Recent Developments in German Gambling Law

1
Recent Developments in German Gambling Law

1. Categories of Gambling Market segments and
   regulation
2. German Interstate Treaty on Gambling
3. Recent Developments

2
Categories of Gambling Regulation

• Gaming Machines
• Gambling machines (Geldspielgeräte) in amusement
  arcades and restaurants are regulated by federal
  law by means of the 33 Commerce Regulation Act
  (Gewerbeordnung) and the technical specifications
  by the Gaming Regulation (Spielverordnung).
• Slot machines (Glücksspielgeräte) in casinos are
  regulated by the Federal State Implementation
  Laws (Ausführungsgesetze der Bundesländer)
  coordinated by the Interstate Treaty on Gambling
• States regulate casinos by their Federal State
  Laws on Casinos (Spielbankengesetze der
  Bundesländer)

3
Categories of Gambling Federal and State Law

• Gaming Machines
• Gambling machines (Geldspielgeräte) Federal Law
• -gt Regarded as a commerce law issue
• Slot machines (Glücksspielgeräte) Federal State
  Laws
• -gt Regarded as a police law issue

4
Categories of Gambling Availability

• Gaming Machines
• 220.000 gambling machines (Geldspielgeräte) in
  8.000 amusement arcades and in 60.000-70.000
  restaurants and hotels
• 8.600 slot machines (Glücksspielgeräte) in 82
  casino saloons (Automatensäle)
• Source AWI Unterschiede zwischen gewerblich
  betriebenen GGSG und Slot machines in den
  Spielbanken

5
Categories of Gambling State Monopoly Lotteries

• Lotteries
• State lotteries 6 aus 49 (Super 6, Spiel 77,
  Glücksspirale) offered by the each of the States
• Scratch cards offered by the States
• Class lotteries offered by the northern States
  (NKL) and the Southern states (SKL)
• Social lotteries (Fernsehlotterien) offered in
  collaboration with the public television channels
  (ARD and ZDF)

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Categories of Gambling Availability

• Lotteries
• State lotteries including scratch cards offered
  in 26.000 shops
• Class lotteries offered in some of these shops
  and via mailing by private lottery collectors
  (Lotterieeinnehmer) and the internet
• Social lotteries (Fernsehlotterien) offered at
  the post offices, banks and some shops and via
  the post and the internet

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Categories of Gambling

• Casino Games
• Roulette
• Card Games (Baccarat, Black Jack, Poker)
• Illegal Internet casinos (turnover not known)
• -gtNo legal internet casinos

8
Categories of Gambling

• Sports betting
• horse betting offered by private bookmakers
• soccer betting offered by the state lotteries
  (ODDSET)
• sports betting offered in about 6000 illegal
  betting shops (estimated turnover 0,5 to 1
  billion Euro)
• and via internet (bwin etc.) regarded as illegal
  in at least some states (estimated turnover 1 to
  1.5 billion Euro)
• Estimated market share of ODDSET 10
• -gt 90 of the market is illegal

9
Categories of Gambling

• Contests
• price competition games offered by private
  television channels (50 cent games)
• price competition games offered by companies (in
  general without charge)

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The German Market for Gambling Gross Sales
(2005) 31.6 Billion Euro
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The German Market for GamblingNet Sales (2005)
8.4 Billion Euro
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The German Market for Gambling Recent
Developments

• Gross sales gambling machines increase from 2,35
  billion Euro in 2005 to 3,25 billion Euro in 2008
  (38)
• Net sales (Bruttospielertrag) casinos in
  Baden-Württemberg decrease from 106 million Euro
  in 2005 to 75 million Euro in 2008 (-29)
• Share of slot machines in casino net sales 75

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The German Market for GamblingRecent
Developments
Source Dr. Norman Albers (Deutscher
Buchmacherverband Essen e.V.) Warten auf den
Wettbewerb Deutschland im Jahr Zwei des neuen
Glücksspielstaatsvertrage Die Sicht der privaten
Sportwettenanbieter
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Number of Players TNS Infratest
Source A survey of 8000 people as to their
participation in gambling in the last 12
months. See Stöver (2006)
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Money Spent by Players
Market segment Number of Players Sales in Euro Average Spent per Player, in Euro
Lotteries 27-34 Million 13,98 Billion 458,36
Gaming machines 3-5 Million 9,78 Billion 2445,00
Casino games 2-4 Million 5,84 Billion 1946,67
Contests 25-40 Million
Contests (television) 8-10 Million 0,15 Billion 16,67
Sport betting 3-7 Million 1,83 Billion 366,00
Total 40-45 Million 31,58 Billion 743,06
Source Own calculations
16
State Revenues 4.43 Billion Euro
Source Institut der Deutschen Wirtschaft (2006)
17
Interstate Treaty on Gambling

• -gt Result of the decision of the Federal
  Constitutional Court on sports betting on March
  28, 2006.

