Is Hesse’s Initiative to close Private Betting Agencies doomed?

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

In November 2004, Lotto Hessen announced rejoicingly on its website (www.lottohessen.de), that: “(The) controlled campaign of the illegal (Note: this is used by the State providers to refer to „private“) sports betting providers, with the aim of creating a legal uncertainty in the sport betting market, has collapsed. Hessen Lotto strongly welcomes the legal certainty which has come back into force through this decision of the Upper Administrative Court (VGH).

In the same month, the Hessian Interior Department composed a bulletin, which better resembles a voluminous and detailed complaint than a bulletin. In this bulletin, every private sports betting organiser and broker was informed that an application for permission to organise and negotiate sport bets, though in principle possible, would not offer much prospect of success. In this context, reference will be made to the Gambelli Decision of the ECJ from November 2003.

„Contended – and because of this in need of clarification – are alone the questions, whether the authorities of a member state can encourage and incite the consumer to partake in lotteries and gambling, in order to accrue income for the exchequer.“ (Question raised in the Gambelli Decision) or whether there is „huge increase in the games on offer accompanied by aggressive advertising” (Question raised in the decision of the Federal Administrative Court (BVerwG)).”

In the bulletin such critical questions are in fact dealt with in just one sentence:

„For local reasons both questions are to be answered resoundingly in the negative.
This was followed by the decision of the Upper Administrative Court of Münster (OVG Münster) of the 13th of September 2004 (Case No. 4 B 1961/04). This court decision did not just ignore the Gambelli Decision, but also applied the legal test set down by the court in such a way as to deprive it of its effect, in that it said, „it is again to be noted that in a consistently “strongly charming” advertising world, excessively moderate advertising measures would not be appropriate for the State gaming agencies to use to reach the emotive public.”

These comments clearly contradict the guidelines of the ECJ, which are that an aggressive advertising effort initiated as a market expansion strategy, may not be used as a limiting policy to exclude private operators from the gaming market.

For this reason, the content of this bulletin on organisation and negotiation of sport betting in Hesse remains a lip-service to the Hessian Interior Department. The legal view of the Hessian Interior Department is not only questionable, but from a Community and Constitutional law point of view, dubious.

The questionability and inconsistency of the Interior Department’s opinion was recently documented by a decision of the Local Court of Offenbach (Department of Criminal Law, Amtsgericht Offenbach) on the 31st of January 2005 (Case no.: 201 Ds 1200 Js 80901/03).

The Local Court of Offenbach (AG Offenbach) went on to say that as the case was dealing with a “broker” of sports betting and not an “Organiser” of sports betting, neither German Criminal Law (Art. 284 of the German Criminal Code (StGB)) nor the Hessian Sports Betting and Lotteries Law (Hessische SpW/LottG) were applicable to the broker. The constitutional prohibition on the making of analogies (Analogieverbot), did not allow for any other conclusion.

The activities of the broker are limited solely to the distribution of the betting slips, the acceptance of bets placed and the transmission of these bets to the actual organiser via the Internet. Where the customers (as in the present case) cannot access the computer from which the bets are transmitted to the organiser, this is not to be considered as a “provision of facilities“(contrary to the submissions of the Defendant) either.

Commenting on the constitutionality of the Hessian Sports Betting and Lotteries Law (Hessische SpW/LottG), the Local Court of Offenbach went on to say:

„Furthermore, it is to be pointed out that Art. 5.1 of the Sports Betting and Lotteries Law (SportW/LottG) raises obvious constitutional concerns, the planned clarification of which has already been announced. “

In the next few days, the Administrative Court of Darmstadt (VG Darmstadt) will decide on the first of the objections by the operator of the betting agency. I would expect that the Administrative Court of Darmstadt (VG Darmstadt) will follow the Local Court of Offenbach (AG Offenbach).

Attorney-at-Law Dr. Wulf Hambach
Mozartstrasse 18
D-80336 Munich
Phone: +49 89 – 64 96 97 – 13
Facsimile: +49 89 – 69 99 84 – 30
E-Mail: info@ra-hambach.com