VIXIO GamblingCompliance: German State To Appeal Court-Ordered Licensing Halt

By David Altaner

• Conference of state regulators’ influence called non-transparent
• Potential break on €5m deposits not sufficiently disseminated
• Some operators may welcome continuation of limbo

German sports-betting licensing was blocked largely due to the shadowy involvement of a committee of 16 state regulators, according to court statements released on Monday, in a ruling the Darmstadt Council said it will appeal. 

A spokesman for that licensing body said it will appeal a ruling last week that halted it processing applications over complaints the process was opaque and discriminatory.

The Darmstadt Administrative Court stopped the process in part because the Glücksspielkollegium, or conference of 16 state regulators, is involved in the licence awarding process in a way that has not been described in “a sufficiently transparent and comprehensible manner”.

This lack of clarity over the group’s involvement comes even though the Darmstadt Council in the German state of Hesse is bound by its verdicts, according to a press release issued by the court on Monday. The ruling itself is not yet available.

Germany has been struggling for more than a decade to pass country-wide online gambling legislation that remains in effect. Successive court rulings have routinely meant legislation could not be enforced.

This latest order to halt issuing licences raises the prospect that no licences of any kind will be issued until a new sports betting and online casino licensing regime planned for July 2021 launches.

One law professor said the court’s ruling rests on administrative procedure.

“The entire licensing process has come to a halt and as far as I can tell needs to start from the beginning, therefore enabling foreign competitors to enter the German betting market by obtaining a licence,” said Julian Krüper, who teaches law at Ruhr University, Bochum and said he had seen an executive summary of the decision. 

Gambling attorney Wulf Hambach said it seems clear that the court was referencing a High Court decision from October 2015 that blocked the previous treaty — a decision which also sharply criticised the lack of transparency surrounding the Glücksspielkollegium’s involvement in the application process.

“Therefore the root of the problem is not the competent gambling authority in Hesse, but it is more a systematic problem of the Interstate Treaty and the way the 16 gambling regulators are organised in the Glücksspielkollegium,” Hambach said.

“Only if you change this system and only if you find a licence application solution outside of the committee’s competence” will the process be able to move ahead without challenge, he said.

Schleswig-Holstein, the state which launched its own breakaway licensing programme some years ago, has “successfully shown how to issue dozens of online gambling licences in the past ten years without involving the gambling committee”, he said.

In its complaint, the Austrian bookmaker that brought the case, Vierklee, also argued that competitors which received earlier notice of the opportunity to apply for a licence had an unfair advantage, according to the court’s statement.

The Darmstadt Council issued invitations to an information seminar in August 2019, mostly on its own website, a way which disadvantaged operators in other parts of the European Union, the Austrian operator argued. 

The court also considered the bookmaker’s argument that not all applicants were clearly informed that it was possible to seek a break from requirements to post a €5m security deposit, the press release said.

The decision last week dismayed the German Sports Betting Association (DSWV), which called it a “serious blow” to its members.

But some operators will be happy that the licensing process has stalled, “because if they do not get a German licence they also do not get the restrictions that come with a German licence”, said Christoph Engelmann, an attorney with DLA Piper in Hamburg.

It could take months or even years until court proceedings finish, he said

To lodge an appeal, the council needs to have applied to the Hessian Administrative Court in Kassel within two weeks of the delivery of the ruling, and a spokesman said the council is planning to do so. 

This transitional legislation had led to almost 50 operators applying for a licence by the end of February, the council said at the time.

Of 100 warned about doing business without a licence, at least ten had pulled out of the market, it said.