Volume: 16 Issue: 11
The German Federal Administrative Court ruled on 26 October 2017 that the ban on online casino, scratchcard and poker games under Germany’s Interstate Treaty on Gambling 2012 (‘Interstate Treaty’) is compliant with constitutional and EU law, according to the Court’s press release; the full legal grounds of the judgment have yet to be released.
The ruling is the latest decision in a case involving enforcement action taken by the local regulator in the state of Baden-Wuerttemberg, which issued prohibition orders to two unnamed operators - based in Gibraltar and Malta respectively - alleging inter alia that they were offering unauthorised gambling, and additionally in the case of one operator, of offering online sports betting without having applied for a licence during the 2012 process.
“While German courts have shown a clear tendency to rubber-stamp restrictions in the German regulation of gambling under constitutional law, the Court of Justice of the EU (‘CJEU’) has been more critical of restrictions to online gambling,” said Dr Matthias Spitz, Partner at Melchers. “In recent decisions, e.g. in Ince, Unibet International and Online Games Handels GmbH, the CJEU put the onus on EU Member States to implement reasonable licensing systems, or to provide evidence justifying the restrictions to online gambling. It seems questionable whether the Federal Administrative Court has sufficiently taken this EU jurisprudence into account.”
“The Court seems to approve of the interdiction of operators of online sports betting that did not originally apply in the licensing process in 2012. That was probably the ‘icing on the cake’ for staunch anti-gambling regulators and the state lottery companies,” adds Spitz.
As a result of the ruling, unlicensed online gambling operators may face more regulatory attention, with Spitz noting that “The ruling is very likely to be seen as an invite to regulators to increase enforcement efforts.” The ruling has led meanwhile to further calls from commentators for reform of the Interstate Treaty, though the changes to the Interstate Treaty that specifically cater to sports betting licensing are currently postponed until February 2018, with the state of Schleswig-Holstein refusing to ratify such amendments at all. “Proponents of the restrictive regime that is currently in place will find it easier to argue that everything is ‘in order’ with the regulatory approach of the Interstate Treaty [following this Court decision],” said Spitz. “Still, we have not yet seen an immediate political impact in regard to the pending ratification process for the amendments to the Interstate Treaty, which aim at stabilising the current regime.”
The operators involved in these proceedings are now very likely to evaluate whether to file an appeal to Germany’s Federal Constitutional Court as a next legal step in the case, although Spitz believes that “such a complaint is most likely to be rejected, which again would further be perceived as corroborating the judgment of the Federal Administrative Court.”