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Gaming Law updated No. 13 |
Newsletter on Sportsbetting and Gambling Law
Nr.13 of August 4th 2004
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Summary:
1. Editorial
2. ODDSET – Abusing Market Dominance? – An analysis by Martin Arendts, M.B.L.-HSG, attorney-at-law
3. Administrative Court of Osnabrück: German Criminal Provisions are neither applicable to operators nor to brokers of sporting bets
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1. Editorial
Dear Reader,
On August 3rd 2004 Oddset was officially presented as the fifth “National Sponsor” of the Football World Cup 2006. A lot of criticism as to the state sports betting operators’ commitment was to be heard in the forefront of this decision. Reason enough for me to have a closer look at this market behaviour from a legal point of view.
In addition we report on a new decision regarding sports betting: The Administrative Court of Osnabrück extensively invoked the requirements postulated by the “Gambelli-decision” and examined, whether the state met these requirements while limiting the German gambling market.
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2. ODDSET – Abusing Market Dominance?
An analysis by Martin Arendts, M.B.L.-HSG, attorney-at-law
According to a press report of August 3rd 2004 ODDSET, the sporting bet operator of the state owned Lotto- and Toto-Block (DLTB), is the fifth “National Sponsor” of the Football World Cup 2006. The news magazine “Spiegel” beforehand reported, that in return ODDSET expected the Bundesliga (equivalent to the Premier League) Clubs to terminate their co-operation with private sporting bet operators (with a former GDR license). Furthermore, ODDSET and Westlotto respectively have been Sponsors of the Bundesliga Club “FC Schalke 04” (although, not even one year ago a private operator was refused perimeter advertising in the same stadium). In addition ODDSET invests millions a month in advertisements and tries to impede private operators’ advertisement and marketing efforts (e.g. spots on the DSF-channel) – in part by political channels.
Is this behaviour legally unproblematic? Not so from a point of view of anti-trust law. The abuse of a market dominant position is prohibited by German anti-trust laws as well as by European competition rules.
The rules for fair market competition are established by the law against restrictive practices (GWB). ODDSET still has a predominant market position and – until the liberalization of the gambling market – there are still “legal (…) restraints for other companies’ access to the market” (Art. 19 paragraph 2 GWB). Accordingly, ODDSET may not prejudice other businesses’ competition possibilities (Art. 19 paragraph 4 Nr. 1 GWB) and may also not constrain the same unreasonably (Art. 20 GWB). Pressuring Bundesliga Clubs not to accept advertisement requests from private operators would therefore clearly constitute a legal infringement.
An infringement should be on hand according to European Principles as well. According to Art. 86 paragraph 1 EC-Treaty, Competition rules apply to public businesses as well. ODDSET and the DLTB have to be considered as such public businesses, since they are granted “special or exclusive rights.” Like the Post or a former telecommunications company it could be considered as a company offering “services of general economic interest” (Art. 86 paragraph 2 EC-Treaty). The states’ intention to define the state gambling offer as public task (and not only as mere economic activity) speaks in favour of this interpretation.
According to Art. 81 EC-Treaty, all agreements “causing prevention, restriction or distortion of competition within the common market” shall be prohibited. A limitation is existent, if the freedom of action of one or several parties involved (in this case the possibility of gathering advertisement space in the soccer business) is prejudiced. The possibility of Competition as such is to be protected (in this case also by foreign bookmakers, as possible advertisement partners).
Legal consequence of such an infringement is (compulsory and automatic) nullity of the corresponding agreement. Moreover Art. 81 EC-Treaty is to be considered as a protective provision in terms of Art. 823 paragraph 2 German Civil Code. Such an agreement can therefore entail actions for damages in tort. In addition, prejudiced bookmakers may claim nonperformance against the DTLB.
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3. Administrative Court of Osnabrück: German Criminal Provisions are neither applicable to operators nor to brokers of sporting bets
After the “ghost of Gambelli” showed up in Badem-Württemberg the last time (we reported on both decisions of the Administrative Court of Karlsruhe in edition No. 10 of our newsletter), the requirements set forth by the “Gambelli-decision” were now implemented by a state of the northern part of the republic.
The administrative court of Osnabrück (case-no. 2 B 60 / 03) in its decision of May 27th 2004 extensively expressed itself on the applicability of Art. 284 German Criminal Code to private operators and brokers of sporting bets:
“For the applicant and its contractual partner (…) the prohibition of operating sporting bets without a public license provided for in both provisions (Art. 284 German Criminal Code and Art. 16 Lower Saxony Lottery Act) and the resulting indirect restriction of its economic activity in the Federal Republic of Germany as a Member State of the EU most probably represent an interference with the freedom to provide services and the freedom of establishment granted by Art. 49 to 55i and 43 to 48 respectively (…) ECJ, decision of November 6th 2003 – C-243/02 – “Gambelli”, GewA 2004, page 30 and following; ECJ-decision of October 21st 1999 – C 67/98 – “Zenatti”, GewA 2000, page 21 and following.
(…) though the (…) interference with the applicant’s contractua partner’s freedom to render services and the freedom of establishment may be justified for reasons of public policy, public security or public health, according to Art. 46 paragraph 1 of the EC-Treaty or for reasons of overriding reasons relating to the public interest (compare ECJ-decision of October 21st 1999, No. 31).
Such conditions presumably do not apply here (…) There are drastic doubts that the conditions should apply here, or, in other words, that the legal monopoly attributed to the state and the confinement of conveying sporting bets to state licensed locations is really intended to protect potential customers from financial exploitation by the event as well as from the economic dangers resulting from excessive participation in sporting bets and that the generated revenues can be regarded as mere accessory effect.
This again suggest grounds that the defendant may not invoke the blanket clause of Art. 11 NGefAG in connection with Art. 284 German Criminal Code and Art. 16 Lottery Act of Lower Saxony successfully, since the prosecution of the applicant as broker of sporting bets would constitute an equal interference with the named freedoms of the company D.”
It is important to note, that the Administrative Court characterizes the so far prevailing upper court jurisprudence as not being up-to-date anymore. Considering the latest overall judgements, the judgement rendered by the administrative Court of Appeals of Lower Saxony in 2003 should be obsolete, reasons the Administrative Court of Osnabrück.”
One can only hope, that the Administrative Court of Appeal of Lower Saxony judges the recent decisions the same way.
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© 2004; Publishing is desired with publication of the source including contact information.
A copy or publication information is desired |
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