Lottery firms hail German opportunity as monopoly system ruled illegal

A German court has ruled the country’s state monopoly lottery system is incompatible with EU law, creating an opportunity for private lottery operators to enter the market.

The Administrative Court of Munich ruled last week that the state-run monopolies in each of the 16 German states were in breach of the EU’s principles of freedom to provide services.

The ruling means that the 16 states will need to draft an updated Interstate Treaty on Gambling with liberalised lottery regulations.

The 16 state leaders are scheduled to meet next February to discuss the Treaty, which will also cover online casino and sports betting regulation.

Sebastian Blohm, head of corporate and legal affairs at lottery operator Zeal, welcomed the ruling as an opportunity for private companies to compete with the state-run entities.

“For too long, the lottery industry has been closed to competition – denying customers choice and stifling innovation,” Blohm said.

“In a world where we can book a holiday with one click and buy music at the touch of a button, the lottery industry is stuck in a time-warp. It’s time the industry was opened up to competition.”

Lottoland, which applied for a licence to run a lottery in Germany earlier this year, also welcomed the ruling.

“The German lottery monopoly is conflicting with Article 56 of the Treaty on the functioning of the EU in regards of the freedom to provide services” the operator said in a statement.

“Therefore, the respective German legislation is not applicable and online operators licensed in other EU jurisdictions can rely on Article 56 TFEU and legally operate in Germany. This once again shows that the German gambling regulation is in urgent need of modernisation and a far-reaching reform.”

German lawyer Martin Arendts said if the states could not agree a comprehensive framework for online gambling, it would be time for the federal government to step in.

“We definitely need a quantum leap,” Arendts added.