January 9, 2013 : SCHLESWIG HOLSTEIN CAN REJOIN GERMAN GAMBLING TREATY, SAYS E.C.
 
German province will have two possibly conflicting regulatory regimes
 
The European Commission has cleared the way for the northern German state of Schleswig Holstein to re-join the restrictive German Interstate Treaty on gambling despite the province already issuing 27 sports betting and online casino and poker licenses to major European companies – well over the total of 20 sports betting licenses allowed nationally under new federal German sports betting restrictions.
 
The European Commission, along with the Malta government, had originally criticised both the Treaty and SH's draft law designed to overthrow the previous government's liberal and EC-approved betting laws as being non-compliant with EU principles.
 
Undisclosed remedial action was recommended and the green light given Tuesday to SH implies that these have been met, although the situation remains confused.
 
The de facto position appears to be that both the Treaty and SH's law amendments can go ahead. The 15 other German states have already signed up to the Treaty, which under new German laws restricts the number of sports betting licence issues to 20, imposes a 5 percent tax rate on wagers and specifically bans online poker and casino action.
 
SH recently warned one licensee that its licence covered only activities within SH borders, perhaps giving an indication of how it intends to proceed once it has rejoined the Treaty….but that still leaves its law in conflict with the number of nationally allowed sports betting licenses, a situation which has been described by observers as ‘incoherent'.
 
The reaction of those companies who have made considerable investments in acquiring licensing under the former, and more liberal, SH law is unlikely to be friendly, and developments will be watched with interest. Some observers have not discounted the possibility of expensive litigation being launched.
 
Meanwhile, the German Federal High Court of Justice is studying the situation and will apparently soon rule on whether German law and two different regulatory systems is desirable or compatible with European Union law. The European Commission has taken a stance that the Court's 2011 decision that online gambling bans were permissible if the state was trying to protect players is flawed.