European Court of Justice rules that laws are inconsistent, and there is no justification for a monopoly
There was good news from the European Court of Justice this week; the highest EU court has ruled that Germany's monopolistic online gambling laws breach EU law, are inconsistent and do not justify the use of state monopolistic practices.
Ruling on three cases referred to it by German courts, the ECJ found that while state monopolies can under some circumstances be justified, Germany's actions in promoting gambling are inconsistent with its claimed goal of protecting its nationals from the dangers of the pastime.
"The German rules on sporting bets constitute a restriction on the freedom to provide services and the freedom of establishment," the Court found, adding: "The public monopoly of the organisation of sporting bets and lotteries in Germany does not pursue the objective of combating the dangers of gambling in a consistent and systematic manner."
The court pointed to the intensive advertising and promotional campaigns initiated by the German state monopolies in a bid to grow profit, saying that these were inconsistent with claimed goals that German policies were designed to protect the public interest.
Reacting to the ruling, the European Gaming and Betting Association (EGBA), a trade association that includes most of Europe's biggest online gambling groups among its members, said: "This is a landmark ruling which will have a decisive impact on the much needed reform in Germany."
Sigrid Ligne, the organisation's secretary general said in a statement: "Other member states have opened or are opening their markets … They show that consumers can be better protected in a market that is both regulated and open to competition."
European Lotteries, an umbrella group for licensed national lotteries in 40 countries, said the ruling did not, however, pave the way for liberalising the multi-billion-euro industry.
"Contrary to how proponents of a liberalisation would like to interpret these rulings, the Court today did by no means advocated a liberalisation of gambling," spokesman Friedrich Stickler told the Reuters news agency.
"On the contrary, the Court reminded Germany that it has to control more strictly the offer of dangerous forms of gambling such as casino games and gaming machines."
In earlier verdicts, the ECJ has said governments may be justified in restricting internet gambling even though such bans violate EU laws on the free movement of services and the freedom of establishment, as long as the curbs are designed to protect consumers or prevent fraud.
The ECJ will rule on a similar case challenging Austrian gambling restrictions on Thursday.
The German Interstate Treaty on Gambling came into force in 2008 and is scheduled to expire at the end of 2011. It currently bans online gaming and betting activities in the country.
In a recent study the independent Gold Media concluded that the ban had no effect on the annual 30 percent growth in consumer demand for online gaming and betting in Germany, but rather had pushed the consumer to sites hosted outside the country.
“More and more stakeholders are raising concerns with regard to the efficiency of a ban on online gaming and are calling on the government to overturn the Interstate Treaty”, said Ligné, opining that the ECJ ruling could influence changes.
"There is a need for a political solution that does justice to the demand of consumers to play online and that at the same time ensures a high level of consumer protection. Other [EU] Member States have opened or are opening their markets and moving away from a monopoly regime to a multi-operator licensing system," she added.
"They show that consumers can be better protected in a market that is both regulated and open to competition."