German hassles


RIP Brian
Feb 22, 2001

December 13 meeting of German provincial chiefs will be watched carefully

This week's scheduled meeting of the 16 provincial chiefs of Germany to discuss German gambling law will be a political gathering that could have far-reaching effects in terms of European Commission action and the attitude of local businesses.

The politicians are to debate a possible new law to uphold the state monopoly on taking bets and exclude both German and other companies from EU nations from providing gambling services (see previous InfoPowa bulletins).

The Bloomberg business news service reports that some German companies may move abroad if private operators are banned from offering services to German gamblers.

Naming the German lottery agent Fluxx AG and its competitor Tipp24 AG, Bloomberg revealed that both may abandon the home market if the country's 16 states pass a new law to uphold a monopoly on taking bets and effectively ban private operators.

"Wherever we can be active here in Germany, we'll stick around,'' Stefan Haenel, chief financial officer of Fluxx AG, told Bloomberg News in a television interview. "But we're also going to use opportunities outside Germany. We owe shareholders not to give up in Germany without a fight.''

Fluxx said last month it will post a net loss of as much as Euro 3.5 million ($4.6 million) this year due to mounting legal and lobbying costs. The Altenholz, Germany-based company will spend as much as Euro 1 million more than planned to support a campaign by the Federation of Lottery Agents against plans to block private betting firms.

Competitor Tipp24 last month said it's preparing to enter at least one other European market to lessen its dependence on Germany. The company said a proposal by German state ministers to ban private betting operators from the country may "severely restrict or even prevent'' it from doing business.

In 2004 Germany's federal government approved a law that prohibits betting companies with "private or commercial goals'' unless they seek permission from the state and take measures to help limit gambling addiction, Bloombergs reports.

Now state ministers are reconvening to vote on prohibiting all private betting firms after the Federal Constitutional Court on March 28 ruled that the states can only uphold their monopoly if they boost efforts to fight gambling addiction. They also have to rein in advertising for betting, the court said.

"This is going to mean a big cut in revenue for the individual states,'' Haenel said. ``They may even have to ban jackpots'' to show they're serious about fighting addiction, he said.

Germans spend about Euro 27 billion on gambling every year, of which Euro 8 billion is spent on lottery tickets, according to Fluxx's Web site. Fluxx and Tipp24 make a profit by charging state-owned lotteries commission for selling tickets to consumers on the Internet.

Germany's states may also extend the monopoly to include a ban of private sports betting companies. Four German states have already banned Bwin Interactive Entertainment AG, an Austrian Internet sports betting firm, and other private companies.

Critics say Germany's private sports betting market already does more to fight gambling addiction than the state-owned lotteries. Sports betting outlets in the country have blacked-out windows and deny entry to minors, while lottery tickets are sold at kiosks and newsstands.

Charlie McCreevy, the EU commissioner for internal markets and services, has said the German state monopoly on betting breaches European law. The country's government needs to pass laws that apply to everyone equally, both state-run gambling operations as well as private companies, McCreevy told German magazine Der Spiegel in an interview earlier this year.

The decision of the 16 state heads this week will not be the final word of the issue - any new law still has to be approved by the German parliament.
Update - ban failed!


Unanimous decision proved elusive for 16 state premiers

Premiers from the 16 German states (provinces) were unable to reach unanimous agreement yesterday (Wednesday) on proposed laws to protect state gambling monopolies by banning online gambling in the country.

The heads of the individual German states met to discuss the ban, which would have to be approved by the federal parliament. Three German states - Bavaria, Saxony and Hesse - have already introduced state laws. Most of the German states run lucrative monopolistic lotteries and are keen to protect these revenues, according to the German newspaper Handelsblatt.

If Germany were to deny access to its gamblers on protectionism grounds, it could find itself at odds with the European Commission, which is fighting to liberalise the European gambling market, but faces opposition from local and national governments who want to preserve state lottery and gambling monopolies.

The three south German states that have outlawed online gambling were doing so because they decided that an Austrian public company, Bwin Interactive, infringed their monopolistic law by not acting with their authority.

Bwin welcomed the postponement. This decision is a very sensible one, said Steffen Pfennigwerth, owner of Bwin in Germany, a 50 percent joint venture with Austria's Bwin Interactive. The states will now have sufficient time to develop a legal framework for the German betting market in accordance with European law and the constitution," he said.

Bwin has been active in the campaign to liberalise European gambling, carrying out education initiatives and laying a complaint against France's gaming laws, alleging that these conflict with the open competition principles of the EC Treaty. Should the European Court of Justice find that to be the case the ruling would likely apply to all countries, including Germany, should it change its gambling laws.

German press reports indicate that the state of Schleswig-Holstein was chiefly responsible for the defeat of the banning move at yesterday's meeting. To carry the motion, a unanimous vote was needed to ratify the proposed legislation, but it fell short when the leader of the state of Schleswig-Holstein declined to sign-off on the law. The other 15 German states were apparently agreeable "in principle" to the proposal.

Whilst no firm statement is yet available, media reports are suggesting that the 15 states that agree on the proposed law could attempt to go ahead with it anyway. If this happens there could be further ructions, as politicians from Schleswig-Holstein have reportedly said that they would take the matter to the German Federal Court.

And if the 15 states pressed ahead, it could also raise questions of legitimacy of state licences to operate gaming sites throughout Germany.

The German states will be cautious about the reaction of the European Commission to such a protectionist initiative, too. The leader of the state of Lower Saxony has already been quoted as saying that any state treaty would be presented to the European Commission to examine its compliance with EU obligations.

In summary, the attempt at a unanimous agreement on banning legislation, which would have placed the issue before the federal parliament some time next year, has failed and the status quo remains unchanged.

Users who are viewing this thread

Click here for Red Cherry Casino

Meister Ratings