European Commission again critical of German state treaty

The European Gaming and Betting Association reports that the monopoly-minded signatories to the latest German Treaty on gambling have again been criticised by the European Commission and could face infringement proceedings.

The Commission issued its opinion Tuesday against the German State Gambling Treaty, once again confirming that it believes the proposed Treaty is in breach of EU law.
If the draft is not substantially changed after this warning, Germany risks formal infringement proceedings, referral to the European Court of Justice (CJEU) and ultimately financial penalties, EGBA observes.

Several provisions of the Treaty have been identified by the EC as being in conflict with EU laws.

While the draft law appears to open the market for online sports betting operators from all EU member states, it in practice largely reserves the market for the incumbent German monopolies.

All but one of Germany’s sixteen lander or states have signed the Treaty, which makes minimal concessions to foreign operators. The sixteenth state, Schleswig-Holstein, has broken away and framed its own online gambling regulations, which have met the approval of the Commission.

Earlier this year EGBA detailed the reasons why the new Treaty flies in the face of EU law:

• The total number of sports betting licences available is limited without justification to seven (7), whereas the state monopoly for sports betting is exempt from the requirement to apply for a licence;

• An exorbitant tax of 16.67 percent of the amount wagered is imposed on all operators. This will make online wagering uneconomic, excluding online operators and is clearly intended to protect the current state monopoly on offline bets from online competition;

• The licensing system ‘bundles’ offline and online sports betting together and applies a commercial viability test to would-be operators, thus putting online-only operators at an automatic disadvantage in applying for a licence;

• While privately owned land-based premises are limited to 350 per license, no such restriction applies to outlets employed by the state-owned operators

• Certain casino games may be offered online but only by specified casino game operators that are already operating land-based casino games in Germany;

• An illegal expansion of marketing is encouraged for the state monopoly, but marketing restrictions are placed on other operators;

• The licence fee will favour those applicants with land-based operations that attract higher margins and appears to be unrelated to the costs incurred to deliver and then maintain the licence.

Sigrid Ligné, secretary general of EGBA said back then: “The draft German treaty has many provisions which are in conflict with EU law. But worse: it is clear that, taken together and especially including a prohibitive tax on wagers from which the incumbent state monopoly is exempt, these provisions effectively slam the door in the face of EU operators from other member states and will in fact extend the monopoly for offline to online games.

“The Commission must act quickly to stop this test case for its stated aim of a common EU framework for this sector “.

The proposed German State Gambling Treaty comes after a number of preliminary rulings by the EU Court that the current State Treaty is incompatible with EU law (see inter alia Carmen Media, C- 46/08

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