Court calls for a fair tender procedure for a privately owned gambling operator
by Attorney-at-Law Martin Arendts, M.B.L.-HSG
By decision of 3 March 2008 (file-no. VII-Kart 19/07 (V)) the First Cartel Division of the Court of Appeal of Düsseldorf (Oberlandesgericht Düsseldorf) dismissed the motions of the State of Rhineland-Palatinate (Land Rheinland-Pfalz) and of Lotto Rheinland-Pfalz GmbH against a decision of the German Federal Cartel Office (Bundeskartellamt) to prohibit their merger. In its ratio decidendi the Court of Appeal of Düsseldorf raises fundamental doubts as to the legality of a state monopoly and, referring to the European Commission’s legal opinion on this matter, calls for a tender of the license so far granted to Lotto Rheinland-Pfalz GmbH.
By filing motions with the Court of Appeal, the state and the lottery company intended to obtain a decision, allowing for the state to take over the controlling majority of the lottery company, contrary to the Federal Cartel Office’s decision. The Federal Cartel Office had prohibited the State of Rhineland-Palatinate to acquire a majority interest of 51% in November 2007. Doing so, in its press release of 29 November 2007, the Federal Cartel Office emphasised that even highly regulated sectors such as the gambling industry were not “competition free zones”. Anti-trust law was applicable to them without any restriction.
Lotto Rheinland-Pfalz GmbH is the only lottery company in Germany not owned or controlled by the state. The shareholders of this GmbH (equivalent of a Ltd.) keep being the three sports federations of Rhineland-Palatinate (Sportbund Pfalz e.V., Sportbund Rheinhessen e.V. and Sportbund Rheinland e.V.). However, they were willing to cede a majority interest in return for an adequate guarantee by the state.
The Federal Cartel Office voiced considerable anti-trust related doubts regarding this nationalisation. With its lottery products “Zahlenlotto”, “Spiel 77”, “Super 6”, “Keno” and “Glücksspirale”, which are sold over more than 1200 lottery counters, Lotto Rheinland-Pfalz GmbH disposes of a dominant market position. The State of Rhineland-Palatinate’s planned majority interest would even increase this dominant position. The merger would lead to a “structural alliance” between Lotto Rheinland-Pfalz GmbH and Süddeutsche Klassenlotterie (a lottery operated by several German states), which would have largely eliminated the competition existing so far.
In its decision, the Court of Appeal of Düsseldorf considers the motions to be inadmissible already. Subsequently the court issues fundamental explanations as to the legitimacy of a state monopoly. According to the jurisprudence of the German Federal Constitutional Court and the ECJ a state lottery- and betting monopoly was only legitimate “in order and only as far as necessary to attain legitimate goals of common welfare”. The Court of Appeal doubts this with regards to the argument of fighting gambling addiction, which keeps being pleaded as justification:
“Fighting gaming- and betting addiction as well as effective consumer protection can (especially) be achieved by setting respective legal requirements and standards for the gambling business, and by adapted requirements for license holders as well as by a consequent supervision of the gambling operations. It is not necessary, that, additionally, the State of Rhineland-Palatinate has a majority interest in the operations entrusted with the lottery business and to exert dominant influence on the operation by means of its position as a shareholder.”
In the court’s opinion, a monopoly does therefore not stand up to the examination of its commensurability, since there are milder (and equally effective) means to combat gambling addiction and to ensure consumer protection.
The rule of non-discrimination does not necessitate this merger either. The state can have its gambling business operated by a private third party company. However, a tender was required to do so:
“However, it is necessary that the rule of non-discrimination is complied with and that a discrimination free tender procedure takes place accordingly. Should – as the European Commission seems to assume – the Lotto GmbH have been entrusted with the lottery business without invitation to tender, the private lottery undertaking will have to be determined in a transparent and fair competitive bidding in the future.“
The Court of Appeal granted leave to file a special appeal (Rechtsbeschwerde) with the Federal Court of Justice (Bundesgerichtshof). It can be assumed that the Federal Court of Justice will soon have to decide on the ban of this merger as well.
17 March 2008
German Federal Court of Justice dismisses motion against enforcement order from bwin International Ltd. – Final ruling on the merits expected in 2009
Since 2002, bwin International Ltd. has been providing games of chance to its customers under the www.bwin.com domain (formerly www.betandwin.com) – among others to German residents. In September 2004, Westdeutsche Lotterie GmbH & Co OHG ("Westlotto") sought a judgement against bwin International Ltd. to prevent the Company from organizing, brokering or advertising sports betting, casino and lottery games in Germany.
In February 2006 the Regional Court of Cologne ruled in favour of Westlotto at the first instance. In September 2007, the Higher Regional Court of Cologne confirmed the judgement of the court of first instance, declaring it to be enforceable. bwin lodged an appeal with the Federal Court of Justice against the judgement by the Higher Regional Court of Cologne. Although the Federal Court of Justice is not expected to pass a final ruling on the merits for the next 12 to 18 months, Westlotto instituted enforcement proceedings against bwin in November 2007.
bwin filed a motion to the Federal Court of Justice requesting the court to suspend enforcement proceedings until the court has passed a final ruling on the merits. In a decision served on 14 March 2008, the Federal Court of Justice rejected the motion filed by bwin International Ltd. on procedural grounds. Until a final ruling by the Federal Court of Justice on the merits, Westlotto may now apply for further enforcement orders. If the Company eventually fails to win the appeal proceedings before the Federal Court of Justice, or if a political solution is not found in the interim, any penalties that may be imposed as a result of enforcement orders could have a material adverse effect on the Company’s results and financial position. Should the Federal Court of Justice decide in favour of bwin, the Company reserves the right to claim for damages.
