GERMAN COURT SETBACK FOR BWIN

21 March 2008

Online gaming group loses interim ruling in German ban case


The Vienna listed online gambling giant Bwin appears to have lost the first round in its challenge against German Internet gambling bans, failing in its bid to have Germany's Federal Court of Justice overturn a ruling barring it from offering sport bets and casino games in the country. Shares in the company fell by nearly eight percent on receipt of the news this week.

In September 2004, Westdeutsche Lotterie GmbH & Co sought a judgement against Bwin International Ltd. to prevent the company from organizing, brokering or advertising sports betting, casino and lottery games in Germany.

In February 2006 the Regional Court of Cologne ruled in favour of Westlotto at the first instance.

In September 2007, the Higher Regional Court of Cologne confirmed the judgement of the court of first instance, declaring it to be enforceable. Bwin lodged an appeal with the Federal Court of Justice against the judgement by the Higher Regional Court of Cologne.

Although the Federal Court of Justice is not expected to pass a final ruling on the merits for the next 12 to 18 months, Westlotto instituted enforcement proceedings against Bwin in November 2007.

Bwin filed a motion to the Federal Court of Justice requesting the court to suspend enforcement proceedings until the court has passed a final ruling on the merits.

However, in the latest decision served on 14 March 2008, the Federal Court of Justice rejected Bwin's motion on procedural grounds. Until a final ruling by the Federal Court of Justice on the merits, Westlotto may now apply for further enforcement orders.

If Bwin eventually fails to win the appeal proceedings before the Federal Court of Justice, or if a political solution is not found in the interim, any penalties that may be imposed as a result of enforcement orders could have a material adverse effect on the Company's results and financial position, it disclosed this week.

On the other hand, should the Federal Court of Justice decide in favour of Bwin, the company says it reserves the right to claim for damages.

In view of the latest legal developments, Bwin and its legal advisors say they are confident that they will win the case against Westlotto.

The European Commission is also of the opinion that the current legal situation in Germany is incompatible with primary EU legislation, and has therefore instituted further infringement proceedings against Germany. And there are several preliminary rulings originating from German courts still pending judgement by the European Court of Justice.

Bwin e.K., which offers Bwin products on Bwin.de under a licence issued by the former German Democratic Republic, is not a party to these proceedings before the Federal Court of Justice.

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