German Court blocks chances of online gaming

Bwin.Party Digital Entertainment Plc, Betfair and others lost a top appeals court case over Germany’s ban on online gambling.

The Federal Court of Justice, Germany’s highest civil court, said in five suits brought by state-owned lotteries that the prohibition is justified to combat dangers associated with gambling. Shares of Bwin fell as much as 12 percent.

“Because of the greater dangers of the Internet, above all anonymity, lack of social control and accessibility at any time, this sales venue can be subject to stricter regulation,” Presiding Judge Joachim Bornkamm said after the rulings.

The European Union’s top court ruled last year that Germany’s betting monopoly, which allows most sports betting to be done only through state-controlled companies, violates European laws. Germany has faced criticism for allowing private horse betting while outlawing other forms of private sport bets. The EU court ruling didn’t bring an end to the various suits pending in Germany over the issue.

Bwin e.K., the company’s German unit that was involved in the lawsuit, said it will consider whether to file a constitutional complaint. Any such step wouldn’t yield a ruling until the end of this year when the current rules elapse anyway, the company said.

‘Won’t Last can’t last’

“The ban violates European rules and won’t last,” Bwin e.K. said. “A regulated market opening is the only way to combat the black market in Germany and to comply with EU requirements.”
German states are debating on how to revise their state treaty that sets current rules. The state of Schleswig-Holstein has decided to open its market. The state treaty, which took effect in 2008 and is elapsing on Dec. 31, was an effort to take earlier rulings by the EU court and the nation’s constitutional court into account.

Bwin shares fell 6.7 percent to 119.2 pence at the close of London trading after falling as much as 12 percent following the ruling.

Today’s decision matches a June ruling by Germany’s top administrative court, which also cleared the online ban because it covers private offers and government-owned lotteries.

“When looking into whether a regime is coherent, you don’t have to look at the total market,” Bornkamm said. “The online sector is a marked-out area that can easily be viewed as isolated.”
While the states tolerate private horse race betting on the Internet in practice, the volume of those bets is so small they don’t make the whole system incoherent, the judge said.

The court rejected the arguments that Bwin e.K. could make use of a license issued by the former East German government or that exceptions need to apply to companies who hold license from other European countries.

“Our ruling is valid only for the rules that apply until the end of this year,” said Bornkamm.