GamblingCompliance: Germany’s Sports-Betting Plans Progress Despite EC Concerns

By Elisa Grabbe, published at www.gamblingcompliance.com

The European Commission has blasted Germany’s new sports-betting licensing plans for potentially infringing EU law and limiting competition, but Germany is nevertheless expected to ink the changes in just a few days.

With draft amendments having completed their standstill period at the commission last Friday, the prime ministers of the German states plan to sign the new Interstate Treaty on Gambling on Thursday this week.

The states have decided to make just minimal amendments to the treaty, which would allow for an unlimited number of sports-betting licences but would uphold the ban on online casino games.

In its comments seen by GamblingCompliance, the commission states: “It appears that the German authorities … do not offer a workable solution, in particular for the significantly growing online casino market and despite widespread concerns regarding the insufficient protection of players and minors on an unregulated online casino market.”

Luka Andric, managing director of the German Sports Betting Association (DSWV), told GamblingCompliance that the DSWV welcomed the commission’s criticism.

“While the draft law may pave the way for a sports-betting licensing regime in 2018, it remains problematic from a legal and a practical perspective. The entire regulatory regime continues to be riddled with incoherencies, discriminatory and anti-competitive measures,” he said.

Under the terms of the draft changes, the 35 operators that fulfilled minimum requirements in the 2012 sports-betting tender could now receive preliminary sports-betting licences, which would be valid for one year.

According to the commission, this would lead to a competitive advantage of the preliminary licensees over operators that did not participate in the 2012 tender.

“They will have to enter a market with existing regulated offers by up to 35 operators already [present] for up to one year, and where the competitive situation for new operators differs significantly in comparison to those who hold a preliminary licence,” it said.

As a result, the commission has voiced concerns that the free movement of sports-betting services could be infringed.

Wulf Hambach, gambling law expert and founding partner at Hambach & Hambach law firm, told GamblingCompliance: “The analysis of the EU Commission creates a deja-vu effect: almost ten years ago, the commission also heavily criticised the first Interstate Treaty on Gambling, resulting in the Carmen Media decision concerning the sports-betting monopoly which infringes EU law.

“It is only a matter of time until the next German court will refer a case regarding the unlawful poker and casino monopoly to the EU courts.”

The state of Hesse has successfully negotiated a right to leave the revised Interstate Treaty at the end of 2019 and put in place its own legislation, similar to Schleswig-Holstein which had its own laws allowing for online casino licences between 2012 and 2013.

Hesse can use this option if the other states do not agree to put in place a new central gambling authority and make changes to “the matter of internet gambling”, which is understood to refer to online casino games.

Wolfgang Kubicki from Germany’s liberal FDP and Christian Democrat Hans-Jörn Arp, who were behind the former Schleswig-Holstein legislation, are now calling on their prime minister to refuse to sign the new treaty on behalf of Schleswig-Holstein this Thursday. As an alternative, they argue Schleswig-Holstein should also insist on an exit route from the treaty in 2019.

Still, the commission has at this stage only submitted comments on the draft, disappointing many stakeholders who expected a stronger detailed opinion that would have sent a tougher signal to the German states.

Furthermore, EU infringement proceedings are still stalled. According to a joint letter by the DSWV and the German Online Casino Association addressed to the commission: “It is clear that the German states (with the exception of Hesse) are not truly committed to reform. On the contrary, it appears that the political decision-makers are playing for time and try to delay the opening of infringement proceedings as much as possible.”

As a consequence, and with the date set for the signing of the new treaty, hopes for a more comprehensive reregulation of the law are dwindling.

Jörg Hofmann, senior partner at Melchers law firm, said: “The commission has accurately described the many weaknesses of the proposed new regulation. The failure of the inadequately modified Interstate Treaty is predestined. However, I am fearful that the responsible bodies in Germany will not take these concerns into account and that any functioning and expedient regulation will be a long time coming.”

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