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27th October, 2010

Germany‘s Gambling Treaty Loses Four More Backers

Extract from GamblingCompliance : Daniel Macadam

Opposition to the current Interstate Gambling Treaty in Germany is mounting, with as many as six regional governments now suggesting that sports betting should be liberalised.

The regions‘ prime ministers indicated they were in favour of overturning the current state monopoly on sports betting in a meeting last week between the heads of all 16 German regions, according to local press.
Germany‘s northernmost state Schleswig-Holstein has been pushing harder for the Interstate Treaty and its sports betting monopoly to be scrapped since last month‘s European Court of Justice rulings, but so far only Lower Saxony has publicly supported them.

Saxony, Hesse, Bavaria and Hamburg have now joined them, making it highly unlikely that the Interstate Treaty will remain in its current form when it expires at the end of next year.
The regional gambling legislation needs to have signatures from at least 13 out of the 16 German regions to pass back into law.

Claus Hambach, partner and gaming specialist at Munich-based Hambach and Hambach, told GamblingCompliance that the support from four more states at last week‘s meeting was "very good news" for private operators.
He was also confident that the regions would be open to throwing out the treaty‘s current ban on internet gambling.
It is unclear, though, whether the regional heads specifically discussed online gambling last week, and whether they looked at Schleswig-Holstein‘s proposed gambling model.

Schleswig-Holstein, which signalled its opposition to the Interstate Treaty last year, is fine tuning a new version of the legislation that would amend the current state lotteries, open sports betting and end the prohibitions on all online gambling except for horserace betting.

Martin Arendts, at Arendts Anwalte law firm, agreed that last week‘s meeting showed gambling reforms were gaining momentum in Germany, but argued that the main issue for the German states was lotteries and not sports betting.
"What is really important for the regions are the lottery monopolies, which bring in millions of Euros, and it is unlikely that they are going to give them up", Arendts told GamblingCompliance.

The regional prime ministers discussed Germany‘s gambling legislation on the second day of their annual meeting last week.
The future of the Interstate Treaty has shot up the political priority list since the European Court of Justice found last month that key aspects were incompatible with EU law.

Schleswig-Holstein started parliamentary discussions about its new gambling legislation, while Lower Saxony‘s CDU-FDP coalition also confirmed their conviction that the current law was no longer possible.
At the same time, though, other states have dug in deeper for monopolistic control over lotteries and sports betting, especially those governments run by the Social Democratic Party.

Although six regions were positive about penning a more liberal Interstate Treaty, local press reported that the SDP-led states were more in favour of upholding its strict monopolistic control.
"It is still not clear exactly what the outcome will be," Christoph Enaux, a regulation specialist and associate at Olswang‘s Berlin office, said.
There will be further meetings over the gambling legislation, this time between the relevant departmental ministers, over the next few months, but a new Interstate Treaty looks unlikely before the end of next year.

In the meantime, plenty of gaming authorities are still fighting online operators in the courts, Hambach said, with thousands of legal proceedings piling up against the private companies.
All eyes are now turning to a case going before Germany‘s highest administrative court on November 24, which will decide how the ECJ rulings should be applied in Germany.

Rahela Welp, head of the gambling regulator in Weisbaden, Hesse, agreed that legal clarification was imperative on Monday, as she gave the keynote speech at a gambling conference in Madrid.

"If the state treaty needs to be changed, it must now be decided by the national courts", Welp said at the first day of the International Masters of Gaming Law event.<
"Up until these decisions the authorities are doing business as usual, but there probably will be significant changes, and in my view may not be limited to Germany."
She added: "The effect of the [ECJ rulings] has been nothing less than earth shattering. A heated debate about the consequences of the decision arose as soon as it was published and it has not ceased yet."