German Federal court refers State Treaty questions to CJEU
Germany's highest civil court rules Schleswig Holstein egaming regime and country's Interstate Gaming Treaty cannot operate in parallel - refers four questions to Court of Justice of the European Union and defers Treaty's enforcement until Luxembourg body takes official stance.
Germany’s highest civil court has ruled that Schleswig Holstein’s egaming regime and the country’s E15 Interstate Gaming Treaty cannot operate in parallel referring four questions to the Court of Justice of the European Union (CJEU) and deferring the Treaty’s enforcement until the Luxembourg body takes an official stance on the matter.
However, earlier this morning, Schleswig-Holstein’s new SPD-Green-SSW coalition government voted in Parliament to return to the State Treaty by a majority of one (32 to 31) ruling out the possibility of any new licences being issued confusing matters further.
Hans-Jörn Arp, parliamentary secretary for the opposition CDU party said he was “stunned” by the coalition’s decision criticising local SPD leader Ralf Stegner and describing his actions as “bulldozing blindly through the country”.
“He [Stegner] pushes laws, court decisions and facts aside. He insulted European institutions and governments of neighbouring European countries. I command him to stop his madness, his deputies of the government parties to follow in blind obedience to the detriment of Schleswig-Holstein.
“Under the treaty you join today, the number of gambling addicts has tripled in six years,” he added.
Under European law the CJEU demands a coherent framework and conditions to offer gaming throughout all EU member states with a restriction on freedom to provide services justifiable on the grounds of public interest, however these restrictions must be deemed to be proportionate and consistent.
The civil court today emphasised its concerns at plans to prohibit online casino and poker. Against this backdrop it submitted four questions to the CJEU on the reorganisation of German gaming law:
- Is it incoherent if the gambling regime in one federal state is different from the other 15 states?
- Does it matter to which extent the regime of the one state has an impact on the regime of the 15 states?
- In case the answer to the first question is yes, will there be no incoherence in the future if the one state joins the 15 states but the concessions/licenses remain valid?
- Does is matter in this case what the impact is on the regime of the 15 states?
The CJEU will also have to grasp with the fact that on 10 December the European Commission issued a detailed opinion against the decision from Schleswig-Holstein to abolish its own breakaway egaming legislation in favour of a return to the country’s controversial State Treaty.
Focusing on concerns surrounding the regime’s lack of transparency, the opinion was supported by Malta and the United Kingdom, the former issuing a detailed opinion of its own.
Lobby group the European Gaming and Betting Association (EGBA) also announced its support for the move at the time, with secretary general Sigrid Ligné suggesting that Schleswig-Holstein’s proposed move from a sustainable and EU compliant licensing system to an inconsistent and unjustifiably restrictive regime would be a significant step backwards, one that the European Commission “cannot approve”.
“The European Commission’s detailed opinion against Schleswig-Holstein sends a clear message that Member States are no longer going to be allowed to impose gaming regulations that fail to meet the tests set by the CJEU,” she added last year.
Another matter is that Schleswig-Holstein sports betting and casino/poker licences have a current lifespan of five years, however the next round of local elections will take place in four years and the state could theoretically face the prospect of a return to a conservative government and a possible switch in licensing laws.
The Federal court today also warned Schleswig-Holstein that legal action could be taken by licensed operators there if licences were suddenly withdrawn, however sources close to the matter suggest this is unlikely to happen.
Until the European Court takes a view both of today’s votes the legal and regulatory situation in Germany remains uncertain, however the 43 operators with Schleswig-Holstein licences remain largely optimistic they can continue to legitimately operate there due to previous approvals.
Mathias Dahms, CEO and management board spokesman for Kiel-based and Schleswig-Holstein licensed mybet, told eGaming Review that the next few years would be “chaotic” as the ECJ could take years to clarify the situation, but that despite ongoing uncertainty it is arguably “easier” to operate in Germany now under a legally approved Schleswig-Holstein licence.
“All those that don’t have a licence will have a problem and we will use competitive law to act against non-licensed operators.”
A spokesman for bwin.party, also licensed in Schleswig-Holstein, said the company “welcomed the decision”. “There appear to be inconsistencies and await the decision by the ECJ,” he added.
The now E16 State Treaty licensing process, that has more than 90 operators competing for a limited 20 sports betting licences, is expected to continue with the state of Hesse responsible for administrative duties. So far it has had to publicly answer more than a thousand individual questions from the operators vying for the licences. Under the Treaty companies will be taxed at 5% of their annual turnover. Licences are expected to be issued at the end of the second quarter this year.
Dahms said that he expects the 43 Schleswig-Holstein licensed companies to largely continue to operate from dot.com sites but that they are all closely monitoring each other’s activities under such uncertain conditions. Eventually however he believes that today’s Federal Court decision and yesterday’s seven rushed through additional Schleswig-Holstein casino and sports betting licences will “destroy” the State Treaty’s prohibition of online casino and poker.
Dahms added in a statement released earlier today: “There is now a need for comprehensive regulation of online casino and poker games in Germany. A ban “ as is envisaged in the State Treaty on gaming of the 15 federal states “ will not work. In our opinion the State Treaty on gaming needs to be fundamentally overhauled. The premiers of those states would be well-advised to dispense with their restrictive regulatory model and use the arrangements currently in place in Schleswig-Holstein as their basis. Schleswig-Holstein needs to think long and hard about whether it can seriously sign up to the questionable legal construct that is the State Treaty on gaming.”