State monopolies granted exclusivity

New gaming/gambling legislation entered into force in Germany on 1 January 2008. Although one would expect Germany to observe the laws and regulations of the European Community, it confirmed the country’s state monopolies on lotteries and sports betting and, despite several judgments of the EU Court of Justice (e.g. Placanica et al.), it outlawed any other online gambling from both foreign and domestic sources.

It is also forbidden to place a bet from a computer in Germany with an operator outside Germany whose server is also outside Germany. In other words: it is illegal for Germans when in Germany to participate through their computers in on-line gaming and gambling abroad, even despite the fact that the foreign operators are fully licensed and subject to supervision in their home countries, which includes other EU countries! So, what’s left of the EU and the WWW (World Wide Web)?

The validity of the new German legislation will be contested in court. It is now up to the German courts to determine whether, in so far as German legislation limits the number of operators active in the betting and gaming sector, it genuinely contributes to the objective of preventing the exploitation of activities in that sector for criminal or fraudulent purposes. National legislation which prohibits the pursuit of the activities of collecting, taking, booking and forwarding offers of bets, in particular bets on sporting events, without a license or a police authorization issued by the Member State concerned, constitutes a restriction on the freedom of establishment and the freedom to provide services, provided for in Articles 43 EC and 49 EC respectively.

In my opinion, the articles 43 EC and 49 EC must be interpreted as precluding national legislation which excludes from the betting and gaming sector any and all non State-owned operators. Refusing to grant licenses or authorizations to other than State-owned operators is in violation with Community law.

Not only the gaming (gambling, betting) laws of Germany are in violation of European law, so are the laws of The Netherlands. The European Commission urged The Netherlands to amend its legislation to legalize internet gambling, but up to now the Dutch government has refused to do so. It only allows state-run organizations to offer such services therefore not allowing any competition. The Dutch government should open its borders. The question is not if but when those monopolies will be broken.

Karel Frielink
Attorney (Lawyer) / Partner

(8 January 2008)


Court of Justice of the European Union (8 September 2010):  “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” (click here for more)

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