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A damning indictment, disgrace, hammering: Disastrous verdict on the draft for the new German gambling treaty – Brussels rejects proposal submitted by the Minister Presidents

August 17, 2011 News & Reports

By Andreas Schultheis

Brussels/Kiel/Munich, July 2011 – What had to happen, happened: On eleven pages, the European Commission has torn to pieces the proposal for a new inter-state treaty on gambling (GlüStV) submitted by 15 federal states (E 15) – not including Schleswig-Holstein. Brussels criticises the E 15 draft in particular because it provides for seven time-restricted national licences from 2012 onwards, which at best constitutes a conditional opening of the sports betting market. Until today, the reason for the number of seven licences has remained a well-kept secret of the conference of Minister Presidents and their gambling advisors. Furthermore, the draft provides for a non-competitive licensing duty of 16.66 per cent of the stakes, on top of the normal value added tax.
15 of 16 federal states will therefore now have to “go into detention”, a development which hardly surprises the experts. “The warning signals were obvious and hard to ignore. All lights were on bright red”, Munich lawyer Dr. Wulf Hambach from the law firm Hambach & Hambach Rechtsanwälte http://www.timelaw.de  recalls the statements made during the last few months by industry and law experts and the sports associations. Also, the Schleswig-Holstein model, which has already been accepted by the EU, has shown the way. However, the 15 federal states knowingly hazarded a shipwreck, resorting to the arguments of combating addiction and protecting the players.

Backing the wrong horse: Stalling for time is being punished
The Handelsblatt http://www.handelsblatt.de , for instance, described the rejection from Brussels as an “EU hammering for the gambling plans” of the states, the newspaper DIE WELT http://www.welt.de , calls the verdict a “debacle”, whilst the sports magazine Kicker http://www.kicker.de  rates the rebuke to be a “red card” and writes that for years German politicians have stalled for time. The result: “The EU Commission has now reached the conclusion that the restrictions imposed by the states’ draft do not give the private providers a fair chance to work profitably. If the states intend to avoid law suits, they will have to revise their draft.” It seems that they will not have much time to do so. The revision is due by 18 August. Should this not be done in a convincing manner, the Federal Repulic of Germany may face infringement proceedings. Dieter Pawlik, lawyer in Karlsruhe and an industry insider, thinks that it did not have to come to this. In an article for the industry magazine Isa-Casinos http://www.isa-casinos.de , he criticises the states spending years negotiating, and writes that the decision is a disgrace: “It is more than embarrassing that the states’ gambling advisors, after more than ten years of dealing with the issue, have once more submitted a result which can only be called a disaster, due to incomprehensibly numerous unlawful regulations. A serious question has to be asked: How can ‘specialists’, paid from significant amounts of taxpayers’ money, produce nothing but useless concoctions, thus inflicting one embarrassment after the other upon their government and upon Germany’s reputation.”
The states will now have to face reality, as the Frankfurter Rundschau http://www.fr-online.de  demands. The paper refers to the deadlock after the detailed EU opinion as “a damning indictment” and as a denial of reality. “The inability of the states to accept existing realities during the regulation and liberalisation of the highly competitive gambling market is worse than the EU’s procedural tomfoolery”, the newspaper writes. For the revision of the E 15 draft, this, for instance, also means that millions of online poker players may no longer be excluded and criminalised. Whilst the E 15 GlüStV defines the combat of the black market as one of its objectives, this very act pushes online poker players directly into illegality.

Green party in Kiel: Schleswig-Holstein as a role model
There at least are some signs of movement among the protagonists who up to now rigorously defended the E 15 draft. Monika Heinold, spokeswoman for financial politics of the parliamentary group of Bündnis 90/Die Grünen in Schleswig-Holstein has already expressed her opinion: “It is more than embarrassing that 15 state chancelleries have once more failed to submit a proposal which complies with EU law. There is no time left. Therefore, the order of the day now is: ’back to square one’.” A solution which complies with the Constitution must now be drafted, oriented along the proposal from Schleswig-Holstein. After the “lap of honour” by the Minister Presidents, it now is fair to speculate whether the 15 states will now catch up with the model student from the North, or whether in autumn Schleswig-Holstein will be the only state with a gambling act which is competitive on the international level and complies with EU law.

CDU and FDP in the parliament in Kiel, whose own draft for an inter-state gambling treaty provides for a controlled opening of the market, advertising possibilities and online sales going along with a high level of player protection, also stress that the matter is urgent. “The 15 Minister Presidents have backed the completely wrong horse. Even though the EU-law framework conditions have been known for years, they tried to prevent an opening and regulation of online gambling with implausible arguments”, Wolfgang Kubicki, head of the FDP parliamentary party in Kiel, comments, and Hans-Jörn Arp, vice chairman of the CDU parliamentary party, anticipates the further proceedings with a great deal of scepticism. “The failed course of action by the other 15 states may now even lead to the result that the monopoly for the organisation of lotteries in Germany will no longer exist from 01 January 2012 onwards. Our entire gambling industry is threatening to fall to pieces.” Even now, there are signs that lotteries from other European countries, with their substantial jackpots, will push into the German market. The same applies to betting operators.

Dr. Wulf Hambach and his colleague Maximilian Riege also doubt that the 15 states will be successful in submitting a draft which complies with EU law within the next few weeks, and in implementing such draft by the end of the year. The new inter-state treaty will therefore “probably not be passed by the state parliaments before the present regulation expires. However, this would mean that the affected states would no longer have a valid regulation of gambling from 01 January 2012 onwards”, they write in Legal Tribune Online http://www.lto.de . In this case, they see Schleswig-Holstein as the winner. Here, “all operators interested in providing legal gambling offers can apply for a licence in the North of the Republic.” In April, leading European betting providers such as Pokerstars already publicly expressed their intention to do so.

Source: TIME Law News 03 | 2011


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