28 October 2013

German Highest Administrative Court Confirms Fantasy-League-Game Is Not Gambling

By Martin Arendts, Attorney-at-Law

The German Federal Administrative Court (Bundesverwaltungsgericht) decided that “Super-Manager”, a Fantasy-League-Game offered online, is not gambling within the sense of the German Interstate Treaty on Gaming (Glücksspielstaatsvertrag). With its decision of 16 October 2013 (file no. BVerwG 8 C 21.12), the Federal Administrative Court confirmed the appellate decision of the Baden-Wuerttemberg Administrative Court of Appeal.

The plaintiff, a media company in Berlin, offered online a Fantasy-League-Game called “Super-Manager”, based on the German Football Bundesliga. Participants had to pay a participation fee of EUR 7.99. They were then, within a fixed budget, allowed to put together a fictitious team of 18 Bundesliga players of the season 2009 - 2010. On the basis of a jury’s evaluation of the performance of the players, each Bundesliga day a new line up was submitted in three different fictitious leagues. A participant was allowed to submit a maximum of ten teams, from which every third was free of charge. The winners (top finishers) were prized with cash or other prizes. The overall winner, Super-Manager of the season 2009 - 2010, won EUR 100.000 in cash.

The Regional Authority of Karlsruhe (Regierungspräsidium Karlsruhe), acting on behalf of the State of Baden-Wuerttemberg, issued a prohibition order against the plaintiff, ordering him not to organize and not to advertise this or any other forms of gambling online. The media company filed an action against this prohibition order, but lost in the first instance. The Administrative Court of Karlsruhe rejected the arguments raised against the prohibition order. In the appellate procedure, the Baden-Wuerttemberg Administrative Court of Appeal overturned this decision and held that Super-Manager does not fall under the restrictive provisions of the German Interstate Treaty on Gambling.

The State of Baden-Wuerttemberg filed a further appeal, which was now rejected by the Federal Administrative Court. According to the Federal Administrative Court, Super-Manager is not to be classified in the sense of Section 3, Par. 1, sentence 1 Interstate Treaty on Gambling (§ 3 Abs. 1 Satz 1 GlüStV). In this provision those games are defined as gambling which depend on random chance of the gain and in which in context of the game a payment (consideration) for the acquisition of a chance of winning is required. In addition, the commitment in which the chance of winning is considered must be based on the criminal gambling term definition of gambling according to the German Criminal Code (section 284 et seq.). However it is not sufficient that a mere participation fee (admission fee) is required. With paying the participation fee, the participants obtain only the authorization for playing, without being associated with the chance of winning.

The payment for Super-Manager represents only such a participation fee. It only permits to participate in the game. It is only the composition of the team and the weekly list of the team, which is attached to the winning chance. A further interpretation of the gambling definition in the Interstate Treaty would also contradict the sense and purpose of the law and the constitutional principle of the proportionality. The far-reaching restrictions in the Interstate Treaty on gambling aims at ensuring youth protection, preventing fraud as well as gambling addiction, also channelling the population’s gambling desire to state controlled gaming operations. These are only constitutionally justified; so far their actions are suitably, necessarily and relatively strictly targeted towards these dangers. That is not the case with the games, whose danger is necessarily small and can be controlled by fewer drastic regulations. Thus it is situated after that - undisputed between the parties - statements of the Administrative Court with the Super-Manager game. In particular, the game rules did not permit the participants to at run time spend more money in expectations to compensate or adjust the suffered failures. The remaining risks can be met within the framework of the commercial law (Gewerberecht).