21 August 2007

German Courts On Hold For ECJ Guidance


by James Kilsby

A High Court decision last week boosted the hopes of a number of private betting operators still facing charges brought by German authorities before early 2006 but a spectacular backlog of cases looks set to accumulate over the coming years as a third sports betting case is referred to the European Court of Justice.

Casual observers of the German gambling market could be forgiven for feeling as though understanding the legal situation surrounding sports betting in the country is a predicament that somehow corresponds to that faced by Josef K in Kafka’s ‘The Trial.’

In a non-fictional trial last week, however, Germany’s highest federal court expressed some sympathy for bookmakers who have been directly entangled in the uncertainty by upholding a regional court’s decision to dismiss charges brought against a bookmaker accused of operating illegal betting in the state of Saarland in 2003 and 2004. The High Court confirmed the assertion of the regional court that the bookmaker had committed an “inevitable error” due to the complexity and uncertainty surrounding the legal status of sports betting in Germany during the period in question.

According to leading German gaming lawyer Martin Arendts of the firm Arendts Anwalte, the decision is of great significance for other bookmakers still facing prosecution over their activities during the period up until the Constitutional Court verdict of March 2006 which sought to bring clarity to what was, as the High Court duly recognises, a muddled and constitutionally uncertain legal situation. Arendts suggests that the volume of cases that have continued to be brought since March 2006 means that the High Court’s latest clarification barely scratches the surface of the mountain of litigation involving bookmakers active in the German market.

“This is not such a big decision,” says Arendts. “It is relevant for the few hundred old cases from 2004 and 2005, but not for most of the cases that are currently pending before the German courts - and we have thousands of cases now.”

The fates of those thousands of cases could effectively be decided in Luxembourg rather than in Berlin or Munich as, despite the March 2006 ruling and the likely adoption of a new interstate gambling treaty in January 2008, German courts have begun to look to the European Court of Justice to determine the compatibility of German legislation with European Community law. A court in Stuttgart referred the third sports betting case from Germany to the ECJ in July, following courts in Gießen (May 2007) and Cologne (September 2006).

According to Arendts, the Stuttgart court seeks ECJ clarification on similar issues to its counterpart in Gießen in order to establish the rights of German authorities to prevent foreign bookmakers from offering their services within German and whether a sports betting monopoly (which would be maintained by the current draft interstate treaty) is legal under European law.

Despite the Federal High Court’s decision in Karlsruhe last week, it seems apparent that the number of pending cases in Germany is only set to grow whilst the referred cases await hearing in the ECJ. For example, Arendts says that courts in Stuttgart will await the ECJ’s decision before presiding over the 200 sports betting cases already filed in the state. If, as Arendts believes is possible, other state and Federal courts adopt the same ‘wait-and-see’ approach, uncertainty could continue to reign until the first German betting case is heard in the ECJ, an event that is unlikely to happen for 2 or 3 years at least. “We haven’t seen any new decisions since the latest referral but it might well change the attitude of a few of the courts,” Arendts says.

16 August 2007

bwin Video Webcast

bwin cordially invites you to participate in the online presentation following the publication of the second quarter and first half year of 2007. The presentation will be simultaneously transmitted in English.

Date: Thursday, 23 August 2007
Time: 9.30 - 9.45 a.m. CET (3.30 - 3.45 a.m. EST)

The presentation will be held by Norbert Teufelberger, Co-CEO of bwin.

N.B.: To participate via the Internet, you need Windows Media Player. Please remember to install the necessary software in time before transmission begins. (Download: Media Player®)

A recording of the Webcast will be available in German and English on the bwin Investor Relations website at www.bwin.ag and www.ots.at about one hour after the presentation has ended.

The bwin Group has over 11 million registered customers (including 7 million "play money" customers) in over 20 core target markets. Operating under international and regional licences in countries like Gibraltar, Kahnawake (Canada) and Germany, Italy, Mexico, Argentinia, Austria and the United Kingdom, the Group has set itself the goal of becoming the number one address for sports betting, games and entertainment via digital distribution channels. The Group offers sports betting, poker, casino games, soft and skill games, as well as audio and video streams on top sporting events such as the German Bundesliga. The parent company bwin Interactive Entertainment AG has been listed on the Vienna Stock Exchange since March 2000 (ID code "BWIN", Reuters ID code "BWIN.VI"). Further information about the Company can be found on its investor relations website at www.bwin.ag.