Schleswig-Holstein able to join Interstate Treaty, but risks remain

The German federal state of Schleswig-Holstein can now pass its legislation to join the federal sports betting Treaty, after the standstill period for the EC to review its draft laws ended on Monday.

The expiry of the standstill period means Germany’s northernmost Land could hold a vote on the legislation at the second hearing scheduled for 23-25 January, and implement the new regulations on 7 March 2013, six months after they were first notified. The EC has not yet commented.

However, gaming lawyer Patrick Schwarzbart of DLA Piper told Casino Choice that this most recent development did not mean Schleswig-Holstein’s path back to the Treaty was now straightforward, far from it.

“If SH should decide to join the Interstate Treaty, it – or rather the member state Germany – may in theory be subject to infringement proceedings by the Commission, since the Commission seems to take the view that the Interstate Treaty or rather SH joining the Interstate Treaty is in violation of European market freedoms.”

The statutory three-month standstill period, triggered when the Land notified the EC of its intention to approve the federal Interstate Gambling Treaty ratified by the other 15 Lander and incorporate its provisions into its Gambling Act, had been extended by a further month after the EC and Malta issued opinions against the draft.

The EC’s detailed opinion expressed doubts over the compliance of SH’s new legislation with EU law, given its change from the open and transparent licensing model to which it gave its approval “to a restrictive and opaque one within a year”, according to DLA Piper. The EC also raised concerns over the lack of coherency in German gambling law, given the existence of two parallel regulatory frameworks.

Schleswig-Holstein also last month issued 12 licences for online casino (including poker) on top of the 15 already granted for sports betting under the Gambling Act introduced by its predecessor, bringing it into further conflict with the sports betting-only Treaty already in place in the rest of Germany. The ITG provides for just 20 national betting licences taxed at 5% of stakes, with a ban on online casino and poker.

Reflective of the confusion, Germany’s northernmost Land was forced to issue a warning to mybet less than 24 hours after issuing it with one of Germany’s first online casino licences, reminding the operator that its licence only applied within Schleswig-Holstein, a development that DLA Piper said at the time:

“[U]nderscores the incoherent system of Gambling law in Germany. Hence, it remains to be seen how the German Federal High Court of Justice and the EU Commission will cope with this issue in the future. Major changes in German gambling law may lie ahead.”

Germany’s Federal Court of Justice is due to rule later this month on whether the existence of these two parallel licensing regimes breaches EU law. This followed the EC disagreeing with its 2011 decision that restrictions on the freedom to provide gambling services via a ban on online poker and casino could be justified in terms of providing better protection for players from crime fraud and addiction.

Article written by Stephen Carter

Casino Choice journalist

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