Update: Reasons Given for EC's Objection to German Gambling Law

European Gaming and Betting Association provides the specifics

This week, the European Gaming and Betting Association issued a statement, shedding light on the reasons why the European Commission rejected the protectionist and restrictive new German law on gambling.

Reportedly, the commission believes that the proposals are in breach of EU law, and that if significant changes are not introduced after this opinion, there's a risk for Germany to get involved in formal infringement proceedings, referral to the European Court of Justice (CJEU) and ultimately financial penalties.

Even though the law is supposedly created to open the market for online sports betting operators from all EU member states, it has been assessed that it in practice reserves the market for the incumbent German state monopolies.

In its statement, EGBA specified the following breaches:

* There are to be only seven sports betting licenses available, and the state monopoly for sports betting is exempt from the requirement to apply for a license;

* The envisaged tax of 16.67 percent of the amount wagered, imposed on all operators, is simply excessive and aims to protect the current state monopoly on offline bets from online competition;

* 'Bundling' of offline and online sports betting together and applying a commercial viability test to would-be operators will put online-only operators at a disadvantage in applying for a license;

* Privately owned land-based premises are limited to 350 per license, whereas there is no restriction for outlets employed by the state-owned operators.

* Certain casino games may be offered online but only by specified casino game operators that are already operating land-based casino games in Germany;

* Big marketing restrictions introduced for non-monopoly operators, whereas an illegal expansion of marketing is encouraged for the state monopoly;

* The license fee favors those applicants with land-based operations that attract higher margins, and it seems to be unrelated to the costs of delivering and then keeping the license.

According to EGBA Secretary General, Sigrid Ligné, "The draft German treaty has many provisions which are in conflict with EU law. But worse: it is clear that, taken together and especially including a prohibitive tax on wagers from which the incumbent state monopoly is exempt, these provisions effectively slam the door in the face of EU operators from other member states and will in fact extend the monopoly for offline to online games.

"The Commission must act quickly to stop this test case for its stated aim of a common EU framework for this sector ".

The current German gambling law (the State Treaty), which is also assessed as incompatible with the EU, expires at the end of the year, so the country planned to introduce a new law in January 2012.

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