Who is battling the windmills – the monopolists or the private providers of sports bets?

Rechtsanwalt Dr. Wulf Hambach

Hambach & Hambach Rechtsanwälte
Haimhauser Str. 1
D - 80802 München
Tel.: +49 89 389975-50
Fax: +49 89 389975-60
E-Mail: w.hambach@timelaw.de
“Battle of the windmills” is the title in Manager Magazin of 19th October 2006 for a report by Rita Syre on the Dow Jones Media Workshop with the title “Sportwetten am Wendepunkt?” (“sports betting at a turning point?”). Syre compares the situation of the state’s fight against the opening of the markets with Don Quijote’s battle against his imaginary foes – the windmills. The author did not choose the metaphor from literature incidentally, because it was the President of the Football Bundesliga Club TSV 1860 Munich, Stefan Ziffzer, who used this image during the event in Frankfurt and probably received the greatest amount of applause for the following apt choice of words: “If we stick to the state monopoly, money will spill across the borders”, the qualified political economist said, because the betting market has been a global market for a long time. Ziffzer: ”The state once again is fighting a battle against windmills.”

If one believes the monopolists, it is not they, but rather private providers of betting who are fighting the windmills. Because: According to Ministerialrat (Undersecretary) Heinrich Sievers, the factual and legal situation is fairly easy. Syre on this: “Sievers, who is responsible for gambling in the Hessian Ministry of the Interior, fans the flames with his handout. The Ministerialrat stated uncompromisingly that, after the decision by the Federal Constitutional Court, private sports betting offers provided in Germany are not only ‘illegal’, but that these private offers are a ‘euphemistic synonym’ for ‘criminal sports betting offers’.”

In Sievers’ the one-and-a-half page paper it also says: “Only unreliable soldiers of fortune from Germany and other EU countries operate illegally in Germany.”

Just one day later, Erwin Horak (President of Lotto Bayern) took the same line during a hearing in the Bavarian Parliament on the subject of sports betting: He said that information and advertising restrictions, which had been imposed upon the state-owned monopolists by the Federal Constitutional Court, have already been fulfilled. The powerful former press spokesman of the Bavarian Minister of Finance Horak, who not only is the boss of Lotto Bayern and plays a leading role in the state-owned sports betting provider Oddset, but also is responsible for nine gambling houses, considers the monopoly to already comply with European Laws before the background of the measures taken by his Lotto authority. For all new, i.e. post-Constitutional-Court cases, he considers the legal situation to be resolved (compare http://www.csu-landtag.de/binaer/statement_horak.pdf; the position paper on the dangers of addiction in sports betting and gambling which was introduced by Lawyer Dr. Wulf Hambach during the hearing in the Bavarian Parliament and which has been compiled in co-operation with the London Remote Gambling Association, can be downloaded here: http://www.csu-landtag.de/binaer/CSU.pdf).

This view was also taken by Westlotto lawyer Dr. Manfred Hecker and others during the media workshop. Heckers opinion can be read in detail in the Zeitschrift für Wett- und Glücksspielrecht (magazine for betting and gambling law), where he explains that § 284 StGB (German Criminal Code) could now be consequently applied after the decision by the BVerfG of March 2006 and that any doubts as to the compliance of this provision with European Laws have been eliminated. In particular, he holds the opinion that the March 2006 decision by the BVerfG represents a turning away from the BVerfG’s decision of 27th April 2005 (1 BvR 223/05) according to which the question of the compliance of § 284 StGB with European Laws due to the doubts with regard to community law in connection with EU bookmakers could hardly be solved without submitting the case to the ECJ. This decision taken last year could “confidently be treated as waste paper” (compare ZfWG 2006, page 38).

Thus the following has allegedly been determined: The sports betting monopoly does comply with European Laws already, and the § 284 provision from criminal law can allegedly be doubtlessly applied by all courts to ALL private sports betting operators and procurers.

