In a ground-breaking decision (Ince – C-336/14), the Court of Justice of the European Union (CJEU) held that German criminal authorities must not prosecute intermediaries of sports betting services, as the relevant stipulations penalising private operators in Germany do not comply with EU law.

Legislative Background

Since 2008, the German gambling market has been regulated by an Interstate Treaty on Gambling, prohibiting private providers from offering public sport bets and games of chance, effectively setting up a general State monopoly on games of chance. For a number of reasons and following various CJEU decisions, the highest German administrative court, the Federal Administrative Court, judged that this State monopoly on sports betting violated EU law and was therefore inapplicable (Federal Administrative Court, judgment 20 June 2013, – 8 C 17/12). In order to bring German gambling law into compliance with EU law, the Interstate Treaty was amended in 2012, allowing up to 20 private providers to receive a sports betting licence. However, the licensing process has been beset with problems with the result that not a single licence has been issued to date as we discussed in an earlier article.

Background to the CJEU decision

A Turkish business woman living in Germany, Ms. Sebat Ince, operated a sports betting terminal in Bavaria brokering sport bets of an Austrian provider without holding the German administrative authorisation required by law. Such unauthorised provision of sports betting services to German players is prohibited by German gambling law and considered to be a criminal offence. Consequently, Ms. Ince was charged by German public prosecution authorities. However, the Local Court of Sonthofen, which was competent in this matter, had significant doubts as to whether the relevant German law was in line with EU law and whether Ms. Ince could indeed be sentenced for a criminal offence. The Sonthofen court referred the matter to the CJEU.

Findings of the CJEU

The most relevant aspects of the CJEU’s decision relate to current law in Germany although the CJEU also commented on previous laws which might lead to damages claims by private sports betting providers against the German State in future.

The CJEU ruled that as no sports betting licenses have been granted during the period in which the current gambling law has been in place, whereas the State sports betting providers are allowed to continue their offers, a State monopoly on sports betting is still in place. As mentioned, this had already been deemed incompatible with EU law by the German Federal Administrative Court. Even though, theoretically, private and State-owned providers could now be awarded sports betting licences, the fact that this had not happened in practice upheld the sports betting State monopoly, and the ruling of the German Federal Administrative Court on the illegality of such State monopoly still applies.

Impact of the decision

The CJEU decision will have a direct impact on the German legal regime regarding sports betting. Authorities may no longer issue prohibition orders against private sports betting providers which have licences from other EU Member States merely because they do not hold the required German licence for offering sports bets (as such licence cannot be obtained in practice). Furthermore, the current sports betting procedure will most likely have to be revised and changes in German gambling law will have to be implemented.

In addition, the CJEU’s decision may also have an impact on the on-going debate over the legality of online casino games and poker in Germany. While the CJEU’s decision does not explicitly mention that its reasoning also applies to online casino games and poker (as this was not an issue covered in the reference by the Sonthofen court), its reasoning could be applied by extension. The arguments brought forward against a State monopoly and the obligation for private providers to obtain prior authorisation before offering games of chance could also be considered viable arguments in cases that deal with online casino gaming and online poker. It can be assumed that a number of local German courts will begin rejecting prohibition orders against casino and poker providers which are made solely on the basis that they do not hold the relevant (and unobtainable) licence.