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Online Gambling Companies Win Big As EU Throws Out Germany’s Gambling Monopoly

Posted  September 24, 2010

Online and other private gambling companies are looking forward to their winnings as a result of the ruling by the European Court of Justice in Luxembourg (ECJ) that Germany’s state-run gambling monopoly violates European Union law.

The EU’s highest court has ruled that Germany’s justification for the state monopoly on gambling rang hollow and struck down the law in a landmark decision that opens the door to the German market for private betting companies, including online companies.

Under a 2008 bill, Germany allows only state lotteries – a gambling monopoly that Germany sought to justify by arguing that it protects consumers from the harm of gambling and prevents gambling addictions.

However, the ECJ labeled this justification “unjustifiable” in light of the “intensive advertising campaigns” undertaken by the state-run gambling companies and the addictive automated gambling machines also allowed under Germany’s monopolistic rules.  The ECJ opined that, “[i]n such circumstances, the preventive objective of that monopoly can no longer be pursued, so that the monopoly ceases to be justifiable.” In addition, the ECJ noted that Germany’s gambling legislations is “contrary to the fundamental freedoms of the EU.”

This ruling comes after the German legislation was challenged in regional courts by online gambling companies; the regional courts then asked the ECJ for a ruling on the legality of the German monopoly.  This ruling is in stark contrast to previous ECJ rulings deeming state lotteries in other EU states legal because of their goal of limiting the negative consequences of gambling on society.

The consequences of this ruling could be far-reaching in Germany, where the state-run lottery and betting companies have earned billions in euros.  In addition to staunching the flow of gambling income to the state, this ruling could redirect those billions to private gambling companies and allow private gambling companies to flourish in a market previously closed to them.

Although the full consequences of the ruling are yet to be seen, the European Gaming and Betting Association welcomed the ruling as part of “much-needed reform” in Germany.   “Other member states have opened or are opening their markets. They show that consumers can be better protected in a market that is both regulated and open to competition,” it said.

Tagged in: Antitrust Enforcement, International Competition Issues,