Schleswig-Holstein licences under threat
Seven licences could be cancelled just a month after being awarded after the state's new coalition government declared its intentions to seek a return to the country's controversial state treaty.
Licences in Schleswig-Holstein are under threat of being cancelled just a month after being awarded after the state’s new coalition government declared its intentions to seek a return to the country’s controversial state treaty, sources close to the matter have told eGaming Review.
Following their narrow election victory two weeks ago over Chancellor Angela Merkel’s Christian Democrats (CDU) three of Germany’s political parties have formed a coalition in order to assume overall control and agreed a return, “in principle”, to the state treaty.
The Social Democrats, Green party and South Schleswig Voter Federation that represents the area’s Danish speaking population outlined their proposals earlier this week. According to local legal sources this included a paragraph stating the coalition would look to join the state treaty alongside the country’s other 15 Länder and examine options to “dispose of licences without being liable” for any compensation from the seven existing licensees.
The translated statement read: “The government aims to put in place gambling regulation which is harmonised across all Länder and to join the State Treaty on gambling. The government will examine how the SH gambling law may be repealed without giving rise to compensation claims and how it may be possible to amend the [Schleswig Holstein] gambling law in line with competition law in order to stop the issuing of licenses.”
On 3 May JAXX SE (now mybet), 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 were expected to see each company launch a dot.de variant of their sites, offering sports betting until the licences come up for renewal in May 2018.
Just two weeks ago, days after the CDU’s election loss, Bwin.party, Bet365, Betclic Everest subsidiary bet-at-home and Malta-licensed operator Tipico became the latest companies to receive a Schleswig-Holstein licence, allowing them to offer sports betting in the jurisdiction with immediate effect, with licences for poker and casino expected to be awarded “in due course.”
A further 23 sports betting and 14 casino and poker applications were said to be on track to be approved in the coming weeks and ratified in time to launch the products by the summer, however a change in political power now appears to have scuppered any chances of further licences being awarded at least in the short-term.
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.
One operator that is going through the approval process in Schleswig-Holstein and that was expecting to hear positive news later this month told eGR he had been advised by local lawyers this morning to forget his licence bid as a result of today’s news.
Mathias Dahms, CEO of mybet Holding, one of the seven companies to have been awarded a licence in Schleswig-Holstein said the operator would “continue to expand” its German business on the basis of its licence approval last month.
“In the coalition agreement the new governing parties in Schleswig-Holstein have merely agreed to find a way how to stop the granting of additional licenses. It is not the question of the licenses already issued to be revoked “ what anyhow would be difficult to enforce legally and would of course imply claims for indemnification,” he said.
“Furthermore, the parties agreed to consider joining the questionable draft of the other 15 states, although the treaty is legally highly questionable compared to European law. Our Schleswig-Holstein license will remain valid in any case,” Dahms added.
Following the news Betfair issued an official statement stating: “Schleswig Holstein’s licensing model will foster a genuinely competitive and vibrant online market that will benefit government, consumers and operators alike. Unlike the proposals of the other 15 Lander, Schleswig Holstein’s regulation is EU-compliant and we remain hopeful working with the new coalition government to ensure we are operating there, under the licence already awarded to us, in the near future.”
The coalition’s draft coalition, however, still needs the state general assembly’s blessing, while the newly formed government has still to be officially sworn in by parliament suggesting that even if it were to look to revert to the state treaty it would take time.
The other issue, local lawyers told eGR this morning, is that the existing seven licensees would almost certainly take legal action against the coalition if it threatened to cancel their previously sanctioned licences.
Henrik Armah, senior associate at law firm Olswang, told eGR the threat of legal action was likely and that the new government could be liable for potential lost revenues, profits and costs if it were to go ahead with reforms.