Breaking news: 15 German Ministers sign revised draft state treaty
Fifteen German Länder sign latest draft version of "unworkable" interstate gambling treaty, eGaming Review has just learned - Schleswig Holstein refuses to sign.
The Prime Ministers of 15 of Germany’s federal Länder, with the exception of breakaway state Schleswig-Holstein, have this afternoon signed the latest draft version of a controversial “anti-EU” interstate gambling treaty, eGaming Review has just learned.
However, 15 of the country’s 16 states also agreed that they would only initiate the ratification process for the State Treaty unless they receive a positive opinion from the European Commission. Without its agreement the Treaty cannot come into effect.
Schleswig Holstein, that saw its own draft gambling law approved by the European Commission in May, did not sign the treaty.
Proposals for a revised draft of the treaty were agreed by 15 of the states at a Prime Minister’s conference in Lübeck on 28 October. The treaty proposes the issue of up to 20 licences for online sports betting to be issued to private operators, based on a 5% turnover tax, a 1,000 cap on player bets, and restrictions on in-play, while online casino and poker are banned. This is an improvement on the original proposal of seven licences and a 16.6% turnover tax, but is still considered unworkable by the majority of operators with interests in a market valued at 1bn.
A local source close to the matter in Germany told eGR that he expects the EC to come back with a number of objections against the “anti-competitive” nature of the proposed 5% turnover tax, the 20 licence limit and the total ban on online casino and poker. “What happens, for example, to the 21st applicant?” he said.
The EC will now examine the revised document and begin its notification process but eGR understands that it will not report back until the end of January or the beginning of February.
The European body issued an opinion against the German Lander’s April proposal to issue just seven licences based on a 16.66% turnover tax, yet approved Schleswig-Holstein’s law in May.
Clive Hawkswood, chief executive of the RGA said all eyes would now be on the EC to see if it objects to any of the Treaty’s provisions adding that it was encouraging that the 15 Lander who support the Treaty would “not seek to enact it until they know the Commission’s views”.
However he also called the decision to sign the Treaty “disappointing” and that the prohibition of poker and casino and the “unworkable” level of taxation for sports betting would “severely restrict the ability for the treaty to meet the social and economic objectives of German politicians”.
“In essence, it fails to acknowledge the development of modern regulatory remote gambling regimes and it will not stop the large number of German citizens continuing to seek better choice and value from operators licensed in other jurisdictions,” he added.
A spokesman for Kiel-based German firm JAXX which owns sports betting provider myBet.com said the Treaty is “short-sighted” and called for major improvements.
“The regulation has not been thought through. It is a political compromise that is not fit for purpose and is grossly out of step with other European countries,” said Mathias Dahms, management board spokesman for JAXX.
“We doubt whether these conditions will encourage a sufficient number of companies in Germany to apply for licences for the market to be regulated effectively. Most players will continue to operate from abroad, bolstering the grey or black market.
In a statement JAXX called on Schleswig-Holstein to “hold fast to its chosen course”.
“At the same time JAXX calls upon the other states to make improvements to ensure that Germany, too, finally achieves an EU-conformed, legally viable set of regulations on gaming.”
It added that there are “serious legal flaws” in the 15-state treaty signed today compared with the legislation that Schleswig-Holstein has already passed.
“Legal experts agree that if the State Treaty takes effect in mid-2012 in its current form, as planned, it will very soon fail in court. The states already saw this happen with the current ‘State Treaty on gaming’, which was rejected by the ECJ in 2010,” it added.
A Betfair spokesman called the news disappointing but not unexpected. “The Treaty the 15 Länder have signed will not create a genuinely liberalised market and as a result, the objectives of creating the new regulatory framework will not be met.
“The incompatible and inconsistent nature of the Länder’s Treaty mean there is much legal and political wrangling to come, though in the meantime we look forward to applying for an operating licence in Schleswig Holstein.”
The European Commission ruled Schleswig-Holstein’s draft gambling law as compliant with EU law, giving Germany’s northernmost state the green light to pass a bill this summer and the licensing process to begin early next year.
At the time a Betfair spokesman called the Commission’s approval a “decisive step” and told eGaming Review it would apply for a licence there if and when the bill was passed.
bwin.party’s co-chief executive Norbert Teufelberger told this publication earlier this year that the newly merged business would apply for a licence, while John Shepherd, director of corporate communications, said: “Our position has not changed. If the Schleswig-Holstein law is passed, we will apply for a licence.”