25th of January 2013 Author: Johnny Karp
News came on Jan. 24 that German lander Schleswig Holstein has renounced its liberal online gambling act and that the German Federal Court has addressed questions on the German gambling laws under the State Treaty on Gaming and its consistency with EU law to the European Court of Justice, effectively deferring its own decision on the matter and placing a hold on enforcement.
As known, Schleswig Holstein intends to re-join the Treaty, already supported by 15 other German provinces, although the European Commission views its provisions as conflicting to the EU law.
The restrictive and controversial Treaty allows for only 20 sports betting licenses and does not recognise online casino and poker action as legal.
In accordance with the formerly liberal and EC-approved online gambling act the Schleswig Holstein government has continued to issue six-year duration licenses - some thirty-six in all - to foreign and German companies under the terms of the original act's provisions.
Such parallel regulatory regime has the potential to generate legal actions. That is why the European Court of Justice precedents suggest EU member states may impose necessary gambling restrictions concerning public interest and safety, but there are stringent criteria for assessing such necessity and the reasoning behind its implementation.
The German court has requested a ruling from the European Court of Justice on whether the disparity in provincial and federal gambling law is compatible with the EU law, as well as the view of the superior court on whether this week's repeal of the 'old' Schleswig Holstein online gambling law impacts the consistency question.
However, until the European Court of Justice gives its views, the Germans are unable to enforce the federal provisions linked to the Treaty.
In the EC legal opinion to the Germans querying the logic of SH moving to a more restrictive regime so soon after liberalising its online gambling market, it is said that "The Commission would be interested in receiving information that would explain the substantial legislative changes to the regulation of online sports betting in Schleswig-Holstein not even one year after authorisation of this market."
Nevertheless, because of a 5 percent turnover tax on sports betting under the famous Treaty, some foreign gambling companies, including Betfair and William Hill, have already scaled down their operations in Germany.
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