Calls for changes to German gaming laws intensify after ECJ ruling

Following yesterday’s European Court of Justice (ECJ) ruling that the liberal gaming policy enacted by the state of Schleswig-Holstein does not damage the consistency of the stricter State Treaty on Gaming adopted by Germany’s other states, politicians in the northern state have called for sweeping changes to the country’s gambling legislation.

In a statement issued after the ruling, parliamentary secretary Hans-Jörn Arp of the Christian Democratic Union (CDU) and parliamentary leader Wolfgang Kubicki of the Free Democratic Party (FDP) called on the country’s member states to develop a new treaty based on that of Schleswig-Holstein.

“The European Court has stated … that the exceptionalism of Schleswig-Holstein has no influence on the State Treaty on Gaming,” Arp commented. “With this ruling all charges against the successful Schleswig-Holstein regulatory model are exhausted.”

He added that the “hasty and ill-considered decision” made by the ruling Social Democratic and Green state government to join the State Treaty was clearly wrong in the face of the ruling. He said that the decision would cost the state almost €200m in lost earnings.

His counterpart Kubicki said it was only a matter of time before the ECJ took action against the State Treaty in its current form, and that the federal government should act pre-emptively to make the changes itself.

“The Prime Minister must finally listen to reason and make way for pragmatic and sustainable gambling regulations,” he explained.

Arp added that the start of the World Cup highlighted the failure of the State Treaty, which despite being adopted in 2012 is yet to be enacted, with all applications failing to meet the stringent licensing conditions.

“Football enthusiasts throughout Germany bet on the internet. Regulation is only successful in Schleswig-Holstein so far,” Arp noted. “Without a fundamental reorganization, we will be in the same situation at the next World Cup. This is completely unrealistic and helps only the gray market.”

The president of the German Sports Betting Association (DSWV) and former mybet chief executive Mathias Dahms also called for changes to the State Treaty.

While he welcomed the ruling, he said, it did not address the problems facing the country’s sports betting market.

The DSWV questioned whether a final ruling on the legality of the Treaty will ever be issued, noting that it had failed to act despite the proces dragging on for two years without a licence being issued.

“We have been trying for years to secure nationwide licenses and want to do our part in ensuring that finally an attractive, legally secure and competitive sports betting market is emerging in Germany, from which German sports can benefit,” Dahms explained. “We appeal to the member states to revise the State Treaty on Gambling based on the Schleswig-Holstein model.”

Lawyer Jörg Niemeyer commented that ultimately the ruling has no effect on existing rules, but explained that it is “quite possible” that Germany will be forced to liberalise its gambling laws in order to tackle a thriving black market.

The ruling has been greeted with enthusiasm by operators and state lottery bodies alike, with Westdeutsche Lotterie, the company that originally filed the complaint against Gibraltar licensee Digibet, describing it as a “milestone” verdict.

The company’s chief executive Theo Gossner said the decision was a “major blow to the private, illegal betting provider.”

“The ECJ has given a landmark response today by agreeing that the German gambling regulation is proportional, and keeps the freedom to provide services consistent, provided that the other legal requirements are met,” Gossner said.

The original case started out as a federal court case in Germany between Digibet and WestLotto, with the lottery securing a court ruling to have the operator cease to offer its services to players in the country.

Digibet challenged the ruling, leading to the Federal Court questioning whether the liberal Schleswig-Holstein regime would undermine the State Treaty, ultimately referring the case to the ECJ.

Another referral case by the Lower Instance Court in Sonthofen, which mainly deals with questions on the sports betting licence tender process, will see the ECJ embark on a review of the legality of the Treaty, but a final ruling on this is not expected before 2015.