German Sports Betting Regulations and European Fundamental Freedoms: Protection of Consumers or of State Revenue?

Abstract

Technological advances have in the past decade allowed private sports betting providers to make substantial inroads into the German gaming market, which was previously almost completely dominated by the German Laender. Having first tried to counter a possible loss of market share by setting up and aggressively promoting their own vehicle Oddset while at the same time monopolizing the offer of sports betting, the Laender in 2006 had to learn that the Federal Constitutional Court would not condone such a strategy. In order to save the monopoly they passed the State Gambling Treaty. The two most important provisions of this treaty completely ban the provision of betting via the Internet and erect a public monopoly of domestic public law providers. This article analyses whether these rules are compatible with European law. Both the Internet ban and the monopoly infringe the fundamental freedoms of services and establishment under the EC Treaty. The legislative history, systematic structure and the inconsistencies with respect to the regulation of other forms of gambling and addiction-prone activities unmask this legal instrument as actually intended to promote the fiscal interests of the Laender rather than pursuing overriding reasons of general interest. These measures are not suitable to promote the claimed objectives. The regulations are also discriminatory in effect as, in contrast to German institutions under public control, companies with a registered seat in other member states other than Germany may not offer sports betting. Finally, they are also disproportionate with regard to the restrictions they impose on the fundamental freedoms of establishment and services.