This story is sponsored by BetfairThe final act of Schleswig-Holstein’s outgoing CDU-FDP coalition to issue three online gambling licences late last week may ultimately prevent Germany from replacing its ban under the last Interstate Gambling Treaty with a restrictive opening for sports betting.
The poor performance of the FDP in Sunday’s election saw the SPD and the Green Party, which both stated their intent ahead of Sunday’s election to annul SH’s gambling law should they come to power, granted the opportunity to form a coalition government, with the parties already having engaged the support of Danish minority party the SSW to give it a one-seat majority in the northerrmost federal state’s parliament.
But the CDU-FDP coalition’s issue of three licences for online sports betting last Thursday to Betfair, myBet and Oddset with immediate effect, means the incoming government now has to consider the huge costs involved in pursuing its pre-election plan to void SH’s Gambling Law and opt the Land back into the Interstate Treaty endorsed by the other 15 Länder (G15), legal experts have argued.
According to an opinion issued by lawyers Christoph Enaux and Henrik Armah of Olswang, an SPD-led government taking any of the three options open to it to render existing licences null and void - adopt a bill declaring all previously granted licences invalid, abolish the existing Act or give the authorities legal basis to formally revoke these licences – would result in “a very strong risk of Schleswig-Holstein becoming liable for compensation towards the licensees based on the principle of protection of trust.” The CDU-FDP’s final act even led the Green Party to state that despite their opposition to the Gambling Act, they would not back a policy where taxpayers’ money was used to compensate gambling operators.
Further, the SPD’s candidate to replace Peter Harry Carstensen as prime minister of SH, Kiel mayor Torsten Albig, has publicly supported betting and gambling providers establishing businesses and paying taxes in the region. “This could make it even harder for him as the potential new Prime Minister to change horses and to join the Interstate Treaty of the other 15 Länder”, said the two lawyers. Armah added today that: “I assume that there are more pressing topics on the agenda than gambling. Hence, I would not be surprised if waters stay calm in this regard for some time.”
Germany’s northermost Land also revealed last Thursday that a further 23 gambling companies have applied for sports betting licences, with 14 having registered their interest in online casino licences, covering the offer of poker, roulette, baccarat and blackjack. SH plans to issue unlimited licences to operators for all products based on a 20% gross profit tax (GPT).
Schleswig-Holstein was the only one of the 16 German federal states not to sign up to a new five-year Interstate Gambling Treaty under which the G15 plan to issue no more than 20 licences for private sports betting operators based on an unworkable 5% turnover tax.
SH published its licensing requirements on 26 January, under which operators are only allowed to offer services to state residents and compelled to check the accuracy of submitted details with the state registry. The ordinance however gives no mention of what back up measures, such as geo-location, will be required by operators to prevent out-of-state German residents from playing on SH-licensed sites, or how out-of-region advertising by these same operators will be policed. An accompanying “Monitoring Ordinance” relating to the required level of performance and technical requirements has not yet been released.
German media houses started accepting advertising contracts from offshore gambling websites last year after the 16 Länder confirmed that the state monopoly on online sports betting would end in 2012.