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Decision of the Federal Constitutional Court on
Sports Betting The Case

• With an authorisation under the Racing Betting
  and Lottery Act (Rennwett- und Lotteriegesetz),
  the complainant ran a betting office in Munich,
  in which, as a bookmaker, she commercially took
  and arranged bets at horsesraces. In July 1997,
  she registered with the State capital, the city
  of Munich, an extension of her business to
  arranging sports bets. The city, in consultation
  with the Bavarian State Ministry of the Interior,
  refused this, referring to the comprehensive
  prohibition against public games of chance, which
  carried sanctions, contained in  284 of the
  Criminal Code.
• The complainant took legal action against the
  city at the Administrative Court
  (Verwaltungsgericht), with the goal of obtaining
  a declaratory judgment that organising fixed-odds
  sport bets with the exception of horse-racing
  bets did not require permission. During the
  proceedings, she made an application for the
  grant of permission, which was rejected by the
  defendant, and she then added to her statement of
  claim an application in the alternative that the
  defendant be judicially obliged to grant
  permission to organise or arrange sports bets.

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Decision of the Federal Constitutional Court on
Sports Betting The Case

• Horse betting is regarded as a commercial law
  issue and any (reliable etc.) person applying for
  a licence has a right to get a licence
• Other sports betting is regarded as a police law
  issue and only the Federal States are allowed to
  offer sports betting opportunities
• The Federal States are responsible for education
  and science and police
• Sports betting (except horse betting) is
  forbidden under the criminal law (Strafgesetzbuch)

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Decision of the Federal Constitutional Court on
Sports Betting The Verdict

• Taking into account the provisos that are
  contained in the grounds, it is incompatible with
  Article 12.1 (freedom to choose an occupation) of
  the Basic Law (Grundgesetz) that under the Act on
  the Lotteries and Betting Organised by the Free
  State of Bavaria (Gesetz über die vom Freistaat
  Bayern veranstalteten Lotterien und Wetten,
  Staatslotteriegesetz State Lottery Act) of 29
  April 1999 sports betting in Bavaria may be
  organised only by the Free State of Bavaria, and
  only bets of this kind may be arranged
  commercially, and yet the monopoly is not
  consistently geared to the goal of combating the
  dangers of addiction.
• The legislature is ordered to pass new provisions
  for the organisation and arranging of sports
  betting, taking into account the constitutional
  requirements that follow from the grounds, by 31
  December 2007.

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Decision of the Federal Constitutional Court on
Sports Betting The Verdict

• -gt The legislature is constitutionally obliged to
  amend the legislation on the area of sports
  betting, exercising its framing discretion under
  legal policy. If the legislature wishes to retain
  a state betting monopoly, it must orient this
  strictly to the goal of combating betting
  addiction and restricting the passion for
  betting.

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Decision of the Federal Constitutional Court on
Sports Betting Implications

• A state monopoly on sports betting is compatible
  with the fundamental right of occupational
  freedom only if it is consistently geared to the
  goal of combating the dangers of addiction
• Not only Bavaria but all other Federal States
  have similar regulations
• The verdict is valid for all the Federal States
  Lottery and Betting regulations

23
German Interstate Treaty on Gambling

• Result of the decision of the Federal
  Constitutional Court on sports betting on March
  28, 2006.
• An effort towards a comprehensive and unified
  framework for lotteries, casino games and
  betting.
• Consistently geared to the goal of combating the
  dangers of addiction.
• Horse racing betting and gambling machines as
  well as games of skill (contests) and fun games
  are not covered by the new regulation, but casino
  games including slot machines are.

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German Interstate Treaty on Gambling

• Commerce Law of the Federal State Horse betting
  and gambling machines
• Police Law of the States Sports betting,
  lotteries and casinos
• -gt Federal and State regulation authority in
  conflict

25
Controversy between the Federal States

• Against the single vote of the prime minister of
  Schleswig-Holstein, that is 15 1, it was
  decided to have the Treaty signed by the prime
  ministers in an circulation procedure at the
  beginning of year 2008, in order to have it
  subsequently be notified to the European
  Commission.
• Finally all States signed the German Interstate
  Treaty including Schleswig-Holstein
• German Interstate Treaty in force since 1.
  January 2008

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German Interstate Treaty Provisions

• An effort towards a comprehensive and unified
  framework for lotteries, casino games and
  betting.
• Consistently geared to the goal of combating the
  dangers of addiction.
• Consistent and systematic regulation Horse
  racing betting and gambling machines as well as
  games of skill (contests) and fun games are not
  covered by the new regulation, but casino games
  including slot machines are.