In view of the latest legal developments, bwin and its legal advisors are confident that they will win the case against Westlotto. The European Commission is also of the opinion that the current legal situation in Germany is incompatible with primary EU legislation, and has therefore instituted further infringement proceedings against Germany. Furthermore, there are several preliminary rulings originating from German courts still pending judgement by the European Court of Justice. bwin therefore assumes that it will be able to maintain unchanged the products offered for German clients on the www.bwin.com domain, notwithstanding this judgement by the Federal Court of Justice.
bwin e.K., which offers the Company's products on www.bwin.de under a licence issued by the former German Democratic Republic, is not a party to these proceedings before the Federal Court of Justice.
ad hoc release of 17 March 2007
In February 2006 the Regional Court of Cologne ruled in favour of Westlotto at the first instance. In September 2007, the Higher Regional Court of Cologne confirmed the judgement of the court of first instance, declaring it to be enforceable. bwin lodged an appeal with the Federal Court of Justice against the judgement by the Higher Regional Court of Cologne. Although the Federal Court of Justice is not expected to pass a final ruling on the merits for the next 12 to 18 months, Westlotto instituted enforcement proceedings against bwin in November 2007.
bwin filed a motion to the Federal Court of Justice requesting the court to suspend enforcement proceedings until the court has passed a final ruling on the merits. In a decision served on 14 March 2008, the Federal Court of Justice rejected the motion filed by bwin International Ltd. on procedural grounds. Until a final ruling by the Federal Court of Justice on the merits, Westlotto may now apply for further enforcement orders. If the Company eventually fails to win the appeal proceedings before the Federal Court of Justice, or if a political solution is not found in the interim, any penalties that may be imposed as a result of enforcement orders could have a material adverse effect on the Company’s results and financial position. Should the Federal Court of Justice decide in favour of bwin, the Company reserves the right to claim for damages.
In view of the latest legal developments, bwin and its legal advisors are confident that they will win the case against Westlotto. The European Commission is also of the opinion that the current legal situation in Germany is incompatible with primary EU legislation, and has therefore instituted further infringement proceedings against Germany. Furthermore, there are several preliminary rulings originating from German courts still pending judgement by the European Court of Justice. bwin therefore assumes that it will be able to maintain unchanged the products offered for German clients on the www.bwin.com domain, notwithstanding this judgement by the Federal Court of Justice.
bwin e.K., which offers the Company's products on www.bwin.de under a licence issued by the former German Democratic Republic, is not a party to these proceedings before the Federal Court of Justice.
ad hoc release of 17 March 2007
14 March 2008
bwin - publication of preliminary figures for financial year 2007
On Thursday, 20 March 2008, bwin will publish selected key figures giving a preview of the preliminary results of the financial year 2007.
The bwin Group has over 13 million registered customers (including 8 million "play money" customers) in over 20 core target markets and operates platforms for sports betting, poker, casino games, soft- and skill games. Under various licences (e.g. in Germany, Italy and Gibraltar), it also offers audio and video streaming of major sporting events (such as matches of the German Soccer League) through subsidiaries and associated companies. 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"). All details about the company can be found on its investor relations website at www.bwin.ag.
The bwin Group has over 13 million registered customers (including 8 million "play money" customers) in over 20 core target markets and operates platforms for sports betting, poker, casino games, soft- and skill games. Under various licences (e.g. in Germany, Italy and Gibraltar), it also offers audio and video streaming of major sporting events (such as matches of the German Soccer League) through subsidiaries and associated companies. 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"). All details about the company can be found on its investor relations website at www.bwin.ag.
07 March 2008
EGBA: European Commission opposes payment blocking in France
The European Gaming and Betting Association (EGBA) welcomes the European Commission’s detailed opinion against the French draft decree on gaming payments. The draft intends to oblige French financial institutions to block payment orders from online gaming operators listed by the French authorities, even those that are fully licensed, regulated and based in the EU.
Sigrid Ligné, EGBA Secretary General said: “Today’s action consolidates the Commission’s position that unjustified payment blocking in our sector clearly contravenes EU law. We welcome the Commission’s action and hope that this will send a clear signal to other EU and EFTA Member States that such proposals will not be tolerated”.
The French draft decree is the second of two decrees, drafted under the 2007 Delinquency Act, which attempt to erect technical barriers to further protect the French gambling monopolies that are already the subject of separate EU infringement proceedings. The first draft decree, notified in April 2007, sought to oblige Internet Service Providers to discourage consumers from accessing websites others than those operated by the French gaming monopolies: Francaise des Jeux and PMU.
That draft decree was never adopted following a detailed opinion issued by the European Commission last July. Today’s decision is a timely reminder that restrictions on the free movement of capital and payments, as set out in Article 56 of the EC Treaty, are not acceptable. Similar restrictions are currently being considered in Germany, Norway and the Netherlands; they are already in place in the United States. As demonstrated in the U.S experience “such restrictions are difficult to implement, easy to circumvent, inefficient and foster the growth of an underground market” added Sigrid Ligné.
Today’s Commission detailed opinion extends the standstill period of non-adoption until 31 March 2008, during which time France cannot adopt its draft decree. If France then decides to adopt the text despite the Commission warnings, the Commission can immediately launch infringement proceedings.
Sigrid Ligné, EGBA Secretary General said: “Today’s action consolidates the Commission’s position that unjustified payment blocking in our sector clearly contravenes EU law. We welcome the Commission’s action and hope that this will send a clear signal to other EU and EFTA Member States that such proposals will not be tolerated”.
The French draft decree is the second of two decrees, drafted under the 2007 Delinquency Act, which attempt to erect technical barriers to further protect the French gambling monopolies that are already the subject of separate EU infringement proceedings. The first draft decree, notified in April 2007, sought to oblige Internet Service Providers to discourage consumers from accessing websites others than those operated by the French gaming monopolies: Francaise des Jeux and PMU.
That draft decree was never adopted following a detailed opinion issued by the European Commission last July. Today’s decision is a timely reminder that restrictions on the free movement of capital and payments, as set out in Article 56 of the EC Treaty, are not acceptable. Similar restrictions are currently being considered in Germany, Norway and the Netherlands; they are already in place in the United States. As demonstrated in the U.S experience “such restrictions are difficult to implement, easy to circumvent, inefficient and foster the growth of an underground market” added Sigrid Ligné.
Today’s Commission detailed opinion extends the standstill period of non-adoption until 31 March 2008, during which time France cannot adopt its draft decree. If France then decides to adopt the text despite the Commission warnings, the Commission can immediately launch infringement proceedings.
03 March 2008
European Commission opposes payment blocking in France
The European Gaming and Betting Association (EGBA) welcomes the European Commission’s detailed opinion against the French draft decree on gaming payments. The draft intends to oblige French financial institutions to block payment orders from online gaming operators listed by the French authorities, even those that are fully licensed, regulated and based in the EU.
