## New Developments in German Sports Wagering
Matthias Spitz, a legal expert at Melchers Law Firm, provides an update on the evolving situation surrounding sports wagering regulations in Germany.
The intricate and prolonged journey of German gambling laws took an unexpected turn in 2016. The European Court of Justice (ECJ), through its verdict on the Ince matter (C-336/14), effectively undermined Germany’s position. The court ruled in favor of gaming companies possessing EU permits, asserting that member states cannot simply penalize these entities while simultaneously neglecting to provide a practical avenue for legal operation within their jurisdictions. This decision dealt a significant blow to Germany’s long-held state control over sports betting, particularly its practice of pursuing criminal charges against businesses operating with EU licenses.
The Ince case, initiated in 2013, centered around a local wagering establishment proprietor, Sebat Ince, who faced prosecution for conducting business without a German permit. This particular case, however, revealed the shortcomings of the system Germany had implemented. The ECJ essentially exposed the contradiction of prohibiting licensed EU enterprises while failing to establish a transparent and equitable licensing framework of its own.
Despite the Interstate Treaty on Gambling, intended to establish this very system, Germany has yet to issue a single license. This ongoing situation underscores the conflict between national and EU legislation, leaving the future of German sports betting regulations unclear.
Germanys regulations on wagering have been in a constant state of change for quite some time. In 2008, the Interstate Agreement on Gaming aimed to establish a framework for granting permits for sports wagering. Nevertheless, the procedure was fraught with difficulties and essentially permitted the government to retain its exclusive control over gambling activities.
This circumstance faced legal challenges within the European Court of Justice, particularly in the Winner Wetten lawsuit of 2010 and subsequently in a case presented by Bavarian legal authorities. The European Court expressed disapproval of Germanys methodology, labeling it an “artificial licensing process” due to the excessively strict prerequisites that effectively hindered private enterprises from acquiring licenses.
Despite the Federal Administrative Court, Germanys highest judicial body, being tasked with enforcing the European Court’s judgments, it persisted in allowing regulatory bodies to obstruct operators unless they could fulfill nearly unattainable benchmarks. This resulted in a predicament where businesses, eager to function within the bounds of the law, attempted to secure provisional licenses within a system that was inherently defective.
German authorities never formally granted these permissions initially. In his October 22, 2015, opinion on the Ince matter, Advocate General Szpunar aptly characterized this strategy as “opportunistic.”
The European Court of Justice magistrates appear to concur. They contend that this method should not be employed to resolve disputes between national monopolies and EU legislation during a transitional period when regulatory changes are still pending. Essentially, when the existing regulatory structure conflicts with EU law and awaits modernization, gaming operators should not be targeted simply for continuing their operations without a permit.
Furthermore, there’s the matter of inadequate notification. The Court clarified that legislation prolonging the legal ban on internet gambling constitutes “technical regulations.” Consequently, Germany was obligated to inform the European Commission before implementing them, as per Directive 98/34. EU operators require advance notice of such alterations to adapt accordingly.
Bavarian officials, recognized for their occasional hubris, appear to have relinquished their self-declared leading position by neglecting this notification responsibility. The European Court judges countered, asserting that “non-compliance with this obligation renders these rules unenforceable against individuals in legal proceedings.”
The saga of German sports betting licenses: Is it a tale without end?
Germany’s journey to oversee online wagering on sports has been a turbulent one, to put it mildly. Their strategy involved granting a restricted quantity of permits – a mere 20 – under the pretense of a “trial clause” within their Interstate Gambling Treaty. The regional authorities contended that this would enable them to “gauge the climate” of a more liberal market.
Nevertheless, the process, initiated hastily in 2012, promptly attracted disapproval due to its opacity. European tribunals have been unambiguous: the allocation of licenses must adhere to impartial, non-prejudicial standards, disclosed beforehand. German courts, echoing this sentiment, halted the proceedings, citing a flagrant disregard for these tenets.
To add insult to injury, a German appellate court even went so far as to pronounce the entity tasked with license distribution – the gaming commission – unconstitutional! They argued it established an illicit “tertiary level” of governance, unrecognized by the German constitution.
The outcome? After all these years, not a single permit has been granted, leaving operators stranded in uncertainty, blameless for the administrative chaos.
The European Union’s highest court, in its judgment regarding the Ince matter, found that the German sports wagering licensing framework, implemented via the “trial clause,” was not in harmony with European Union regulations. This discrepancy arose because, despite efforts to establish control, a practical state control over sports betting persisted, leaving the regulatory agency incapable of effectively tackling illicit gambling activities.
Despite these evident concerns, rumor has it that the German regulatory agency sees no urgency for modification – a classic case of ignoring the obvious! Nevertheless, this recent judgment considerably reinforces the legal position of independent sports betting providers in Germany, particularly considering the present absence of a genuinely transparent and regulated marketplace.
*This assessment was furnished by Matthias Spitz, a Partner at Melchers Law Firm in Germany and an affiliate of the International Masters of Gaming Law (IMGL).*