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German States Split On Online Gambling

By: Shirley Spicer, Saturday December 18th 2010
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The State Gambling Treaty in Germany banning online gambling lapses on January 1, 2012. The decision makers of the 16 federal states met yesterday to ascertain if they could arrive at a consensus on the path to be followed in 2012 and thereafter. Unfortunately they could not do so. The German states are divided into three camps on the future of allowing private online gambling operators to enter the market. Wolfgang Boehmer, the state premier of Saxony-Anhalt, said that everyone had agreed to maintain the state monopoly on lotteries but the divisions showed in the other areas of online gambling. The strictest approach was advocated by a group of Social Democrat-governed states, including Rhineland-Palatinate and North Rhine-Westphalia. They want to continue with the existing state monopoly on sports betting as well. Another group of five Christian Democrat Party-led states would like to open the country's online sports betting market to private operators.

The best news for the potential online casino players in Germany comes from the northern state of Schleswig-Holstein. This state plans to issue online sports betting, casino and poker licenses to private operators in 2011 and have a regulated online gambling regime in operation by January 1, 2012 when the current treaty lapses. Wolfgang Kubicki, FDP parliamentary group leader of the state, announced even before the meeting that that his state would go ahead with plans to legalize and regulate online gambling even if all other states decided otherwise. The parliament of Schleswig-Holstein will meet to continue discussing the draft document. The proposal is based on the Danish model with 20% gross profits tax.

German online gambling law expert Hambach analyzed the implications of this split. He said that Germany's online gambling market is likely to be regulated on a state-by-state basis, resulting in "a domino effect". He also pointed out that the present situation is chaotic. Private online gambling operators are citing the court rulings by the European Court of Justice (ECJ) and German judges that have challenged the legal validity of instituting state owned gambling monopolies under the State Gambling Treaty. Hambach cited the ECJ decision in the Carmen Media case and the decision by Germany's highest civil court in the Westlotto versus Bwin case. He opined that the real reason behind the meeting of the ministers was to forge uniform and clear guidelines in the wake of these court decisions. But since there was no unanimity in the first place the task of formulating guidelines became redundant.

Meanwhile the bulk of the funds staked in various sectors of online gambling in Germany are going to the unregulated market. Gold Media had provided data showing that €7.3 billion of the €7.8 billion staked in Germany in 2009, or 94% of the total, went to unregulated online gambling.

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