Sigrid Ligné, EGBA Secretary General said: “Today’s action consolidates the Commission’s position that unjustified payment blocking in our sector clearly contravenes EU law. We welcome the Commission’s action and hope that this will send a clear signal to other EU and EFTA Member States that such proposals will not be tolerated”.
The French draft decree is the second of two decrees, drafted under the 2007 Delinquency Act, which attempt to erect technical barriers to further protect the French gambling monopolies that are already the subject of separate EU infringement proceedings. The first draft decree, notified in April 2007, sought to oblige Internet Service Providers to discourage consumers from accessing websites others than those operated by the French gaming monopolies: Francaise des Jeux and PMU.
That draft decree was never adopted following a detailed opinion issued by the European Commission last July. Today’s decision is a timely reminder that restrictions on the free movement of capital and payments, as set out in Article 56 of the EC Treaty, are not acceptable. Similar restrictions are currently being considered in Germany, Norway and the Netherlands; they are already in place in the United States. As demonstrated in the U.S experience “such restrictions are difficult to implement, easy to circumvent, inefficient and foster the growth of an underground market” added Sigrid Ligné.
Today’s Commission detailed opinion extends the standstill period of non-adoption until 31 March 2008, during which time France cannot adopt its draft decree. If France then decides to adopt the text despite the Commission warnings, the Commission can immediately launch infringement proceedings.
EGBA, press release of 3 March 2008
Sigrid Ligné, EGBA Secretary General said: “Today’s action consolidates the Commission’s position that unjustified payment blocking in our sector clearly contravenes EU law. We welcome the Commission’s action and hope that this will send a clear signal to other EU and EFTA Member States that such proposals will not be tolerated”.
The French draft decree is the second of two decrees, drafted under the 2007 Delinquency Act, which attempt to erect technical barriers to further protect the French gambling monopolies that are already the subject of separate EU infringement proceedings. The first draft decree, notified in April 2007, sought to oblige Internet Service Providers to discourage consumers from accessing websites others than those operated by the French gaming monopolies: Francaise des Jeux and PMU.
That draft decree was never adopted following a detailed opinion issued by the European Commission last July. Today’s decision is a timely reminder that restrictions on the free movement of capital and payments, as set out in Article 56 of the EC Treaty, are not acceptable. Similar restrictions are currently being considered in Germany, Norway and the Netherlands; they are already in place in the United States. As demonstrated in the U.S experience “such restrictions are difficult to implement, easy to circumvent, inefficient and foster the growth of an underground market” added Sigrid Ligné.
Today’s Commission detailed opinion extends the standstill period of non-adoption until 31 March 2008, during which time France cannot adopt its draft decree. If France then decides to adopt the text despite the Commission warnings, the Commission can immediately launch infringement proceedings.
EGBA, press release of 3 March 2008
European Commission requests the Netherlands and Greece to remove national gaming restrictions
The European Gaming & Betting Association (EGBA) welcomes today’s decision by the European Commission to pursue infringement proceedings against the Netherlands and Greece and to formally request them to remove gaming restrictions which were found inconsistent with EU law. The Commission took the first step in the infringement procedure against the Netherlands and Greece in March 2006 and June 2007 respectively by issuing a letter of formal notice.
Today’s decisions confirm both countries’ failure to justify the compatibility of their legislation with EC law. Sigrid Ligné, Secretary General of the EGBA commented: “Today’s reasoned opinions send a clear signal that national gaming legislation, which does not serve any genuine consumer protection or public order interest, has no future. Leading European online operators are now calling on Greece and the Netherlands to implement sustainable reforms that will guarantee a fair, open and regulated market access”.
The Netherland’s reasoned opinion coincides with the Dutch government’s plans to issue a three-year exclusive online gaming license to state operator Holland Casino and to force financial institutions to refuse payment transactions to/from EU licensed online gaming and betting operators. “These latest developments make the Commission’s reasoned opinion even more relevant and highlight the need for market protectionist measures to end”, added Sigrid Ligné.
The reasoned opinion against Greece relates to the gaming monopoly granted to OPAP, a publicly listed company which has over the years continued to maximise its profits, expanding its activities beyond the Greek borders while preventing EU operators from gaining fair access to its market. “These particular features of the Greek gaming monopoly and the clear discriminations against EU regulated competitors, left the Commission with no choice but to ensure the respect of basic EU market principles” says Sigrid Ligné.
EGBA, press release of 28 February 2008
Today’s decisions confirm both countries’ failure to justify the compatibility of their legislation with EC law. Sigrid Ligné, Secretary General of the EGBA commented: “Today’s reasoned opinions send a clear signal that national gaming legislation, which does not serve any genuine consumer protection or public order interest, has no future. Leading European online operators are now calling on Greece and the Netherlands to implement sustainable reforms that will guarantee a fair, open and regulated market access”.
The Netherland’s reasoned opinion coincides with the Dutch government’s plans to issue a three-year exclusive online gaming license to state operator Holland Casino and to force financial institutions to refuse payment transactions to/from EU licensed online gaming and betting operators. “These latest developments make the Commission’s reasoned opinion even more relevant and highlight the need for market protectionist measures to end”, added Sigrid Ligné.
The reasoned opinion against Greece relates to the gaming monopoly granted to OPAP, a publicly listed company which has over the years continued to maximise its profits, expanding its activities beyond the Greek borders while preventing EU operators from gaining fair access to its market. “These particular features of the Greek gaming monopoly and the clear discriminations against EU regulated competitors, left the Commission with no choice but to ensure the respect of basic EU market principles” says Sigrid Ligné.
EGBA, press release of 28 February 2008
13 February 2008
Football club VfB Stuttgart files suit against German Interstate Treaty on Gambling
by Martin Arendts
The president of VfB Stuttgart, Erwin Staudt, announced in a press conference in Frankfurt today that the football club had filed suit against the new Interstate Treaty on Gambling. The League Association (Ligaverband) of the German Bundesliga supported this move. Staudt argued for asking the Administrative Court of Stuttgart for protection: "We are convinced that the Interstate Treaty on Gambling is unconstitutional and not in conformity with EU law."
Dr. Reinhard Rauball, president of the German Bundesliga, added: "The monopoly on sports betting is a significant disadvantage for the German professional football in the international competition." Football clubs in other EU member states, like Spain, Italy and Austria, could advertise for private bookmakers. German football clubs would loose revenues of 100 to 300 m Euros each year. Due to the state monopoly, VfB was prohibited to advertise bwin, a listed bookmaker. Also Werder Bremen and 1860 München lost bwin as a football shirt sponsor.
