringement of EU law.
With its decision the ECJ strengthens the role of sporting bets intermediaries in Germany. The German state legislators are now even more put on the spot to pass a new legislation with a licensing procedure compliant to EU law. In addition the Bavarian Constitutional Court recently ruled that sections of the State Treaty on Gambling are unconstitutional and the Higher Administrative Court of Hesse ruled that the central decision-making body of the State Treaty on Gambling (the so-called gambling council) is unconstitutional, too. The decision of the ECJ continues these doubts about the German gambling regulation. Some states (like Hesse) have already demanded new and more liberal legislation.
Update: Dr. Michael Stulz-Herrnstadt and Christoph Engelmann commented on the ECJ’s decision in the German magazine “GRUR-Prax” 2016 p. 106. The article can be viewed here (in German, subscription based).
The Bavarian Constitutional Court (BayVerfGH) had to decide whether the German State Treaty on Games of Chance is constitutional. It decided that two sections of the State Treaty are unconstitutional. The first section is § 4a III 2 which enables the German prime minister conference to decide over the quantity of licenses for sport betting companies. The second section is § 5 IV which enables the so called “Gluecksspielkollegium” to enact guide lines for advertising. The BayVerfGH held that both sections are unconstitutional because of violations of the rule-of-law principle.
Dr. Michael Stulz-Herrnstadt (partner) and Christoph Engelmann (associate) commented on the BayVerfGH’s decision in the German magazine “GRUR-Prax” 2015 p. 491. The article can be viewed here (in German, subscription based).
The High Administrative Court of Bavaria (BayVGH) had to decide whether the TV broadcasting of advertising for sports betting can be prohibited if the sports betting company has been selected for a sports betting license that has not been issued yet. The state media authorities decided to only proceed against tv advertising for sports betting if the relevant gambling authority decides to proceed against the sports betting company.
The BayVGH ruled that the state media authority acts contradictorily if it proceeds against the broadcaster without the corresponding decision of the gambling authority. It ruled in accordance with the court of lower instance (VG München) that the sustained licensing process cannot be held against the sports betting companies
especially as the (single) state licensed sports betting company is allowed to stay in business while private companies are waiting for the new licenses.
Dr. Michael Stulz-Herrnstadt (partner) and Christoph Engelmann (associate) commented on the BayVGH’s decision in the German magazine “Zeitschrift fuer Wett- und Gluecksspielrecht” (ZfWG) 2015 pp. 250-252. The article can be downloaded here (in German).
As last year, the DLA Piper gambling law team will be attending the KPMG eGaming Summit in Gibraltar on the 3rd of April and will hold a gaming law session where Steve Ketteley (our UK gambling law expert) will moderate the discussion among Albert Agustinoy (our Spanish gambling law experrt), Patrick Schwarzbart (our German gambling law expert) and myself, Giulio Coraggio (our Italian gambling law expert)!
Germany: Federal Administrative Court – Second decision on the legal qualification of an entrance fee
In a ruling of 22 January 2014 the Federal Administrative Court reversed a decision of the Adminstrative Court Halle concerning the qualification of an entrance fee to a Poker tournament as a game of chance (BVerwG – 8 C 26.12). According to the Federal Adminstrative Court the payment of an entrance fee does not qualify as a „wager to obtain an opportunity to win“ (which is a requirement for a game of chance to fall under German gambling regulations), at least under certain conditions.
Germany: Gaming Machine Industry affirms its commitment to fight against German gambling regulations
At the International Trade Fair for Amusement and Vending Machines Sportbetting and Sportsgaming (IMA) held between 14 – 17 January 2014 in Düsseldorf the gaming machine industry represented by the Association of the German Gaming Machine Industry (VDAI) again made it very clear that they will not back down on challenging the current gambling regulations in Germany.
Gambling regulators of France, Germany, Portugal, Spain and the UK joined last week the Italian online gambling regulator in Rome to discuss about the future of the European gambling sector that might lead to some improvements as well as some concerns especially for game suppliers.
We are delighted to inform you that we will be running a conference named “Sports betting in Italy: how to reverse the decline? Countries in comparison for a possible solution” on the 10th of December 2013 in Rome at the Hotel Boscolo Exedra – Michelangelo meeting room, Piazza Della Repubblica No. 47, at 9:30 am.
Germany: Federal Administrative Court sharpening the definition of a game of chance. Entrance fee not relevant for the qualification?
In a ruling of 16 October 2013, the Federal Administrative Court confirmed a judgment of the Higher Administrative Court Mannheim that an online football Fantasy League game requiring a one time entrance fee does not qualify as a game of chance in the meaning of German gambling regulations (BVerwG 8 C 21.12).