Jackpot Promotion Ban ‘Commercial Suicide’ For German Lotteries

published on GamblingCompliance, June 6th, 2008 by James Kilsby

A High Court has ruled that Bavaria’s state-owned lottery can no longer mention jackpot amounts in advertisements as to do so would violate the advertising provisions of Germany’s Interstate Gambling Treaty, which came into force in January. The local ruling is likely to have a nationwide effect and could strangle the ability of all German lotteries to promote their services, say observers.

The Bavarian High Court in Munich has banned Bavaria’s state lottery from mentioning jackpot amounts in advertising campaigns, upholding the March 2008 ruling of a lower court.

The court said that the lottery could face a fine of up to €250,000 if it continues to run such campaigns.

The case was brought by Bavaria’s competition watchdog against three particular adverts for the state lottery, a member of Germany’s state monopoly lottery grouping Deutscher Lotto- und Totoblock. In its decision, the High Court agreed with the earlier Administrative Court ruling that all three instances violated section 5 of the Interstate Gambling Treaty.

One advert featured the slogan “Play with…”, while another detailed the current jackpot being offered by the lottery. The Court said both contravened the Interstate Gambling Treaty’s advertising provisions by offering enticements to gamble.

As well as banning the television advertising of all gambling products, the Interstate Treaty states that all “advertising in relation to public games of chance shall be limited to providing information on the game of chance and clarification of the opportunities pertaining thereto.”

Furthermore, it states that lottery adverts “should not be to call on or encourage individuals to participate in games of chance.”

According to Wulf Hambach, gaming law specialist with Munich-based firm Hambach & Hambach, the treaty’s advertising provisions reflect a preceding March 2006 Federal Constitutional Court ruling that effectively said state governments could only maintain their monopolies over lottery and sports-betting products if they drastically limited their own ability to advertise.

Said Hambach: “The Interstate Gambling Treaty says that lottery monopolies should reduce their advertising down to what is purely information. However, the High Court said that a lottery jackpot is not just information; it is also a way of promoting the lottery. So to include mention of the jackpot in an advertisement runs contrary to the Interstate Treaty.”

Although the decision was in a state court, Hambach believes that the same reasoning could be applied throughout Germany. “The ruling will definitely have a federal impact,” he said, adding that a possible effect could therefore be that all Germany’s state lotteries are prohibited under the new gambling treaty from mentioning jackpot amounts when advertising their games.

The impact of higher jackpots – and lotteries’ ability to promote them – on German lottery revenue was underlined just last December when sales records were shattered as a series of rollovers saw the maximum prize in a midweek interstate lottery draw climb as high as €45m.

With the Interstate Treaty not yet in effect, lottery operators were able to capitalize on the media frenzy that accompanied the inflated jackpot by taking out extensive advertising campaigns.

Repeating that level of revenue would be impossible under the Interstate Treaty, warned Norman Faber, president of private lottery association Deutscher Lottoverbandes. “Lotto set the record sales in motion with an enormous advertising campaign. All that is to be forbidden starting from January,” he said after the record-breaking draw.

For Hambach, the Bavarian High Court decision further underlines the commercial cost Germany’s state lotteries will face under the Interstate Treaty which extended their gambling monopolies.

“It has been suggested that the treaty’s restrictions would sever the limbs of the state operators, and not being able to promote jackpots means one of those has now been cut off.

“Only now are people coming to see the reality that the treaty is tantamount to commercial suicide for the state monopolies themselves.”

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