Therefore, Rauball argued in favour of a liberalised market system. All parties concerned should discuss a prospective market model.
The president of VfB Stuttgart, Erwin Staudt, announced in a press conference in Frankfurt today that the football club had filed suit against the new Interstate Treaty on Gambling. The League Association (Ligaverband) of the German Bundesliga supported this move. Staudt argued for asking the Administrative Court of Stuttgart for protection: "We are convinced that the Interstate Treaty on Gambling is unconstitutional and not in conformity with EU law."
Dr. Reinhard Rauball, president of the German Bundesliga, added: "The monopoly on sports betting is a significant disadvantage for the German professional football in the international competition." Football clubs in other EU member states, like Spain, Italy and Austria, could advertise for private bookmakers. German football clubs would loose revenues of 100 to 300 m Euros each year. Due to the state monopoly, VfB was prohibited to advertise bwin, a listed bookmaker. Also Werder Bremen and 1860 München lost bwin as a football shirt sponsor.
Therefore, Rauball argued in favour of a liberalised market system. All parties concerned should discuss a prospective market model.
11 February 2008
Deutscher Lotto- und Totoblock confirms plans to start European super lottery
A speaker of Deutscher Lotto- und Totoblock, Klaus Sattler, confirmed a report by Bild, the biggest German tabloid, about plans to start the largest European lottery ever. Sattler confirmed this weekend: "It is true that several European lottery operators are considering to start a jackpot oriented game." Bild reported that EuroLotto would offer jackpots of much more than 100 million Euros.
According to Sattler, these plans will be discussed with the supervisory authorities of the states and the Academic Advisory Board (wissenschaftlicher Fachbeirat), established by the new Interstate Treaty on Gambling (Glücksspielstaatsvertrag).
According to Sattler, these plans will be discussed with the supervisory authorities of the states and the Academic Advisory Board (wissenschaftlicher Fachbeirat), established by the new Interstate Treaty on Gambling (Glücksspielstaatsvertrag).
10 February 2008
EuroLotto: new super lottery in Germany?
by Martin Arendts
According to Bild, the biggest German newspaper, the German state gaming operators want to refresh old plans to start a super lottery with jackpots of a least 10 million Euros and with a chance to win more than 100 million Euros. The plans disappeard, while the new Interstate Treaty on Gambling was discussed, but now seem to be retracked very seriously after the Treaty was signed into law. According to the newspaper article, the state operators want to file applications with the gaming authorities in April and hope to start the new lottery in autumn.
The new lottery will probably cost 2 Euros, significantly more than the normal lottery (0,75 Euro). Lottery drawings will be on Fridays, based on a 5 out of 50 system (and two more numbers out of eight).
EuroLotto would be a direct competitor of EuroMillions, offered since 2004 in nine European states (France, Spain, UK, Belgium, Luxembourg, Portugal, Ireland, Austria, as well as the non-EU member state Switzerland). According to Bild, EuroLotto will also be offered in nine states. Last year, the Scandinavian states, Estonia, the Netherlands and Italy were mentioned as possible partners of the German operators.
According to Bild, the biggest German newspaper, the German state gaming operators want to refresh old plans to start a super lottery with jackpots of a least 10 million Euros and with a chance to win more than 100 million Euros. The plans disappeard, while the new Interstate Treaty on Gambling was discussed, but now seem to be retracked very seriously after the Treaty was signed into law. According to the newspaper article, the state operators want to file applications with the gaming authorities in April and hope to start the new lottery in autumn.
The new lottery will probably cost 2 Euros, significantly more than the normal lottery (0,75 Euro). Lottery drawings will be on Fridays, based on a 5 out of 50 system (and two more numbers out of eight).
EuroLotto would be a direct competitor of EuroMillions, offered since 2004 in nine European states (France, Spain, UK, Belgium, Luxembourg, Portugal, Ireland, Austria, as well as the non-EU member state Switzerland). According to Bild, EuroLotto will also be offered in nine states. Last year, the Scandinavian states, Estonia, the Netherlands and Italy were mentioned as possible partners of the German operators.
07 February 2008
European Court of Justice to rule on the conformity of gambling monopoly with EU law
Administrative Court of Schleswig publishes questions submitted to the ECJ for preliminary ruling
by Attorney-at-Law Martin Arendts, M.B.L.-HSG
As already reported in German Gaming Law updated no. 93, the Administrative Court of Schleswig (Schleswig-Holsteinisches Verwaltungsgericht) raised considerable doubts as to the conformity of the new Interstate Treaty on Gambling (Glücksspielstaatsvertrag) with EU law and referred a case regarding the state monopoly on sports betting and gambling to the European Court of Justice (ECJ). The 19 page reference for a preliminary ruling, including the four questions submitted to the ECJ, was recently published (decision of 30 January 2008, file no. 12 A 102/06).
An interesting aspect is that this reference – unlike the other seven German references for a preliminary ruling submitted by the Administrative Courts of Cologne, Giessen, and Stuttgart – not only calls for the interpretation of the extent of the freedom to provide services, as provided for by Art. 49 EC Treaty, with regards to the monopoly on sports betting but with regards to lotteries as well.
Like the other German courts which referred cases to the ECJ, the Administrative Court of Schleswig argues that fighting compulsive gambling invoked as justification for the state monopoly is manifestly unsustainable. Other games of chance having higher or equal addiction potential (especially slot machine games - according to the Administrative Court of Schleswig those having the highest addiction potential - as well as horse-betting) can nonetheless be offered by private operators. In addition, state authorities expanded casino games despite their increased addiction potential.
The Administrative Court of Schleswig argued that the entire gambling legislation needed to aim at limiting gambling for a state monopoly to be justified. The argument of state monopoly advocates that there were different sectors of gambling (also embraced by the Administrative Court of Appeal of Hamburg) is clearly rejected by the Administrative Court of Schleswig. Rather one had to take a holistic view at the legislation as a whole:
“Regarding the question of a coherent and systematic limitation of gambling, the court is therefore not capable to find that the ECJ’s requirements for enacting a valid limitation were complied with. A holistic view of all licensed and permitted offers of games of chance is obviously non-existent. Only such a holistic view can enable the legislator called upon to comprise the perceived dangers of gaming- and gambling addiction for the individual and society and to provide the necessary remedies.”
