German Courts Rule in Favor of Cross-Border Betting

1 March 2004

Recent court rulings in the Netherlands and Scandinavia have strengthened the notion that the Gambelli verdict does not open European member states up to cross-border gambling, but a pair of new cases in Germany might indicate otherwise.

In the first case, the District Court (Landgericht) of Munich ruled on Oct. 27, 2003 that Austrian sports betting operator bet-at-home is free to conduct business in all E.U. member states. The verdict is believed to be the first German court decision in favor of foreign bookmakers. The court held that bet-at-home may offer bets to German consumers without holding a German license. According to the court, the German criminal charges for unlicensed gambling (Art. 284 German Criminal Code) pursue only the fiscal interest of the state (incomings for the state).

Attorney Martin Arendts, a European law and gambling expert, pointed out that member states can only block foreign gambling operators for social reasons.

"The judgment in the Gambelli case by the European Court of Justice has found that sports events gambling which is licensed in one member state can only be restricted if the restriction is justified for reasons of consumer protection or because it protects social order," Arendts said. "The fiscal interest of a state is not a valid reason to restrict the free movement of services."

In the Gambelli case, the European Court of Justice also refers to the concerns of non-discrimination.

"It is not permissible to generally restrict gambling for competitors who are licensed in other member countries," Arendts said.

The second ruling, handed down Feb. 9, 2004 in the state of Hessen's Verwaltungsgerichtshof (VGH) court, could rock the German betting monopolies. In this case, the court ruled that bets place in a German betting shop can be mediated to an English bookmaker.

Wulf Hambach, a lawyer with Arendts Lawyers, said the Hessen decision could open the German betting market.

"Until now, there have been only five licensed betting providers in the German market: the state-owned company—Oddset--and four private entities," Hambach explained. "But this decision opens the market to betting companies based in the U.K. or in Austria, and we can now expect to see an increase in those providers choosing to operate within the high-potential German market."

Now a practical conclusion is expressed by the Hessian VGH.

In the injunctive process of the Hessian VGH, the court advised the administration to license the business of a broker for sports betting (the bookmaker is licensed in the United Kingdom) as long as the interim injunction is in function. The bookmaker is thus allowed (at least for a period of time) to do his business and sell the "betting product made in the U.K." in the German betting market. Another important aspect is that the Hessian VGH is the highest administrative court (on the Hessian state level), so its decision, in this case, cannot be voided. The bet-at-home case has only indirect consequences (besides the "interim-solution" for the broker and bookmakers in the Hessian-case and in the very few other cases) for the state monopoly. "However," Hambach explained, "the most important indirect--and soon direct--consequence is that the state bookmakers have to prepare themselves for a battle in front of the courts and have to face the fact that mainly because of the Gambelli case, the monopoly breakdown is not anymore a question of 'if' but a question of 'when.'"

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.