Germany: opaque licensing process falls foul of EU and equal treatment principles

German administrative court holds sports betting licencing procedure to lack transparency forcing the authorities to invite further operators.

The administrative court Wiesbaden decided in a summary ruling of 30 April 2013 (deadline for appeal ends today 14 May 2013) that the gambling authorities in Hessia will need to provide the plaintiff, a Gibraltar-based applicant for an Interstate Treaty on Gambling (E15+1) sport betting licence, with the opportunity to personally present its security and social concept before the licence commission (5 L 90/13.WI). The applicant was initially not invited to present its concepts before the authorities in March 2013. The decision will have a wide-ranging impact on the licensing process and on other operator’s application.

The court based its decision on potential infringements of European fundamental freedoms and the German constitutional equal treatment principle.

The plaintiff, who holds a Schleswig-Holstein licence for sport betting services, applied for a licence under the German Interstate Treaty on Gambling to provide its services also in the other 15 German federal states. During the licensing procedure applicants who reached the ’second round’ (ie have demonstrated general reliability) and who have handed in all required documents, concepts and applications correctly and on time should be invited to a negotiation round in which they get the opportunity to personally present their security and social concepts. However, the authorities have only invited a select group of applicants excluding the plaintiff. The court ruled that this was unjust due to a lack of transparency and a violation of the constitutional equal treatment principle. Neither the Interstate Treaty on Gambling nor the tender conditions explicitly grant the authorities the right to exclude applicants from the negotiation round. According to the court, the respective wording in the regulations is not sufficiently transparent and applicants should not assume that they might already be excluded before the termination of the selection procedure.

Furthermore, the court held that if a licence has already been granted in Schleswig-Holstein, it is – without any further circumstances – not comprehensible that the very same concepts shall not suffice to obtain a licence under the Interstate Treaty on Gambling. Hence, the applicant must be granted the opportunity to participate in the second round to present its concepts.

This opportunity must also be protected by means of an interim injunction in order to prevent the authorities from accomplishing facts (e.g. by granting all 20 sport betting licences), which cannot be redeemed.

The decision of the court must not be underestimated. Due to the equal treatment principle, in particular in relation to the tender, it is to be expected that the authorities will be forced to open another round of invitations, essentially inviting further operators who are in the second round and have handed in all required documents in time. Obviously, this will result in further delays.

Against the background of current submission proceedings before the ECJ dealing with the consistency (and thus transparency) of German sport betting licencing this court decision underlines the legal uncertainty and – at the same time – the chances for sport betting operators in Germany.

For further information on this entry, please contact Patrick Schwarzbart (patrick.schwarzbart@dlapiper.com) or Max Wenger (max.wenger@dlapiper.com).