Federal particularities regarding legislative authority could not justify a gaming monopoly limited to a single sector.
* * *
The questions submitted to the ECJ
The Administrative Court of Schleswig requested the ECJ to give a ruling on the following question by way of preliminary rulings proceedings (Article 234 EC Treaty):
a) Is Article 49 EC Treaty to be interpreted to the effect that – invocation of the freedom to provides services implied – the provider of the services needs to have permission to provide the services in the country of establishment – here: limitation of the gambling license of Gibraltar to “offshore bookmaking”?
b) Is Article 49 EC Treaty to be interpreted to the effect that it conflicts with a national state monopoly on the operation of sports betting and lotteries (with more than minor addiction potential) justified by the need to fight compulsive gaming, if other games of chance with considerable addiction potential may be offered by private service providers and the different statutory regulations regarding sports betting and lotteries on the one hand and other games of chance on the other hand are based on the diverging legislative authority of the federation and the states?
In case question b) is answered in the affirmative:
c) Is Article 49 EC Treaty to be interpreted to the effect that it conflicts with a national regulation that leaves the granting of a license for the operation and the transfer of games of chance to the licensing authority’s discretion even in case that the statutory requirements for granting such a license are fulfilled?
d) Is Article 49 EC Treaty to be interpreted to the effect that it conflicts with a national regulation that prohibits the operation and the transfer of public games of chance via the Internet, in particular, if – although limited to a transition period of one year – the operation and the transfer via the Internet complying with youth- and gambler protection provisions is permitted in order to observe the principle of proportionality and to allow two commercial gaming agents, who had been operating via Internet so far, to adapt to the distribution channels to be permitted by the Interstate Treaty?
German Gaming Law updated No. 94
by Attorney-at-Law Martin Arendts, M.B.L.-HSG
As already reported in German Gaming Law updated no. 93, the Administrative Court of Schleswig (Schleswig-Holsteinisches Verwaltungsgericht) raised considerable doubts as to the conformity of the new Interstate Treaty on Gambling (Glücksspielstaatsvertrag) with EU law and referred a case regarding the state monopoly on sports betting and gambling to the European Court of Justice (ECJ). The 19 page reference for a preliminary ruling, including the four questions submitted to the ECJ, was recently published (decision of 30 January 2008, file no. 12 A 102/06).
An interesting aspect is that this reference – unlike the other seven German references for a preliminary ruling submitted by the Administrative Courts of Cologne, Giessen, and Stuttgart – not only calls for the interpretation of the extent of the freedom to provide services, as provided for by Art. 49 EC Treaty, with regards to the monopoly on sports betting but with regards to lotteries as well.
Like the other German courts which referred cases to the ECJ, the Administrative Court of Schleswig argues that fighting compulsive gambling invoked as justification for the state monopoly is manifestly unsustainable. Other games of chance having higher or equal addiction potential (especially slot machine games - according to the Administrative Court of Schleswig those having the highest addiction potential - as well as horse-betting) can nonetheless be offered by private operators. In addition, state authorities expanded casino games despite their increased addiction potential.
The Administrative Court of Schleswig argued that the entire gambling legislation needed to aim at limiting gambling for a state monopoly to be justified. The argument of state monopoly advocates that there were different sectors of gambling (also embraced by the Administrative Court of Appeal of Hamburg) is clearly rejected by the Administrative Court of Schleswig. Rather one had to take a holistic view at the legislation as a whole:
“Regarding the question of a coherent and systematic limitation of gambling, the court is therefore not capable to find that the ECJ’s requirements for enacting a valid limitation were complied with. A holistic view of all licensed and permitted offers of games of chance is obviously non-existent. Only such a holistic view can enable the legislator called upon to comprise the perceived dangers of gaming- and gambling addiction for the individual and society and to provide the necessary remedies.”
Federal particularities regarding legislative authority could not justify a gaming monopoly limited to a single sector.
* * *
The questions submitted to the ECJ
The Administrative Court of Schleswig requested the ECJ to give a ruling on the following question by way of preliminary rulings proceedings (Article 234 EC Treaty):
a) Is Article 49 EC Treaty to be interpreted to the effect that – invocation of the freedom to provides services implied – the provider of the services needs to have permission to provide the services in the country of establishment – here: limitation of the gambling license of Gibraltar to “offshore bookmaking”?
b) Is Article 49 EC Treaty to be interpreted to the effect that it conflicts with a national state monopoly on the operation of sports betting and lotteries (with more than minor addiction potential) justified by the need to fight compulsive gaming, if other games of chance with considerable addiction potential may be offered by private service providers and the different statutory regulations regarding sports betting and lotteries on the one hand and other games of chance on the other hand are based on the diverging legislative authority of the federation and the states?
In case question b) is answered in the affirmative:
c) Is Article 49 EC Treaty to be interpreted to the effect that it conflicts with a national regulation that leaves the granting of a license for the operation and the transfer of games of chance to the licensing authority’s discretion even in case that the statutory requirements for granting such a license are fulfilled?
d) Is Article 49 EC Treaty to be interpreted to the effect that it conflicts with a national regulation that prohibits the operation and the transfer of public games of chance via the Internet, in particular, if – although limited to a transition period of one year – the operation and the transfer via the Internet complying with youth- and gambler protection provisions is permitted in order to observe the principle of proportionality and to allow two commercial gaming agents, who had been operating via Internet so far, to adapt to the distribution channels to be permitted by the Interstate Treaty?
German Gaming Law updated No. 94
31 January 2008
Free movement of services: Commission inquires into restrictions on gambling services in Germany
IP/08/119
Brussels, 31 January 2008
The European Commission has decided to send to Germany an official request for information on national legislation restricting the supply of gambling services. The Commission wishes to verify whether the measures in question are compatible with Articles 43, 49 and 56 of the EC Treaty. This decision relates only to the compatibility of the national measures in question with existing EU law. It does not have any implications for the liberalisation of the market for gambling services generally, or for the entitlement of Member States to seek to protect the general interest, so long as this is done in a manner consistent with EU law i.e. that any measures are necessary, proportionate and non-discriminatory. The letter of formal notice is the first step in an infringement procedure under Article 226 of the EC Treaty. Germany has two months in which to respond. The Commission hopes that the answers it receives will lead to an early and satisfactory resolution of the matter.