Now here is the crucial question: Has the factual and legal situation really been solved, are the private sports betting providers thus really battling the windmills or are the statements by the monopolists rather a symbol of their hopeless battle against the windmills?

A current decision obtained by the Austrian betting operator Wettcorner (represented by Hambach & Hambach) on 12th October 2006 before the Landgericht (Regional Court) of Munich I, rather speaks in favour of the latter.

On the background of the proceedings, the LG of Munich I (ref. 5 Qs 32/06) says the following:
After the Bavarian State Ministry of the Interior, in its notification of 20th May 2005, denied the application filed by the company Wettcorner Software, demanding the declaration that it would continue to be allowed to accept (online) sports bets through accepting offices in Bavaria and procure them to the company licensed in Austria as a bookmaker, and also denied the subsidiary application for the granting of a licence for the Federal State of Bavaria for the procurement of sports bets to a bookmaker licensed within the EU territory, the Bavarian Administrative Court in Munich, after corresponding action had been filed on 07th June 2006, overruled the notification of the Bavarian State Ministry of the Interior dated 20th May 2005 and decided that the Federal State of Bavaria was obliged to take a new decision on the application by Wettcorner, under consideration of the court’s legal opinion, which regarded the notification of 20th May 2005 as violating European Law.
Nevertheless, the local authorities of the state capital Munich, in their notification of 05th July 2006, prohibited Wettcorner from accepting, procuring and operating sports bets, as the necessary licence does not exist.” In the preliminary investigation initiated (concurrently), the Amtsgericht (Local Court) of Munich issued a search and seizure order against the Munich accepting offices of Wettcorner on 03rd August 2006.

Contrary to the opinion held by Hecker, Horak and Sievers quoted above, the LG of Munich I says with regard to the unlawfulness of the Local Court decision, that the addressee of the provision of § 284 StGB, i.e. the “unsound soldier of fortune from the EU” according to Sievers, could still not fathom out, even after the March decision by the BVerfG, whether or not he renders himself liable to prosecution in spite of a valid EU sports betting licence. Therefore, there was no legal difference between a sports betting case taking place before the March 2006 decision by the BVerfG and one taking place after 28th March 2006. Contrary to Hecker’s above mentioned opinion, the LG of Munich I considers the basic principles, or the concerns from the point of view of community law expressed by the BVerfG in its April 2005 decision respectively, to be relevant in as far as they argue against the applicability of § 284 StGB for state-licensed EU bookmakers.

Therefore: The state’s battle against the windmills will regrettably take some more time. This futile fight is particularly regrettable as it has an unsavoury aftertaste of untrustworthiness: Suddenly, only after the admonishing hint by the BVerfG, it is not all about money for the lottery companies, but – ONLY as far as sports bets are concerned – about the fight against an enemy yet to be investigated: sports betting addiction. The fact that betting addiction and other dangers in connection with (online) gambling do exist, may not be denied nor may the obligation by the legislator to protect consumers as best they can from provable dangers. A spokesman for the British Secretary for Culture, Media and Sport stressed, for instance, during an interview for the International Herald Tribune on 27th October 2006, that a complete ban of private (online) gambling – as in the USA – only drives consumers to an uncontrollable, criminal underworld of gambling.
„We believe that tough regulation is a better approach than a free-for-all or prohibition,“ Anthony Wright, a spokesman for Tessa Jowell, the secretary for culture, media and sport, said Friday. „We will be looking to secure agreement to the principles for international standards of regulation.“ Wright’s comments echo remarks attributed to Jowell that were reported in The Financial Times on Friday. She, too, alluded to the U.S. prohibition of alcohol from 1920 to 1933, saying the move to ban online gambling could lead to the creation of „modern-day speakeasies,“ driving Internet gambling underground and into the control of criminals.
Conclusion: It is not the (controlled) opening of the market, but a total ban of internet gambling in Germany that would be the unsound solution which would put the illegal (unlicensed) as well as the sate-owned soldiers of fortune at an advantage and would protect consumers only inadequately.