German Sport-Gambling Monopoly Backed by High Court

(Bloomberg) – Germany’s sports-betting monopoly was upheld in an interim ruling by the country’s top constitutional court, delivering a blow to online gambling companies that are seeking to overturn the restrictions.

The Federal Constitutional Court in Karlsruhe rejected a request for an emergency ruling, saying a “preliminary” assessment doesn’t indicate the rules are unconstitutional. The court didn’t identify who filed the challenge.

The same court in 2006 struck down the country’s former sports-gambling monopoly, saying the rules were inconsistent. Germany’s 16 states reinstated the monopoly and banned online betting at the beginning of 2008 in a state treaty. The ruling puts the country at odds with European Union regulators, who threatened to sue Germany over the law last year.

“The new sports-betting rules have mended the deficits of the old monopoly,” the court wrote in the judgment. The preliminary assessment shows the monopoly is constructed in “a consistent manner both in terms of law and fact to prevent gambling addiction.”

The plaintiff in today’s case had asked to be allowed to accept bets as long as a lawsuit against the restrictions is pending in a lower court. The northern German state of Lower Saxony had ordered him in 2005 to stop taking bets offered by a Malta-based gambling company.

Interim Ruling

“This was just an interim ruling concerning preliminary procedures and its importance is limited to that,” said Ronald Reichert, a partner at Bonn-based law firm Redeker Sellner Dahs & Widmaier, who represented the plaintiff. “We expect the Federal Administrative Court to soon get the chance to fully scrutinize the rules in a new landmark sport-betting judgment.”

Redeker represents several gambling industry associations and broker companies, Reichert said. He declined to identify his client in today’s case, saying that he’s a businessman who has a betting shop in Lower Saxony.

“The court impressively backed the Germany gambling rules and clearly rebuffed the commercial sport-betting industry,” Erwin Horak, spokesman for the state monopoly Oddset, said in an e-mailed statement.

Betting brokers, including Bwin Interactive Entertainment AG, have been trying to topple gambling restrictions in Germany for several years, arguing they are illegal under European Union law and invoking the Constitutional Court’s 2006 ruling. Several German courts have also sent cases to the European Court of Justice to look into the matter.

The companies are also arguing that the new German system isn’t consistent, because it bans private sport bets while allowing slot machines to be run by private gambling halls. The judges said today that its 2006 ruling doesn’t require the government to regulate slot machines and sport bets under an identical regime.

Today’s case is BVerfG, 1 BvR 2410/08.