This new inquiry focuses on a number of provisions of the new legislation which entered into force on 1.1.2008. Some of the key restrictions that are questioned in terms of their compatibility with the EC Treaty's Internal Market provisions are as follows: the total prohibition of games of chance on the Internet; notably sports betting, on which the Commission sent to Germany in March 2007 a detailed opinion; advertising restrictions on TV, on the Internet or on jerseys or billboards; and the prohibition on financial institutions to process and execute payments relating to unauthorised games of chance. In addition, questions are raised regarding the authorisation regime to be granted to intermediaries as well as the criminal sanctions or administrative fines provided for in cases of organisation, advertising and participation in on-line games of chance.
However, it should be noted that in Germany horse race betting on the Internet is not prohibited and slot machines have been widely expanded. Moreover, advertising of games of chance by mail, in the press and on radio is still permitted.
The European Court of Justice has previously stated that any restrictions which seek to protect general interest objectives, such as the protection of consumers, must be "consistent and systematic" in how they seek to limit activities. A Member State cannot invoke the need to restrict its citizens' access to these services if at the same time it encourages them to participate in State games of chance.
The Commission decision to inquire into the compatibility of the measures in question is based on complaints made by a number of service providers and on information gathered by Commission staff.
The latest information on infringement proceedings concerning all Member States can be found at:
http://ec.europa.eu/community_law/index_en.htm
Brussels, 31 January 2008
The European Commission has decided to send to Germany an official request for information on national legislation restricting the supply of gambling services. The Commission wishes to verify whether the measures in question are compatible with Articles 43, 49 and 56 of the EC Treaty. This decision relates only to the compatibility of the national measures in question with existing EU law. It does not have any implications for the liberalisation of the market for gambling services generally, or for the entitlement of Member States to seek to protect the general interest, so long as this is done in a manner consistent with EU law i.e. that any measures are necessary, proportionate and non-discriminatory. The letter of formal notice is the first step in an infringement procedure under Article 226 of the EC Treaty. Germany has two months in which to respond. The Commission hopes that the answers it receives will lead to an early and satisfactory resolution of the matter.
This new inquiry focuses on a number of provisions of the new legislation which entered into force on 1.1.2008. Some of the key restrictions that are questioned in terms of their compatibility with the EC Treaty's Internal Market provisions are as follows: the total prohibition of games of chance on the Internet; notably sports betting, on which the Commission sent to Germany in March 2007 a detailed opinion; advertising restrictions on TV, on the Internet or on jerseys or billboards; and the prohibition on financial institutions to process and execute payments relating to unauthorised games of chance. In addition, questions are raised regarding the authorisation regime to be granted to intermediaries as well as the criminal sanctions or administrative fines provided for in cases of organisation, advertising and participation in on-line games of chance.
However, it should be noted that in Germany horse race betting on the Internet is not prohibited and slot machines have been widely expanded. Moreover, advertising of games of chance by mail, in the press and on radio is still permitted.
The European Court of Justice has previously stated that any restrictions which seek to protect general interest objectives, such as the protection of consumers, must be "consistent and systematic" in how they seek to limit activities. A Member State cannot invoke the need to restrict its citizens' access to these services if at the same time it encourages them to participate in State games of chance.
The Commission decision to inquire into the compatibility of the measures in question is based on complaints made by a number of service providers and on information gathered by Commission staff.
The latest information on infringement proceedings concerning all Member States can be found at:
http://ec.europa.eu/community_law/index_en.htm
EGBA welcomes European Commission’s decision to launch two further infringement proceedings against Germany and Sweden
Online gaming and betting association commends landmark infringement procedure against the Swedish online poker monopoly and decisive action against the German Interstate Treaty
The European Gaming and Betting Association (EGBA) commends the European Commission’s decisive action against the German Interstate Treaty on Gaming at today’s Commissioner Meeting in Brussels. The Commission has taken a clear position against the newly adopted Treaty by issuing a letter of formal notice which is the first step in EU infringement procedures. Furthermore, the Commission has also addressed a letter of formal notice to Sweden with regard to “all national measures relating to poker games and tournaments”.
The German Interstate Treaty, which seeks to ban all online gaming and betting (except for horse racing) in the country, came into force on 1 January 2008 despite formal objections raised by the European Commission under its notification procedure (Directive 98/34/EC) that the Treaty transgressed EU law. This is the first time that the Commission addresses a national gambling legislation not only on the basis of the Freedom to provide services (article 49 of the EC Treaty), but also on the basis of the Freedom of establishment (article 43) and the Free movement of capital and payment (article 56). In particular, the Commission challenges “the total prohibition of games of chance on the Internet; notably sports betting; …advertising restrictions on TV, on the Internet or on jerseys or billboards; and the prohibition on financial institutions to process and execute payments relating to unauthorised games of chance. In addition questions are raised regarding the authorisation regime to be granted to intermediaries as well as the criminal sanctions or administrative fines provided for in cases of organisation, advertising and participation in on-line games of chance.”
EGBA Secretary General Sigrid Ligné commented “By commencing these broad proceedings only thirty days after the Treaty entered into force, the Commision shows its determination to fight restrictions and in particular prohibitions, which are not backed by genuine consumer protection or public order interests. What happened in the US proved that prohibition cannot be the answer. Trustworthy and highly transparent online gaming companies abandoned the US market, thus paving the way for a grey market in which no guidelines whatsoever exist in terms of consumer protection, prevention of compulsive gaming and protection of minors”. EGBA lodged a formal EU complaint against the new German legislation early January alerting the Commission not only on the inefficiency of the prohibition but also on its adverse effects.
The Commission’s action against the Swedish poker monopoly operated by ‘Svenska Spel’ is the first EU infringement action involving online poker. Since March 2006, Sweden has been expanding its monopoly by operating online poker services, while preventing EU-licensed operators from offering their online poker services in the country. This is also the second proceeding opened against Sweden’s protectionist gaming legislation. A first procedure focusing on sports betting restrictions was launched in 2006. The next step in this infringement proceeding would be the referral to the European Court of Justice.
Today’s action against Sweden demonstrates that the Commission’s competence to scrutinise the Member States’ compliance with EU law is not limited to sports betting. National rules related to cross-border poker services are also expected to meet EU requirements and be consistent with a global national gaming policy.
