German I-gaming: one country, two laws, many questions
It hardly seemed possible but the decisions taken in Germany on 24 January 2013 have contrived to make the internet gambling situation in country even more unfathomable than they were previously.
Back in May 2012 GBGC covered the state elections in Schleswig-Holstein. These elections occurred just days after the maverick state had issued its first internet gambling licences. The governing coalition that had issued the licences lost the election to be replaced by a coalition that had indicated it wished to repeal the state’s gambling act of 2011.
But since the elections further internet gambling licences have been issued in Schleswig-Holstein.
As of January 2013 there are 25 sports betting licences (including the state lottery and 2 awarded to Admiral Sportwetten) and 20 online casino licences. These have been issued to the likes of Betfair, 888, Victor Chandler, Ladbrokes, Bet365, Bwin, and PokerStars. In theory the licences are valid for six years.
On 24 January 2013, however, the state parliament voted in favour of rejoining the State Gaming Treaty which operates across the individual states.
This decision poses some regulatory complications:
1. The Schleswig-Holstein gambling act will be repealed. There will be no further licences awarded but what is the legal status of the licences already issued in the state?
2. Will Schleswig-Holstein licences be valid to take business from other German states?
3. The very number of licences issued by Schleswig-Holstein is a problem. The State Gaming Treaty makes provision for 20 internet gambling licences. Schleswig-Holstein has now joined up to be part of that Treaty but has already issued 45 licences (25 betting, 20 gaming). How can this situation be resolved under the regulation?
4. The State Treaty also prohibits online gaming, yet companies in Schleswig-Holstein have been awarded licences for online casinos
In addition, the German Federal Court referred a number of questions about the gambling regulatory position in Germany to the European Court of Justice (ECJ) for clarification, particularly around the important principle of consistency.
The first question requires the ECJ to decide whether or not case against Schleswig-Holstein fails because the possibility of different regulations in the various Federal States is a direct consequence of the Federal Constitution.
1. Is there an inconsistent restriction of the gaming sector if:
– one state in a federal system allows gaming practices that are illegal under a Federal statute that is law in the other Federal States and as a consequence the legitimate aims of the restriction on gaming for the common good in these states could be adversely affected?;
2. Does the answer to the first question depend on the extent to which the actions of the deviant legal position in the one State nullifies or adversely affects the aims of the other states in restricting gaming for the common good?
If the answer to the first question is yes:
3. Is the inconsistency set aside, if the deviant State accepts the same restrictions that apply to the other Federal States, even if the more lenient controls on gaming mean the concessions already awarded will continue in force for a transition period of several years because cancelling these concessions could involve the State in financial penalties that would be hard to bear?
4. Does the answer to the third question depend on whether, during the transition period, the aims of the other Federal States in restricting gaming are nullified or significantly prejudiced?
Global Betting and Gaming Consultants’ Director Lorien Pilling commented: “Back in May 2012 GBGC said that e-gaming operators in Germany desperately needed some regulatory certainty. The decisions taken in January 2013 and the complex questions referred to the ECJ show that the situation has deteriorated rather than improved. Barnier’s EU action plan for internet gambling has its work cut out.