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).