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An effort towards a comprehensive and unified
framework for lotteries, casino games and betting
State casino laws
State lottery laws
casinos owned by Federal States
German Interstate Treaty
Federal State monopolies
private casinos licensed by the Federal State
Federal State monopolies on sports betting
Commercial horse betting
Federal horse betting law
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Consistently geared to the goal of combating the
dangers of addiction

• Each year about 5.000 persons with the main
  problem pathological gambling in therapy
• Estimated 87.000 to 297.000 pathological gamblers
  in the German population
• Estimated 1.300.000 to 1.700.000 alcohol addicts
  and estimated 3.500.000 to 5.000.000 nicotine
  addicts in the German population

Quelle Becker, 2008
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Gambling Addiction
Category of gambling Percentage of pathological gamblers
Gambling machines (amusement arcades and restaurants) 69,0
Slot machines (casinos) 11,4
Sports betting (shops, internet) 6,8
Roulette 5,8
Poker (card and dice games) 3,6
ODDSET 1,6
Horse betting 0,6
Lottery 6 out of 49 0,5
Scratch cards 0,4
Toto 0,2
Class lotteries (SKL/NKL) 0,1
SUM 100
Quelle Becker, 2008
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Consistently geared to the goal of combating the
dangers of addiction

• The category of gambling, id est gambling
  machines, causing the greatest danger of
  addiction is not part of the German Interstate
  Treaty of Gambling
• Gambelli decision (67) First of all, whilst in
  Schindler, Läärä and Zenatti the Court accepted
  that restrictions on gaming activities may be
  justified by imperative requirements in the
  general interest, such as consumer protection and
  the prevention of both fraud and incitement to
  squander on gaming, restrictions based on such
  grounds and on the need to preserve public order
  must also be suitable for achieving those
  objectives, inasmuch as they must serve to limit
  betting activities in a consistent and systematic
  manner.

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Consistently geared to the goal of combating the
dangers of addiction

• Several German courts have submitted a request
  for clarification to the European Court of
  Justice (Vorabentscheidungsersuchen)
• Sport betting companies claim that the German
  Interstate Treaty on Gabling is not compatible
  with EU law
• German Federal Constitutional Court states in
  October 2008 that the German Interstate Treaty on
  Gambling is compatible with the German Basic Law
  (Grundgesetz)

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German Interstate Treaty Provisions

• Introducing a distinction between particularly
  dangerous and low risk lotteries according to
  the event frequency (more or less then two draws
  a week)
• Player identification and verification prescribed
  for particularly dangerous lotteries
• Education of the staff involved in lottery ticket
  sales
• Mandatory gambling risk information labelling for
  lottery tickets
• Stimulating, encouraging, soliciting advertising
  prohibited, advertising may inform only to the
  extent needed for game participation

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German Interstate Treaty Provisions

• Prohibition of online gaming and betting
• Prohibition of television sponsoring and
  advertising with exceptions for the traditionally
  broadcasted draw of the lottery numbers and for
  social lotteries
• Blocking of Financial and Internet Service
  Providers

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German Interstate Treaty Provisions

• Extending the barring scheme already available
  for casinos games to casino slot machines and
  particularly dangerous lotteries and sports
  betting
• Information to the public about the risk of
  gambling
• Mandatory information on gambling help hotlines
• Introducing an advisory committee (Fachbeirat)
  and a gambling supervisory body
  (Glücksspielaufsichts-behörde)
• Strengthening the Federal State supervisory
  bodies

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Recent developments

• Schleswig-Holstein decided on October 2009 to
  resign the German Interstate Treaty on Gambling
  and privatize casinos
• Selling homes by a lottery designed as a skill
  game allowed but not as a chance game
• Pressure on gambling machines (evaluation of the
  Gaming Regulation (Spielverordnung) in work)

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Consistent and systematic regulation options
discussed

• Including gambling machines into the state
  monopoly, id est into the Interstate Treaty on
  Gambling (Glücksspielstaatsvertrag)
• Proposal of the advisory committee (Fachbeirat)
  to restore gambling machines to amusement machines

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Proposal of the Advisory Committee (Fachbeirat)

• Advisory Committee (Fachbeirat) created by 10
  German Interstate Treaty (Glücksspielstaatsvertrag
  )
• Independently advising States on gambling
  addiction issues
• Consisting of experts mainly representing
  associations providing help for addiction

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Proposal of the Advisory Committee (Fachbeirat)
Restoring gambling machines to amusement machines

• Change the Commerce Regulation Act
  (Gewerbeordnung)
• Maximum stake 0,20 Euro
• Minimum time per play 60 sec
• Maximum loss per hour 7 Euro
• Maximim gain per hour 30 Euro
• No converting into points
• No light or sound effects
• Mandatory information on probabilities to win

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Options discussed

• Introducing entrance control for and extending
  the ban register to gambling machines
• Removing gambling machines from restaurants

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Thank you very much for your attention