European Court Rules German Gambling Monopolies Unlawful



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The European Union’s highest court ruled this week that Germany’s attempts to protect state-run gambling monopolies are unlawful. German regulations currently state that lotteries and sports betting are offered exclusively by state-controlled monopolies. However, the European Court of Justice said Wednesday that the rules for the German state betting monopolies were not “consistent and systemic enough” to uphold the argument that restrictions served to protect the public from gambling addiction.

“The German rules on sporting bets constitute a restriction on the freedom to provide services and the freedom of establishment,” stated the Court’s ruling. “The public monopoly of the organization of sporting bets and lotteries in Germany does not pursue the objective of combating the dangers of gambling in a consistent and systemic manner.”

In its ruling, the court said the German monopoly advertised radically to lure customers, essentially damaging the argument of the states that their monopolies limited addiction. State gambling monopolies are only permitted to operate if they meet certain guidelines, and the European Court of Justice found this particular instance to be illegal.

“In such circumstances, the preventive objective of that monopoly can no longer be pursued, so that the monopoly ceases to be justifiable,” the court said.

The result of this week’s ruling could lead to new gambling regulations in Germany that could effectively wipe out state-run gambling monopolies. But the Deutscher Lotto und Totoblock (DLTB), which operates the German Lottery, feels differently. The organization believes Germany could comply with the court’s decision by imposing tougher restrictions on automated gambling machines.

“The European court has made it clear that E.U. member states can decide whether they want a commercial model or a state-authorized model governed by the public interest,” said Erwin Horak, chairman of the DLTB.

Online gambling is still officially banned in Germany, but it produced an estimated €1 billion in annual revenue for offshore operators that take bets or provide online gaming in the country, according to marketing firm Goldmedia. The firm says that the total has been rising at an annual rate of about 30%, leading to a decline in revenue for the state-run gambling companies.

Many Europeans nations like Italy and France have already done away with betting monopolies in favor of licensed regulation. In April, the French Parliament passed a bill to legalize and regulate online poker, sports betting, and horse racing, putting an end to the state monopoly on online gambling. This allowed privately owned international websites such as PokerStars, Everest Poker, and Full Tilt Poker to offer platforms in the flourishing French market.

Meanwhile, the United States waits patiently for the next step in its own online poker regulation after the passage of HR 2267 in July. The bill received over a dozen amendments during the markup phase and now awaits its time on the House floor. Congressman Barney Frank hopes to move the bill simultaneously with its revenue companion in the Ways and Means Committee (HR 4976) later this month. Congress was on summer recess until September 10th.

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