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German Gaming Law updated No. 16 |
Newsletter on Betting and Gambling Law
Nr.16 of October 29th 2004
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Summary:
1. Editorial
2. Hessian Administrative Court of Appeal revises its decision of February 2004 : A setback for the liberalisation of the German gambling market ?
3. Oddset not offered “only by Lotto” – The Federal Court of Justice stops misleading Advertisements by the state operators.
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1. Editorial
Dear Reader,
The jurisdiction regarding gaming law in the autumn of 2004 turned out as usual to be – a steady see-saw. The district court of Munich I in its decision of September 21st 2004 (case-no: 33 O 10180/03) regarding unfair competition, ruled that the ECJ’s Gabmbelli-decision had not changed anything, and therefore the licensing limitations to state operators were still justified. As a result the district court of Munich is in conflict with the Federal Constitutional Court’s opinion which has attributed a “change in circumstances” to the ECJ’s “Gambelli-decision” (also see our last newsletter Nr. 15 on www.wettrecht.de).
The Administrative Court of Schleswig-Holstein reached the opposite conclusion (case-no. 12 B 60/04), that is that a betting shop may well procure sporting bets to an English betting operator:
“In the view of the real behaviour of the state monopolised operators, (…) the interests pursued by the state treaty have to loose precedence. In this context the court of Schleswig-Holstein bases its Argument on the Hessian Administrative Court of Appeals’ decision of February (also see our Newsletter Nr. 7 on www. wettrecht.de).
The press release of the Hessian Administrative Court of Appeals sent on the news-tickers yesterday, has however caused some concern amongst private gaming operators.
“Interdicting procuring Oddset-sporting bets by private operators is legal – Hessian Administrative Court of Appeal revises its Jurisdiction”
says the headline of the Administrative Court of Appeals’ press information. Did the Administrative Court of Appeals really succumb to the political pressure and revise its legal opinion as to the (il)legality of the state monopoly? May the private gaming operators not invoke the decisive decision of the Hessian Administrative Court of Appeals in future procedures anymore ?
In the following report we comment on the Administrative Court of Appeals’ decision and point up its practical significance.
The Staff
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2. Hessian Administrative Court of Appeal revises its decision of February 2004 : A setback for the liberalisation of the German gambling market ?
“Interdicting procuring Oddset-sporting bets by private operators is legal – Hessian Administrative Court of Appeal revises its Jurisdiction”- “What is the background of this information?
To come to the point: The press department of the Administrative Court of Appeals could surely have chosen the headline of this very extensive decision more carefully. The “Rhein-Main” newspaper has chosen a clearer title: “No Community Law on Channel Island”. The Isle of Man, whereon the bookmaker was established in the case, unlike Jersey, does not belong to the Channel Islands, but to the “Irish Sea”. Nonetheless the decision referred to the question of applicability of Community Law to operators from the isle of man.
The Administrative Court of Appeals of Kassel has revised and cancelled its decision of February 9th 2004 (the decision of the Administrative Court of Kassel of June 24th 2004 was revised) since the Administrative Court of Appeals of Kassel in its decision of February mistakenly assumed that the Isle of Man belonged to the EU . The Administrative Court of Appeals did not decide that the procurement of sports bets could generally be forbidden by the authorities.
In fact the Isle of Man is “only” directly responsible to the British Crown, and therefore a dependent territory with Home Rule (“crown dependency”): The Island therefore is neither a part of the UK of Great Britain and Northern Ireland (which is nonetheless competent for defence and foreign policy), nor a Crown colony (like Gibraltar) and as such, not a member of the European Union. According to Art. 299 VI c EC-Treaty parts of the Community Law are applicable to the Islands in the Irish Sea (e.g. the tariff union and therefore the free movement of goods. The right to a free offer of their services and the free choice of the place of establishment within the Union granted to its citizens and corporation by Community Law, is indeed not applicable to the Isle of Man.
The Administrative Court of Appeals points out the following in the decisive part of its decision:
“The Administrative Court has – on the basis if the applicant’s contract in the present amendment procedure - rightly found that the provisions of the EC-Treaty on the freedom to provide services and the freedom of establishment are not applicable to agreements reached in Art. 2 sentence 2 and Art. 6 of the protocol Nr. 3 of the isle of man where the company M. is established. (…) Granting the right to the freedom of establishment, and the right to the freedom to provide services to companies of the named type is therefore dependent on whether, as a matter of principle, a physical person holding the citizenship of the member state in which the company is established may invoke these rights. According to the specials January 22nd 1972 this is not the case for citizens of the Isle of Man.”
