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EU moves toward ruling on German gambling law

January 16, 2008 2008

published on the International Herald Tribune by Eric Pfanner
Tuesday, January 15, 2008

LONDON: The European Commission plans to decide within weeks whether to step up legal action against Germany over that country’s recent move to ban online gambling, a spokesman for the commission in Brussels said Tuesday.

The German law came into effect on Jan. 1, banning Web-based betting, with the exception of wagers on horseracing, and restricting other forms of gambling to state-run operators. The law sets Germany apart from other European Union countries, some of which have been moving to open state-run betting monopolies to private competitors, and moves it closer to the United States, where the Bush administration has tried to stamp out online gambling.

The European Gaming & Betting Association, a trade organization based in Brussels, on Tuesday urged the commission to take action against the German legislation, saying it violated EU rules.

“The prohibitions in the law are very strict and drastic,” said Sigrid Ligné, secretary general of the association. “We have a strong feeling that it is incompatible with EU law and that the commission will act on our complaint.”

Oliver Drewes, a spokesman for the EU internal markets commissioner, Charlie McCreevy, said Tuesday that the commission would decide, perhaps by the end of the month, whether to take such action.

The commission already warned Germany last year that it thought the law ran counter to EU regulations. The next step, Drewes said, would be a “reasoned opinion” detailing the commission’s objections; Germany would then have two months to respond. Then the commission could take the matter to the European Court of Justice.

Under EU law, governments are allowed to legislate against gambling if, for instance, they are concerned about addiction. But McCreevy has objected to what the commission sees as efforts to protect lucrative state-owned gambling providers from private-sector competition.

The German law seeks to deal with this objection by banning online betting shops, regardless of whether they are run by public or private-sector operators. But the gambling association argues that this is just another form of protectionism, because the government-owned betting shops retain their offline monopoly and would still be allowed to take online bets on horse races.

The commission, in a letter to the German government last year, appears to have sided with the private-sector gambling companies, many of which operate German-facing sites from outside that country.

“The commission does not believe this piece of legislation is in line with community law,” Drewes said.

The commission has started legal proceedings against 10 European countries, including Germany, over their policies on online gambling. Several, including Italy and France, have recently moved to open the gambling sector to private competition, following the lead of Britain, which has already passed legislation allowing online gambling companies to set up shop there.

In France, which had arrested several executives of foreign online gambling companies operating in competition with the state gambling monopoly, the government of President Nicolas Sarkozy last autumn met with McCreevy to discuss the possibility of legalizing and regulating private-sector operators.

Though action by the commission could take years to work its way through the European court system, there are signs that the commission’s stance is having an effect on enforcement of the new German law. On Jan. 7, a court in Stuttgart, for example, decided to delay an order from the local authorities to shut down a betting operator who transferred wagers outside the country, saying the legal situation was unclear. Thousands of other cases related to gambling are pending in German courts.

“We had the chaos before and that will continue,” said Wulf Hambach, a lawyer in Munich who works with online gambling companies.

Wulf Hambach

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