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Gaming Law updated No. 12 |
Newsletter on Sportsbetting and Gambling Law
Nr.12 of July 8th 2004
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Summary:
1. Editorial
2. The State Treaty on Lotteries became effective on July 1st 2004 – Of the State Monopoly, a consolidation ?
3. Masthead
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1. Editorial
Dear Reader,
We reported on the Federal Court of Justice ‘s “Nicer Betting” decision. This decision has been interpreted quite differently so far. The Federal Court of Justice (hereinafter BGH) referred to the district court of Munich’s “bet-at-home” and the ECJ’s Gambelli decision, pointed out that it had doubts about the legality of state gambling provisions and consequently denied the conviction of the newspaper “Die Welt” pursuant Art. 284 IV German Criminal Code (GCC) (advertising for unlicensed gambling) for having set a hyperlink to a bookmaker licensed in Austria.
A few pages before the BGH explained: “The provision of Art. 284 GCC does not as such infringe on Art. 46, 49 EC-Treaty.” Therefore the BGH decided that Art. 284 German Criminal Code (hereinafter GCC) – viewed seperately by excluding the other gambling provisions – did not violate Community law. In our point of view, Art. 284 GCC could offhand be interpreted in conformity with Community Law by considering an “official license” to be one granted by any other Member State.
Speaking of interpretation: The state treaty regulating gambling nationwide became effective just recently in Germany. The treaty even allows the authorities to grant licenses which were not provided for in some of the state laws effective so far. The question arises on how the essential parts of the treaty will be interpreted. In the following report we are going to present the essential parts of this treaty.
The editorial staff
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The State Treaty on Lotteries became effective on July 1st 2004 – A State Monopoly Consolidation?
A report by ARENDTS ANWÄLTE
The state gambling providers (especially the Deutscher Lotto- and Toto-Block) will probably say “finally”. According to a press release of the German Lotto- and Toto block (www.lotto.de) of June 30th 2004, the state treaty on lotteries became effective on July 1st 2004. The press release reads as follows:
“The treaty ratified by all 16 states leads to a unification of the different state provisions regarding licensing and operation of lotteries and bets (…) The operation of lotteries and bets will, in accordance with proved customs, be transferred to state controlled lottery associations, which will operate controlled gambling with regards to the international gambling market and which are subject to explicit advertisement restrictions (…). Therefore the state treaty all in all is an essential step (…) towards unifying legal provisions concerning the gambling market in Germany.”
The objective of the treaty is retained in Art. 1 of the treaty on lotteries (hereinafter StVL). There they say:
“The objective of this treaty is 1. to control people’s natural playing instinct, and to guide it into regulated channels, especially preventing it to evade to illegal gambling, 2. to prevent excessive gaming incentives, 3. to exclude exploitation of the playing instincts for private or commercial profit purposes, 4. securing that gambling is being operated in a proper and comprehensive way, 5. securing that a substantial part of the revenues is used for furthering public or tax-deductible purposes in terms of the Fiscal Code.
The state monopoly for operating gambling becomes manifest in Art. 5 StVL. Art. 5 StVL reads as follows:
“The states have the duty to provide for a sufficient gaming offer within the limit of the objective of Art. 1.”
Art. 5 paragraph 2 continues:
“The states may perform this task on a legal basis of their own, by the use of public bodies corporate or private bodies corporate, whose shares are – to a significant extent - held directly or indirectly by public bodies corporate.”
Despite its wording in Art. 2 StVL the scope of the StVL, next to lotteries also includes “other public gambling respective of its operation and commercial procurement” therefore sporting-bets as well.
The provisions regarding the licensing of public gambling (Art. 6 and the following StVL) are to be considered the central part of the state treaty. Art. 6 paragraph 1 provides for the licensing of public lotteries, the issuing of the same being at the discretion of the competent authority. Art. 6 StVL also provides for the licensing conditions to be fulfilled. Did the states therewith abandon the state monopoly for gambling ? Can a license thereby be granted to private gambling operators at home and abroad ?
Unfortunately not: The reasons for denial enumerated in Art. 7 StVL are much more important than the theoretical possibility of licensing. Especially Art. 7 paragraph 1 is eye catching. Accordingly a license may not be granted if it is established that, the operation of this game of chance furthers the gaming business excessively in view of the existing gambling offer, especially the number of existing gambling operations. In other words: The competent authority will only grant a license if the existing (state) offer for gambling is not sufficient to please people’s playing instincts.
The “already existing (state) gaming offer” is an objective condition for the granting of licenses for operating gambling.
In my opinion Art. 6 and the following StVL contain canting provisions for granting a license for private operators, and in fact the state monopoly can be expanded and respectively tightened by these provisions.
One can hardly expect the state respectively its bodies, that is the competent authority for the granting of gambling licenses, to regard the gambling market as not being saturated. In fact, should private businesses apply for a gambling license, the authorities will regularly decide negatively by invoking the usual reasons that the existing gambling supply is covered by (state) operators, and that a further expansion would put the population at risk.
In my opinion this act is unconstitutional and violates Art. 3 (equal treatment), Art. 12 (freedom to choose one’s profession) of the German constitution since it unfairly interferes with these rights. Constitutional law must satisfy the constitutional principle of clarity. An opening clause would have to denominate justifiable criteria for granting a license. It is by far not sufficient to establish reliability criteria for gambling operators, while at the same time granting discretionary power to the authorities whether to grant a license or not, even in case the reliability criteria were fulfilled.
The treaty’s violation of Community Law cannot be removed by implementing the justification for the interference in the statutory provisions of Art. 1 StVL. As Art. 1 No. 2 StVL states, the objective of the treaty is to prevent excessive gambling incentives, and at the same time aggressive advertisement for “Oddset – the sports bet of Lotto” (a product of the Deutscher Lotto- und Toto-Block) is being conducted in connection with the European Football Cup (especially the final of July 4th 2004), this demonstrates that the state treaty has already failed. Two major points of last year’s “Gambelli-decision” are not being implemented by this state treaty. First, that the states’ fiscal interests may only be a side aspect when practising the politics of restraint. Secondly that the state’s restrictive politics are not justified anymore if the state advertises for its own gambling operations with market expansion strategies.
1. “As stated in paragraph 36 of the judgment in Zenatti, the restrictions must in any event reflect a concern to bring about a genuine reduction of gambling opportunities, and in addition the financing of social activities through a levy on the proceeds of authorised games must constitute only an incidental beneficial consequence, and not the real justification for the restrictive policy adopted.”
2. “In so far as the authorities of a Member State incite and encourage consumers to participate in lotteries, games of chance, and betting to the financial benefit of the public purse, the authorities of that State cannot invoke public order concerns relating to the need to reduce opportunities for betting in order to justify measures such as those at issue in the main proceedings.
Thus the private gambling operators are only left with the possibility of resisting this state treaty which the states will invoke in the future when refusing to grant licenses. This can be done by means of e.g. a constitutional complaint (according to Art. 93 paragraph 1 Nr. 4a of the German Constitution in conjunction with Art. 13 Nr. 8 a, 90 Act on the Federal Constitutional Court and by following the admissible case that one claims his constitutional rights are being violated by the public authorities (e.g. the legislator) and that all other legal process has been exhausted.
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© 2004; Publishing is desired with publication of the source including contact information.
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