In the following, the Administrative Court of Appeals of Hessia comments on the problem on whether sporting bets as a matter of principle have to be classified as games of chance or games of skill (what is of crucial importance to the applicability of Art. 284 German Penal Code). In conclusion the Administrative Court of Appeals follows the prevailing opinion classifying sporting bets as games of chance. The arguments of the court, that there were not enough scientific conclusions as to the relation between elements of chance and elements of skill regarding Oddset-games are however not convincing in this context. If the Administrative Court of Appeals comes to the conclusion that a final classification could only be reached on the basis of experiences with Odsset-sporting bets for lack of adequate scientific evidence, in my opinion it should have decided differently. The Administrative Court of Appeals had done well making a difference between the sporting bets offered at this time, examining whether the element of chance or the element of skill was more important for each particular sporting bet.
In assume that sporting bets will be offered that are merely to be qualified as games of chance. Rightly the Administrative Court of Appeals mentions “exotic sporting events like the results of the football league of Slovakia, Japan or the USA or the results of the 3rd Scottish division (although are certainly experts to be found for this game, too). The Administrative Court of Appeals, on the other hand, should have reached the conclusion that there are necessarily sporting bets which have to be qualified as games of skill, since they are dependent on the amount of information and the experience of the betting customer. This is especially the case for the outcome of Bundesliga games and those of other important European soccer leagues.
The Administrative Court of Appeals also addresses the element of “providing facilities” in terms of Art. 284 I StGB insofar as it finds this pre-condition to already be fulfilled if the betting office makes available tables, professional journals, televisions, computers or similar items to make available information on the sporting events. From a penal law point of view, this seems to be a constitutionally problematic pre-displacement of liability to prosecution. Professional Journals are meant to provide the betting customer with information that does not keep the bet from being a pure game of chance.
As a result one can summarize: In fact the present decision does not concern the question of whether the procurement of sporting bets to an operation licensed in the EU is legal or not. The state monopoly on gaming was not again examined on its conformity with Community- and Constitutional law. In fact the court only found that procuring sporting bets to betting operators outside the EU was illegal since these operators did not hold a public license in terms of Art. 284 German Penal Code. This decision therefore does not help neither the advocates of liberalisation nor the “monopolists”.
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3. Oddset not offered “only by Lotto” – The Federal Court of Justice stops misleading Advertisements by the state operators.
Commented on by Martin Arendts, M.B.L.-HSG – attorney-at-law
The Federal Court of Justice has found the advertisement slogan used by the Free State of Bavaria (the State Lottery Administration)
“Oddset, the sporting bet with fixed quota, only by Lotto”
to constitute a misleading unique position advertisement and forbid it (decision of October 28th 2004 – I ZR 59/02). The Federal Court of Justice thereby restored the interdiction called for by the first instance court, the District Court of Munich I.
State operators must not boast about their unique position towards private operators. A consumer not knowing what to expect behind the term “Oddset” due to the advertisement slogan, assumes that state lottery operators are the only ones to offer such sporting bets (which due to numerous private operators of sporting bets at fixed quotas is not the case). Therefore the advertisement was unfounded and misleading. The attacked advertisement also informed about the “Oddset” bet being a bet at fixed quotas. It conveyed the impression to a consumer that this kind of sporting bet was uniquely offered by state-owned or state-proxy companies belonging to the Lottoblock.
A deviant understanding of the term “Oddset” meaning that it constituted a mere (phantasy) name or a brand used by the Lottery-Administration, is – in the entire context of the attacked advertisement - out of the question, even and especially for those customers who are not yet informed and therefore do not have a concrete idea about it.
The Federal Court of Justice’s decision is to be considered as a slap in the face of the state Lottery Block. In the future this may not advertise being the only one offering sporting bets at fixed quotas anymore. This decision offers an interesting starting-point for private operators to confine the state operators’ high-handedness, and their scruffy really inaccurate advertisement, with instruments of competition law.
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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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