Bavarian State Casino Monopoly Is Legal, Court Rules

Germany’s top constitutional court upheld a state-run casino monopoly in Bavaria, ruling the law is properly designed to protect the public.

The law restricting casino licenses is intended to combat addiction and doesn’t violate the German Constitution, the Karlsruhe-based Federal Constitutional Court said in a faxed statement. Protecting consumers from crime related to gambling is a compelling state interest that justifies limiting the freedom of private businesses, the court said.

„The law limiting the establishment of casinos aims to defend the public from dangers that may result from exploiting the passion of gambling,“ the court wrote.

European courts have issued conflicting rulings on state-run gaming monopolies. Last month, the European Union’s highest court told Italy that it can’t use criminal sanction to block foreign gaming companies while another European court upheld a slot machine monopoly in Norway.

Today’s case was brought by a private company, Casino GmbH & Co. Spielbankenbetriebs KG i.Gr., seeking a casino license in Bavaria. The company was denied a license to open casinos in Bad Fuessing and Feuchtwagen, where state-run casinos already operate.

Ruediger Zuck, a lawyer for Casino GmbH, said privately run casinos in other German states have successfully implemented anti-addiction programs.

‚Not a Good Idea‘

„The biggest scandals in casinos happened in state run casinos,“ Zuck said. „It is not a good idea that the state runs a casino and then controls itself.“

In the Norway slot machine case, the European Free Trade Agreement Court in Luxembourg also ruled that reducing gambling addiction and crime were permissible reasons for establishing a gaming monopoly.

The nine casinos in Bavaria are run by the Staatliche Lotterieverwaltung, the state agency for gambling. Other German states allow private companies to run casinos.

The ruling comes as the EU is threatening to sue Germany over a draft regulation that protects a state monopoly on sports- betting.

Georg Schmid, Bavarian deputy minister of the interior, said the court’s ruling will strengthen the state’s stance on the proposed regulation.

„The decision has far reaching consequences for gambling law in general,“ he wrote in an e-mailed statement.

Internet Sports Betting

The proposed agreement would ban Internet-based lotteries and sports betting in German states. On March 23, the European Commission asked Germany to reconsider the proposal, because the total ban was „disproportionate“ and gave Germany one month to reply.

German state ministers negotiated the draft agreement after the Federal Constitutional court ruled in March 2006 that Bavaria’s monopoly on sports-betting was unconstitutional and needed redrafting. The court said that the law wasn’t sufficiently designed to combat addiction and that the financial interest of the state didn’t justify a monopoly.

„Today’s decision will not change the fate of Germany’s disparate gambling laws once the European institution looks at them closely,“ said Claus Hambach, a lawyer who specializes in gaming law and represents commercial gambling companies.

The various rules on gambling are complicated and contradictory, he said. „In Germany, private companies may offer horse race betting but not dog race betting.“

The case is 1 BvR 2228/02.