On 28 March, the German Supreme Court gave its long awaited ruling on the compatibility of the gambling law in Bavaria with the German Constitution.

The Bavarian law today only allows sports betting by the state lottery organization. The law was challenged by a commercial bookmaker, who was prohibited from offering sports betting.

In brief, the Supreme Court ruled that the Bavarian law is not compatible with the German constitution as it keeps a monopoly without proper justification. A gambling monopoly would only be compatible with the constitution, according to the Court, if it aims to fight gambling addiction. The Supreme Court ruled that the current law does not respond to this aim and therefore needs to change.

Unlike some of the other Courts in Europe, the German Supreme Court leaves little discretionary power to elected policy makers as how to fight gambling addiction. The Court rules that state single license operators have to limit advertising; cannot offer betting opportunities on televised sporting events; have to reduce points of sales; and restrict the number of betting products. The argument that the state sports betting would guarantee high revenues for state causes was completely rejected.

The findings are surprising in a country where only €400 million betting is through the legal channel compared to an estimated €2,2 billion through non-authorized channels. One could therefore easily argue, like the courts in some other European countries have rightly done, that advertising and marketing by the state authorized operator is necessary to draw bettors away from the illegal channels.

The Ruling does not give any light on the issue of jurisdictional integrity. Remote gambling by Germans on websites based in places like Curacao, Antigua or Malta are out of reach of German authorities and will remain so after this Ruling or a revised law as envisaged by the Court. In the mean time, off-shore betting pirates continue to profit from what is still an excellent German racing product without making any contribution to it.

The Ruling says that the state controlled sports betting monopoly can continue until a new law has been adopted. However, the state sports betting operation would have to comply immediately with the Court’s findings, i.e. cut back on advertising. The new law could then either be an opening up of the market or the opposite, a tighter policy toward the marketing of sports betting services.

The Bavarian legislator has until 31 December 2007 to adjust its legislation. For those who understand German, the complete ruling can be found at: http://www.bundesverfassungsgericht.de/entscheidungen/rs20060328_1bvr105401.html