Sigrid Ligné, Secretary General of the EGBA added: “This decision is an important development for EU-licensed operators as it confirms the support of the Commission to guarantee our members’ right to a fair market access both for sports betting and poker services. This decisive action against the German Interstate Treaty and Swedish poker monopoly sends a clear message to all EU countries maintaining or instigating antiquated protectionist gaming regulations. We applaud the commencement of infringement procedures and encourage the Commission to extend these proceedings against other countries that are also contravening EU law”.
The European Gaming and Betting Association (EGBA) commends the European Commission’s decisive action against the German Interstate Treaty on Gaming at today’s Commissioner Meeting in Brussels. The Commission has taken a clear position against the newly adopted Treaty by issuing a letter of formal notice which is the first step in EU infringement procedures. Furthermore, the Commission has also addressed a letter of formal notice to Sweden with regard to “all national measures relating to poker games and tournaments”.
The German Interstate Treaty, which seeks to ban all online gaming and betting (except for horse racing) in the country, came into force on 1 January 2008 despite formal objections raised by the European Commission under its notification procedure (Directive 98/34/EC) that the Treaty transgressed EU law. This is the first time that the Commission addresses a national gambling legislation not only on the basis of the Freedom to provide services (article 49 of the EC Treaty), but also on the basis of the Freedom of establishment (article 43) and the Free movement of capital and payment (article 56). In particular, the Commission challenges “the total prohibition of games of chance on the Internet; notably sports betting; …advertising restrictions on TV, on the Internet or on jerseys or billboards; and the prohibition on financial institutions to process and execute payments relating to unauthorised games of chance. In addition questions are raised regarding the authorisation regime to be granted to intermediaries as well as the criminal sanctions or administrative fines provided for in cases of organisation, advertising and participation in on-line games of chance.”
EGBA Secretary General Sigrid Ligné commented “By commencing these broad proceedings only thirty days after the Treaty entered into force, the Commision shows its determination to fight restrictions and in particular prohibitions, which are not backed by genuine consumer protection or public order interests. What happened in the US proved that prohibition cannot be the answer. Trustworthy and highly transparent online gaming companies abandoned the US market, thus paving the way for a grey market in which no guidelines whatsoever exist in terms of consumer protection, prevention of compulsive gaming and protection of minors”. EGBA lodged a formal EU complaint against the new German legislation early January alerting the Commission not only on the inefficiency of the prohibition but also on its adverse effects.
The Commission’s action against the Swedish poker monopoly operated by ‘Svenska Spel’ is the first EU infringement action involving online poker. Since March 2006, Sweden has been expanding its monopoly by operating online poker services, while preventing EU-licensed operators from offering their online poker services in the country. This is also the second proceeding opened against Sweden’s protectionist gaming legislation. A first procedure focusing on sports betting restrictions was launched in 2006. The next step in this infringement proceeding would be the referral to the European Court of Justice.
Today’s action against Sweden demonstrates that the Commission’s competence to scrutinise the Member States’ compliance with EU law is not limited to sports betting. National rules related to cross-border poker services are also expected to meet EU requirements and be consistent with a global national gaming policy.
Sigrid Ligné, Secretary General of the EGBA added: “This decision is an important development for EU-licensed operators as it confirms the support of the Commission to guarantee our members’ right to a fair market access both for sports betting and poker services. This decisive action against the German Interstate Treaty and Swedish poker monopoly sends a clear message to all EU countries maintaining or instigating antiquated protectionist gaming regulations. We applaud the commencement of infringement procedures and encourage the Commission to extend these proceedings against other countries that are also contravening EU law”.
Administrative Court of Schleswig refers German Interstate Treaty to the European Court of Justice
Court questions justification of the state monopoly regarding sports betting and lotteries
by Attorney-at-Law Martin Arendts, M.B.L.-HSG
The Administrative Court of Schleswig (Schleswig-Holsteinisches Verwaltungsgericht) has raised serious doubts about the justification of the new Interstate Treaty on Gambling (Glücksspielstaatsvertrag) and referred a dispute about the state monopoly regarding sports betting to the European Court of Justice (decision of 30 January 2008, file no. 12 A 102/06). Plaintiff in the main proceeding is a remote gaming operator, licensed in Gibraltar. The gaming operator which wants to offer its services cross-border also in the State of Schleswig-Holstein, filed an application. This application was rejected by the state, citing the monopoly for sports betting and gambling. The gaming operator relied on the freedom to provide services, as guaranteed by the EC Treaty, and filed suit in 2006.
The Administrative Court raised doubts whether the prevention of compulsive gambling and the protection of minors, which were put forward as a justification of the Interstate Treaty, really justify the exclusion of private operators. Other forms of gambling, e. g. gambling machines, are not restricted in the same way. Under EU law, this inconsistent regulation is problematic.
After the seven already pending preliminary proceedings brought by the Administrative Courts of Cologne, Giessen and Stuttgart, the Administrative Court of Schleswig is the fourth German court to refer a sports betting case to the ECJ. As reported, the ECJ has joined the six cases from Giessen and Stuttgart. The new proceeding from Schleswig expressly refers to the new legal situation according to the Interstate Treaty, which became effective as of 1 January 2008, and the still incoherent and inconsistent regulation of gambling in Germany.
by Attorney-at-Law Martin Arendts, M.B.L.-HSG
The Administrative Court of Schleswig (Schleswig-Holsteinisches Verwaltungsgericht) has raised serious doubts about the justification of the new Interstate Treaty on Gambling (Glücksspielstaatsvertrag) and referred a dispute about the state monopoly regarding sports betting to the European Court of Justice (decision of 30 January 2008, file no. 12 A 102/06). Plaintiff in the main proceeding is a remote gaming operator, licensed in Gibraltar. The gaming operator which wants to offer its services cross-border also in the State of Schleswig-Holstein, filed an application. This application was rejected by the state, citing the monopoly for sports betting and gambling. The gaming operator relied on the freedom to provide services, as guaranteed by the EC Treaty, and filed suit in 2006.
The Administrative Court raised doubts whether the prevention of compulsive gambling and the protection of minors, which were put forward as a justification of the Interstate Treaty, really justify the exclusion of private operators. Other forms of gambling, e. g. gambling machines, are not restricted in the same way. Under EU law, this inconsistent regulation is problematic.
