CDU loss opens door for Schleswig-Holstein challenge
Future of regulated online gambling in Germany thrown into fresh doubt after Christian Democrats lose crucial state election in Schleswig-Holstein this weekend.
The future of regulated online gambling in Germany has been thrown into fresh doubt after Chancellor Angela Merkel’s Christian Democrats (CDU) lost a crucial state election in Schleswig-Holstein on Sunday.
Just days after the region’s first three egaming licences allowing operators to legally offer sports betting to German customers were handed to JAXX (myBet), Betfair and local lottery Die NordwestLotto Schleswig-Holstein, the CDU’s worst showing for 50 years could open the door for an opposition coalition to seek to challenge and overturn the state’s EU-backed state gambling act.
In a weekend of anti austerity election results in France and Greece, despite Merkel’s CDU scoring 31% of the vote the Free Democrats, the government’s coalition partners, slumped to a lowly 8% share with the opposition SPD finishing on around 30% but immediately stating it would look to join forces with the Greens in order to gain overall state control. The libertarian Pirate Party polled 8% and entered the state legislature for the first time.
“There were two losers in Schleswig-Holstein: the CDU and the FDP,” the SPD’s national chairman Sigmar Gabriel said after the result was announced.
The vote comes ahead of another vital electoral test for Merkel with elections in Germany’s most populous state, North-Rhine Westphalia, due to be held in five days.
On 3 May JAXX SE, Betfair and Die NordwestLotto Schleswig-Holstein were announced as the first three operators to be awarded an online gambling licence in Schleswig-Holstein. Licences were granted by the Schleswig-Holstein Interior Minister Klaus Schlie and will see each company launch a dot.de variant of their sites, offering sports betting until the licences come up for renewal in May 2018.
eGR understands the remaining 23 sports betting and 14 casino and poker applications are on track to be approved in the coming weeks and ratified in time to launch the products by the summer, however a change of local political power could see this timeframe changed. The SPD has strongly criticised the state’s Gambling Act ever since its introduction, and only last month attempted to nullify it but failed to pass it through Parliament.
In an opinion article written exclusively for eGR just a day after licences were handed to the trio of operators, Henrik Armah, senior associate at law firm Olswang, however said it could take “months” for an SPD-led government to present a new bill to abolish the current act and get it through a newly formed Parliament.
“While a new Prime Minister could unofficially attempt to use his influence on the authorities dealing with the licence applications to slow down the process and to not grant further licences, the legal basis for the licences would remain in place until officially abolished,” he explained.
“In addition, the fact that there are now licences in place might well have an impact on a new government’s decision whether or not to abolish the Gambling Act. In order to render existing licences null and void, a new government could either adopt a bill stating that all previously granted licences are no longer valid, abolish the existing act or give the authorities a legal basis to formally revoke these licences. The two latter options would, however, likely only work under German administrative law if the respective operator has by then not made any use of its licence.”
Armah added that if a new government was to abolish the current October 2011 Schleswig-Holstein Gambling Act, it could face compensation claims from existing licensees on the principle of protection of trust that would, for example, cover costs for establishing a locally incorporated and/or based business, managing the application process but would be unlikely to extend to future lost profits.
“Another, more balanced option for a new government could be a reduction of the existing licences from six to fewer years “ which might potentially mitigate the risk of being liable for compensation payments,” Armah added.
One positive note, however is that, unlike the majority of his party’s senior members, the SPD’s candidate for region’s Prime Minister and the current mayor of Kiel, Torsten Albig, has publicly supported online gaming operators and providers setting up in Schleswig-Holstein.
Schleswig-Holstein is the only German state that did not join the other 15 German Länder in adopting a new Interstate Treaty on Gambling passing its own regional Gambling Act in October last year.
On 15 December last year, the 15 Länder signed a second draft treaty with the provision that they would only implement it if the European Commission gave them the ‘green light’ to do so, however in March the EC issued a detailed response rejecting Germany’s revised proposals with several sources, including the Minister of Economy, claiming this could spell the “end of the road” for the bill in its present form.
The Commission criticised their proposals for failing to address its main concerns over its compatibility with European law with Jörg Bode, Minister of Economy and deputy Prime Minister for the state of Lower Saxony saying the treaty had “failed in its present form”.