NJW aktuell 2009, p. XII – p. XIII: Germany and its Prohibitions – can someone win my house?

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
Position paper by Attorney-at-law Dr. Wulf Hambach, Founding partner of Hambach & Hambach Law Firm (timelaw.de)

The market is there, without a doubt: Currently, freehold houses in rural areas in Germany in particular seem hardly marketable, so that often even compulsory auctions fail. Now, a Robin Hood has turned up who has set the goal of cutting through the seemingly impenetrable legal and administrative thickets of gambling law and who has paved the way, not only for himself, but for innumerable fellow sufferers with slow-selling real estate. In the meantime, his name has become well known in the press: Volker Stiny. His intention: With his astute idea to – putting it in non-legal terms – ‘quiz out’ his house, he has cast a spell over the press once more. ‘Der Spiegel’ reported on Stiny’s intention in its online edition:

In the economic downturn, Volker Stiny cannot find a buyer for his property and therefore wants to get rid of it through a lottery. The authorities, however, are against it. Now, the Munich inhabitant has a new idea: a quiz for the semi- detached house. The questions are not all that difficult. (…) “Nothing may be left to chance in the quiz’, said the 53 year old with a Bavarian accent. ‘The Quiz’ is Stiny’s lottery on the internet. The jackpot: A semi-detached house in tranquil Baldham on the outskirts of Munich, 156 square meters, white plastered, plus garden and garage.

Should these plans work out economically and legally, thousands of poor home owners will no doubt follow their brave Robin Hood through the forest and out of gambling regulations. However, the crucial question is: How are virtual house quiz shows, or Internet games of skill, classified legally?

According to section 4 subsection 1 of the Interstate Treaty on Gambling (GlüStV), the organisation and the brokerage of public gambling without permission is illegal; this prohibition includes, but is not restricted to, the Internet (§ 4 Abs. 4 GlüStV). Whoever organises public gambling contrary to this prohibition is liable to prosecution, according to sections 284 et seq. of the criminal code (StGB). For systematic and historical reasons, the definition of a ‘game of chance’ in criminal and public law is the same, which has recentlybeen confirmed by the administrative courts (among others by the OVG (Higher Administrative Court) of Münster, GewArch 2008, 406 et seq.).

Irrespective of the question of European legislative consistency of the Interstate Treaty on Gambling (regarding this matter, a preliminary ruling is pending before the European Court of Justice), the real estate lottery is typically a game of chance. The house should only be raffled amongst those who have beforehand successfully completed a quiz, the complexity of which is the crucial element in deciding whether the game can be considered as a game of skill. The VG (Administrative Court) of Munich gave a more restrictive decision in the case of Stiny, and – contrary to prevailing opinion – treated all combinations of a game of skill and a raffle as a game of chance. Should Mr. Stiny actually manage to prove that the nature of his game is predominantly based on skill, for example by replacing all sweepstake elements by introducing more demanding questions à la “Who Wants to Be a Millionaire”, which are evaluated beforehand by a neutral jury, he may no longer be able to be charged with a breach of the above mentioned regulations.

Another question relates to the supervision of such online games of skill. If they are operated offline, sections 33 d et seq. Gewerbeordnung (Trade, Commerce and Industry Regulation Act, GewO) regulate the details. If, however, they are operated online, one will search in vain in this and in other acts for regulations concerning games of skill with money stakes and the possibility of winning. Does this mean that offers such as king.com do not require permission?

According to Prof. Gerald Spindler, constitutional reasons do not allow a wider scope of application of the GewO in the virtual world. (Gerald Spindler: “Brief evaluation on 6.10.2007 on the question of the application of sections 33 c, 33 d to online games of skill exempt from punishment). Here, a clear regulation needed for legal certainty is missing. (keyword: punishable sanctions in breach of sections 33 d et seq. GewO). The non- applicability of gaming law regulations naturally does not cast online games of skill into a law-free area; rather, the general Internet trading regulations apply (protection of consumers and minors etc.).

If the general e-Commerce regulations for the house quiz are not adequate for the German authorities, two possibilities remain: A legislative act which would ‘break open the Industrial Code’, but would be difficult from the point of view of legal structure, or the passing of clear administrative guidelines on house competitions on the Internet. For the latter, a view across the English Channel helps. There, the Gambling Commission guards over the gambling bid. As a reaction to the “house competition boom” triggered approximately two years ago, an official guideline was published, providing assistance for the classification of legal and illegal offers. According to this, house competitions in the form of games of skill are legal. However, legal advice should previously be obtained, as in case of an incorrect classification a breach of the UK Gambling Act 2005 is committed: (extract from gamblingcommission.gov.uk).

In principle an individual disposing of a property through a house competition can use a genuine prize competition to do so. Genuine prize competitions are free of statutory control under the Act provided they require sufficient skill, judgment or knowledge to either deter a significant proportion of potential entrants from participating or eliminate a significant proportion who do enter. House competitions that do not meet the test of skill, judgment or knowledge set out in section 14 of [UK Gambling Act 2005] are classed as lotteries.

Unlike in Great Britain, Germany is unfortunately lacking a comparable official reference to the possibility of a legal offer beyond the Interstate Treaty on Gambling – possibly due to a lack of responsible central body. As a consequence, global prohibitions lead to the development of a difficult-to-control black market for house lotteries on the Internet, where it is hardly possible to differentiate between legal and illegal offers. Unfortunately, this market has already emerged, as the demand to get rid of slow sellers with sharp ideas is high. Controlling these online house competitions through well regulated, transparent paths applying clear official guidelines could curtail an uncontrolled growth of illegal transfers and, at the same time offer desperate real estate property owners an alternative to conventional online portals for the transfer of property.

Whilst Robin Hood can probably be assigned to the realm of myth, the need to provide the possibilities of organising house competitions is real in view of the current economic climate. Potential providers should, however, obtain legal advice beforehand without fail, as the qualification of the admissibility – unfortunately also due to a lack of official guidelines – is difficult, and misinterpretations may actually lead to criminal prosecution.

Source: TIME LAW NEWS 4/2009 (www.timelaw.de) Hambach & Hambach Law Firm / Neue juristische Wochenschrift