After the seven already pending preliminary proceedings brought by the Administrative Courts of Cologne, Giessen and Stuttgart, the Administrative Court of Schleswig is the fourth German court to refer a sports betting case to the ECJ. As reported, the ECJ has joined the six cases from Giessen and Stuttgart. The new proceeding from Schleswig expressly refers to the new legal situation according to the Interstate Treaty, which became effective as of 1 January 2008, and the still incoherent and inconsistent regulation of gambling in Germany.
30 January 2008
Multi-Channel Gambling 2008
New sales channels for the fast growing gambling industry
From February 25th to 26th Everest Conference holds the two day conference „Multi-Channel Gambling 2008“, taking place in Berlin, Hotel Concorde. Representatives of leading companies will share their experience and knowledge. In outstanding case studies they will present how they expand their gambling services across digital sales channels such as the internet, iTV and connected mobile devices to attract new customers. Participants of the “Multi-Channel Gambling 2008” conference have the opportunity to find the decisive competitive advantages in the upcoming multi-channel gambling world.
The future of gambling is digital
The internet is well accepted as a new distribution channel by players worldwide and internet gambling has become a fast growing industry. But poker, sports betting and casino can’t just be played over the internet. It can be transferred to other digital means as well. Mobile gambling via mobile phone or palm and by interactive television is the future. UK and France are the European leaders for iTV gambling and the industry is growing steadily. Mobility and TV offer the opportunity to reach the mass market. According to a study of Juniper Research mobile gambling will be a 19 Billion US$ business by 2009, what represents about one third of the total turnover of mobile services.
Find the decisive competitive advantages in the upcoming multi-channel gambling world
To withstand the competition in an unsteady gambling market operators have to find new ways to reach their target groups. Digital distribution channels offer great potential of growth and advantages in the fight for customers. The conference will highlight the recent mobile, online and interactive developments within the European gambling industry.
For more information please contact:
Jürgen Zwerger ,
Managing Director
Everest Conference GmbH
Niederlassung Berlin
Hackescher Markt 4 | 10178 Berlin
Tel.: + 49 (0) 30 32 59 51 402
Fax: + 49 (0) 30 32 59 51 100
j.zwerger@everest-conference.com
From February 25th to 26th Everest Conference holds the two day conference „Multi-Channel Gambling 2008“, taking place in Berlin, Hotel Concorde. Representatives of leading companies will share their experience and knowledge. In outstanding case studies they will present how they expand their gambling services across digital sales channels such as the internet, iTV and connected mobile devices to attract new customers. Participants of the “Multi-Channel Gambling 2008” conference have the opportunity to find the decisive competitive advantages in the upcoming multi-channel gambling world.
The future of gambling is digital
The internet is well accepted as a new distribution channel by players worldwide and internet gambling has become a fast growing industry. But poker, sports betting and casino can’t just be played over the internet. It can be transferred to other digital means as well. Mobile gambling via mobile phone or palm and by interactive television is the future. UK and France are the European leaders for iTV gambling and the industry is growing steadily. Mobility and TV offer the opportunity to reach the mass market. According to a study of Juniper Research mobile gambling will be a 19 Billion US$ business by 2009, what represents about one third of the total turnover of mobile services.
Find the decisive competitive advantages in the upcoming multi-channel gambling world
To withstand the competition in an unsteady gambling market operators have to find new ways to reach their target groups. Digital distribution channels offer great potential of growth and advantages in the fight for customers. The conference will highlight the recent mobile, online and interactive developments within the European gambling industry.
For more information please contact:
Jürgen Zwerger ,
Managing Director
Everest Conference GmbH
Niederlassung Berlin
Hackescher Markt 4 | 10178 Berlin
Tel.: + 49 (0) 30 32 59 51 402
Fax: + 49 (0) 30 32 59 51 100
j.zwerger@everest-conference.com
EGBA welcomes decision by French criminal court
The Court of Appeal of Versailles today called into question the compatibility of French gaming legislation with EU law: The burden of proof now lies with the French authorities to justify their regulatory framework is consistent, proportionate and justified.
Today’s decision follows the request of Didier Dewyn, ex-CEO of Mr Bookmaker, a gaming company licensed in Malta, to annul criminal proceedings brought against him on 16 April 2007 for allegedly organising “illicit lottery” and “clandestine betting on horse races”.
The Court of Appeal of Versailles requested additional information to allow itself to ascertain whether the criteria used under the ECJ’s case law are respected by the French gaming system. The Court considered that referring a question for a preliminary ruling to the ECJ was also not necessary as EC law was clear enough.
EGBA welcomes the decision of the Court of Appeal of Versailles, which relies on the consistent jurisprudence of the ECJ and in particular the Placanica ruling of 6 March 2007. This decision is in line with the ruling of the Cour de Cassation, France’s Supreme Court, in the Zeturf case of 10 July 2007, with which it is fully in line. The French Supreme Court quashed a decision of the Court of Appeal which condemned private operator Zeturf in proceedings brought by the PMU.
Sigrid Ligné, Secretary General of the EGBA comments: “We are delighted with this decision. It is an important one and comes in the general context of the commitment taken by the French authorities to propose a controlled opening of the French gaming market by March 2008.”
press release of EGBA, 18 January 2008
Today’s decision follows the request of Didier Dewyn, ex-CEO of Mr Bookmaker, a gaming company licensed in Malta, to annul criminal proceedings brought against him on 16 April 2007 for allegedly organising “illicit lottery” and “clandestine betting on horse races”.
The Court of Appeal of Versailles requested additional information to allow itself to ascertain whether the criteria used under the ECJ’s case law are respected by the French gaming system. The Court considered that referring a question for a preliminary ruling to the ECJ was also not necessary as EC law was clear enough.
EGBA welcomes the decision of the Court of Appeal of Versailles, which relies on the consistent jurisprudence of the ECJ and in particular the Placanica ruling of 6 March 2007. This decision is in line with the ruling of the Cour de Cassation, France’s Supreme Court, in the Zeturf case of 10 July 2007, with which it is fully in line. The French Supreme Court quashed a decision of the Court of Appeal which condemned private operator Zeturf in proceedings brought by the PMU.
Sigrid Ligné, Secretary General of the EGBA comments: “We are delighted with this decision. It is an important one and comes in the general context of the commitment taken by the French authorities to propose a controlled opening of the French gaming market by March 2008.”
press release of EGBA, 18 January 2008
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