Planned Interstate Treaty on Lotteries fails

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

Arendts Rechtsanwälte
Perlacher Str. 68
D - 82031 Grünwald (bei München)
On the occasion of their last meeting in October 2006 the prime ministers of the 16 German states (Länder) discussed the draft of the new Interstate Treaty on Lotteries (which regulates also betting and is supposed to include provisions concerning casinos as well). The initial plan to finally sign the controversial treaty on 13 December 2006 already is now on the brink of collapse.

On 29 November 2006, the parliament of Schleswig-Holstein unanimously, with the votes of all parliamentary parties, voted to postpone the decision on the draft of the new Interstate Treaty on Lotteries (Lotterie-Staatsvertrag). The state parliament called on the state prime minister Peter Harry Carstensen to plead for a prorogation of the decision due to the need of considerable legal clarification.

The draft was blamed to massively violate Community law, constitutional law and anti-trust law. The state parliament’s finance committee pointed out in one of last week’s motions that the planned interstate treaty to all appearances violated Community law.

One should at first wait for the ECJ‘s Placanica decision concerning the sports betting and lottery system, presumably due in spring of 2007, as well as the evaluation of the hearing of the companies and associations concerned which took place following the last meeting of the state prime ministers. For the rest it was referred to the Federal Cartel Office’s (Bundeskartellamt) decision, which had established a violation of anti-trust law. In the view of these legal faults, the parliamentary leader of the Christian Democratic Party Dr. Wadephul spoke of a „political incapacity of the states“. One had to fear a flood of lawsuits and a „years long state of legal uncertainty“, not without any reason by the way.

Therefore the Treaty has failed at the moment, since the unanimous vote of all 16 German states is necessary for passing the Interstate Treaty. The provision initially incorporated in the draft which asked for the approval of only 13 of the 16 states is illegal (and would lead to an unacceptable diverging legal situation in Germany).

The failure of the current extremely controversial draft is not the end of the world, but hopefully leads to a founded legally tenable regulation. Due to the Federal Constitutional Court’s (Bundesverfassungsgericht) decision of 28 March 2006 a comprehensive regulation of the gambling sector has to be achieved next year, since the transitional period established by the Constitutional Court ends at the end of 2007. The requirements set forth by the Federal Constitutional Court as well as those set forth by the ECJ should be incorporated. For the rest, the necessary comprehensive regulation has to be in conformity with German and European Anti-trust laws. According to Dr. Wadephul taking into consideration their different addiction potential the new regulation should make a difference between lotteries and sports betting. For the rest, state and private operators should not be treated differently without comprehensible reasons.