A German court recently upheld the nation’s ban against purported secondary lotteries. This is based on their previous stance that the sites are offering online gambling which goes against their local laws.
On Tuesday, the Koblenz Higher Regional Court in Rhineland-Palatinate delivered a ruling which was first handed down on the 3rd of July. The ruling upheld the district’s court judgment that barred an unnamed online lottery betting operator licensed in Gibraltar from offering their services to the German people.
The state’s district court issued the original ruling in October last year. The case came up from a complaint filed by Lotto Rhineland-Pfalz sports betting operator and the state lottery. According to the complaint that was filed, they stated that illegal competition from secondary lotteries had reduced their sales in 2017 sales by 7%.
The Gibraltar firm, on the other hand, argued that state lotteries in Germany were found to have violated European Union laws concerning cross-border trade. However, the district court refuted this argument, which was founded on their opinion that the defendant was not a lottery per se but offered online gambling which violates Germany’s State Treaty on Gambling.
In the long run, The Higher Court agreed with the stance of the district court that secondary lotteries were not lotteries under the definitions of the State Treaty. The Higher Court pointed out that primary lotteries have a played a major role on how their drawings would play out, while secondary lotteries are inert observers of the drawings of primary lottery’s.
In addition, The Higher Court rejected the arguments of EU’s cross border trade. They noted that the EU allows member states to set limits on their gambling industry. According to them, the set limits were put there to reduce the problems of gambling and participation of people below the gambling age.
Significantly, the Higher Court did not leave any room for the defendant from Gibraltar to appeal the ruling. This isn’t the end of the drama if concerns from the European Commission which was expressed in the blue letter proves to be correct.
Germany has plans to issue interim online sports betting licenses come January 2020. The newly issued licenses will be valid until July 1, 2021. There are hopes that by then 16 states in Germany would have drafted a new and permanent State Treaty.
The European Commission’s view is that this window (which would last for 18 months) and it is not enough to persuade many illegal operators of the advantages of applying for the interim license.
The European Commission has expressed concerns that Germany’s plan has other limitations. Some of these limitations are; no in-play sports betting, no online casino products, a €1000 monthly ceiling on punter spending and a 5 percent tax on an operator’s turnover.
They believe this does not offer the kind of incentives other regulated markets are enjoying which allowed them to get enough volume of channelization to sites that are licensed locally. So the unnamed operator from Gibraltar may decide to not to budge and see if the Germans will go through with their word.