GERMAN STATE TREATY ON GAMING SLAMMED AGAIN BY E.U.

8 June 2007

Serious reservations expressed about treaty's compatibility with European Union law

Federal German states considering a proposed German treaty to protect state gaming interests will have pause for thought this week following another strongly worded European Commission opinion that the proposal may not be compatible with European Union law.

This is the second statement of position from the Commission, which has serious reservations about the German moves.

The Commission has already investigated a German ban on holding and arranging sports bets and lotteries over the internet, releasing its first detailed statement of position in March 2007. This describing the proposal as disproportionate, and in the latest communique EU commissioners examine the draft treaty in detail.

Key elements in the treaty have again been singled out as disproportionate and incompatible with the EC Treaty, including restrictions on the free movement of capital, advertising restrictions, limitation on sales outlets and restriction of sales channels and restraints of competition.

The Germans have two months to argue in detail on the points raised by the EC, and if the commissioners are not happy with their argument they may include the german State Treaty in infringement proceedings already in progress against other EU member states accused of non-compliance with EU law.

"The EU has recognised that certain federal states are trying to exploit their legislative power in the face of super ordinate law, not – as is erroneously and repeatedly claimed – to protect people against gambling addiction, but to eliminate the competition and corner the economic advantages of monopolising the market. They won't succeed," said Rainer Jacken, Management Board spokesman of Fluxx AG, the German lottery specialist and online bookmaker.

"We await with interest to see how those responsible will now react to this second, more outspoken warning from Brussels. To plead ignorance, as they did in their reply to the EU Commission's first statement of position, will obviously now be completely out of the question, because the EU Commission's renewed directive to subject the draft State Treaty to a thorough review could not have been clearer.

"We appeal to all [German] Prime Ministers finally to take control of the issue and not be ordered about by their own officials and directors of lotteries."

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