Bavarian Administrative Court of Appeal affirms Closure of Betting Shop

Rechtsanwalt Martin Arendts, M.B.L.-HSG

Arendts Rechtsanwälte
Perlacher Str. 68
D - 82031 Grünwald (bei München)
With its decision of 3 August 2006, the Bavarian Administrative Court of Appeal (Bayerischer Verwaltungsgerichtshof) ruled that private operators could be prohibited to provide and to broker sports betting with immediate effect (case-no: 24 CS 06.1365). This is the Court’s first preliminary decision after the Federal Constitutional Court’s fundamental decision of 28 March 2006 regarding sports betting. The Court’s decision concerned a betting shop in the small town of Fürstenfeldbruck (near Munich) conveying sports betting to a Malta based and licenced bookmaker. The Bavarian Administrative Court of Appeal dismissed the betting agent’s appeal against the negative decision of the Administrative Court of Munich, upholding the prohibition order issued by the District Office (Landratsamt).

The Administrative Court of Appeal argued in this decision that the private operation of sports betting could be banned with immediate effect in order to prevent illegal gambling. The Free State of Bavaria had implemented the requirements, provided by the Federal Constitutional Court in its decision of 28 March 2006 in order for the state monopoly to be legally upheld (such as constraining the promotion of the state gambling offer, information about the dangers of gambling and implementing preventative measures against the dangers of betting addiction). Therefore, under the current circumstances, private operators could not invoke their basic right of choosing one’s profession. Likewise, the Court did not have any doubts that the prohibition of private procurement of sports betting was not in conformity with Community law. Even considering the ECJ´s jurisprudence, limiting the freedom of establishment and the freedom to provide services were justified because of imperative reasons of the general public interest, especially in order to fight betting addiction and in order to restrict betting passion.

This decision is untenable, for factual as well as for legal reasons. So far, a coherent and consistent regulation of the state gambling offer (that is not only sports betting, but other forms of gambling as well) does not exist. Although the Bavarian State Lottery Administration (Staatliche Lotterieverwaltung), the state gambling operator, has recently scaled down its promotion for the state ODDSET offer, the state TOTO and LOTTO products are still intensely advertised. Thereby, the State of Bavaria as gambling operator unduly keeps inciting people to bet and to gamble. The legal situation in Bavaria is clearly discriminatory, since only the Free State of Bavaria may offer gambling, whereas operators from other EU Member States are barred to do so. The Court’s reasoning that the limitations are non-discriminatory is untenable in the view of the prohibition of discriminatory practices as set forth by the EC Treaty. This apart, the limitation imposed by the Free State of Bavaria are disproportional as well, since private operators can take care of youth and consumer protection as well (like the German horse betting bookmakers have been doing for more than 80 years) and this protection is guaranteed by the supervision of the EU bookmakers in their respective country of origin (especially in Austria, UK and Malta). In other EU Member States minors are prohibited from betting as well (unlike in Germany, where such a regulation was introduced only two years ago, and effective controls have been introduced as late as one year ago). The Bavarian Administrative Court of Appeal shows creativity in interpreting Community law as well. Although the European Court of Justice had never seen the need of a transitional period, it might do so in the future…

The Court’s decision can only be appealed with an constitutional complaint. On ministerial pressure, the administrative authorities will therefore probably increasingly try to close betting shops. A fundamental change in Germany can only be expected after the ECJ’s ruling in the joined cases of Placanica et al. (case-no. C-338/04, C-359/04 and C-360/04), pronounced probably in October or November 2006, if the court follows the Advocate General’s opinion. In this opinion, the Advocate General came to the conclusion that the supervision in the bookmaker’s country of origin was a “sufficient guarantee for its integrity”. Penal sanctions were therefore unacceptable. Until then, the current chaotic legal situation caused by the diverging jurisdiction will therefore probably persist.