State Monopoly v. The private sector: Abstract

Rechtsanwalt Dr. Wulf Hambach

Hambach & Hambach Rechtsanwälte
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The lingering sound left by the German Constitutional Court’s oral hearing (8th of November) on the constitutionality of the state’s sports betting monopoly

A report by Attorneys at law, Dr. Wulf Hambach and Andreas Gericke

Karlsruhe/Munich 8-10 November 2005. As is already well-known in the gaming industry, the long awaited seminal decision of the German Federal Constitutional Court (FCC) on the organisation of sports betting by private providers (Case no: 1 BvR 1054/01) is now no longer expected this year (we reported on this in edition 06/05 of Betting-Law-News).

On the 13th of July 2005, the Federal Constitutional Court ordered a hearing on the 8th of November (for further information on the background to this case see Hambach „German court delays sports betting decision“ World Online Gambling Law Report Vol. 4 Issue 7 ).

At the very beginning of this long awaited oral hearing FCC Judge Prof Byrde (rapporteur of the senate) stated: „I am sure that bets will also be taken on the outcome of these proceedings.“ Following this humorous statement, the senate stated that German gambling law is an area of law which is known for its complexity and lack of clarity. Consequentially, the hearing lasted for more than double the expected time.

During the 8 hour oral hearing, the senate discussed the problem of the continuous expansion of the German gambling market as well as the increase in the number of gambling addicts. If there was an opening up of the market, there would have to be – according to the judges – effective laws to combat these dangers.

The judges also questioned the clear market expansion strategy carried out by the state gambling providers. In particular, the judges posed a crucial question, which was not convincingly answered by the state providers: How can the state advertise its gambling products in a way, which can only seek to encourage participation in the gambling events (i.e., without indicating the dangers) while obstructing private providers access to the market, arguing that gambling is socially undesirable and dangerous?

However, it is not only the oral hearing which provides clues on the outcome of this court proceedings. Lets take a look at the most important members of the decision panel:

1. The Rapporteur: Federal Constitutional Court Judge Prof Dr Bryde:

  • Several months before the oral hearing, Byrde J. asked numerous administrative authorities to refrain from making orders against private betting office operators in advance of the decision of the Federal Constitutional Court. If the constitutional judge had assumed that the (EU) cross border distribution of sports betting to sports betting operator licensed in another EU member state constituted the offence of illegal gambling – due to the lack of an official license under § 284 of the German Criminal Code – then he would not have undertaken this unusual step.

2. President of the Federal Constitutional Court and Chair of the Senate: Judge
Prof. Dr. Dr. Papier

  • Papier J. dealt intensively with the German gambling issue some time ago. Papier J. considered the state gambling monopoly, in particular, in light of German constitutional law (esp. freedom of profession) rather critically. Papier J. is the author of „Staatliche Monopole und Berufsfreiheit – dargestellt am Bespiel der Spielbanken“ (State Monopoly and freedom of profession – illustrated by way of the casinos as example). In this very detailed 1997 piece, Papier J. comes to the outcome that the monopoly development in the casino area constitutes a breach of the freedom of profession right under Art. 12 para. 1 of the German Constitution if the casinos are laid out under private law.

Following the oral hearing, there are more signs that there will be a liberalisation than a retention of the Status Quo. Given the complexity of gambling law, the extent of such a liberalisation cannot be predicted. If the Federal Constitutional Court actually calls an end to the game of the sports betting monopolists in Germany after seven years (1999 „ODDSET – The sports bet from Lotto“ was introduced), the question is: when this will happen. Many experts would expect an ultimate decision to be made early next year. It remains to be seen whether the final whistle (the judges decision) takes place before the start of the FIFA World Cup on June 9th, 2006. As our so called „football king“, Franz Beckenbauer, would say: „Watch this space“.