German Betting Licences Set To Miss World Cup Kick Off

German operators said that sports-betting licences will not be issued in time for this summer’s football World Cup, with many looking ahead to 2015 instead.

Commercial and state operators alike at a conference in Berlin dismissed any hopes that the coveted 20 licences would be active ahead of kick off in Brazil this June.

“No question. It will not happen,” Heinz-Georg Sundermann, managing director of Lotto Hessen, told GamblingCompliance.

“The World Cup is really not the discussion in Germany for the moment. The discussion is this year or not.”

Speaking at Berlin’s Olympic Stadium, home of the national football team, Sundermann said Germany’s state lotteries are “frustrated” because without the betting licence their online unit Oddset ODS has “costs but no sales”.

Oddset is working on the assumption that licences for online and land-based sports betting will be active in the second quarter of 2015.

The World Cup is unrealistic, “but maybe next year”, said Dirk Quermann, chairman of German online gaming firm Merkur Interactive.

They were speaking at the Sponsors Sports Gaming Summit, which was attended by politicians, betting firms, payment processors, media groups and German Bundesliga football clubs.

Hesse government officials, who are in charge of the nationwide licensing, are currently working their way through piles of paperwork after a mid-March deadline for fresh applications.

Lawyers believe it could take one or two months to go through documents from the more than 40 companies asked to resubmit their bids.

The boss of one of those applicants was clear yesterday. “There are no licences in sight for 2014, maybe not even in 2015,” said Sven Ivo Brinck, the new CEO of German bookmaker Mybet.

One of the main reasons is that failed bidders are likely to be told that they have been unsuccessful 15 days before licences are issued, giving them a chance to launch legal proceedings that could take six months or more to process.

The threat of a legal logjam has left state lotteries, which opposed a liberalisation of internet sports betting three years ago, some of the most frustrated applicants for the 20 licences.

“The frustration level is very high, even on the lotteries’ side. The lotteries are really putting a lot of pressure on,” said Wulf Hambach, partner at Hambach & Hambach law firm.

“They are saying: ‘Please provide us with licences, but also with licences that aren’t so restrictive we can’t do business’.”

In March, the Administrative Court of Appeal rejected a case launched by the lotteries in Hesse’s courts to force the authorities to make a decision within three months.

Two further cases at the European Court of Justice, one of which will be heard tomorrow, about the apparent inconsistency in Germany’s licensing process piles further legal scrutiny onto a tender that started back in 2012.

Matthias Spitz, lawyer at Melchers’ Frankfurt offices, said the eventual winners may find the licences unattractive because of their restrictions on in-play betting, laborious identification procedures and the 5 percent tax on betting turnover.

Still, the state lotteries’ trade association, the Deutsche Lotto und Toto Block (DLTB), kept up the pressure yesterday for Hesse to push on with the tender.

DLTB chief executive Michael Burckert called for licences to be issued as soon as possible and for German banks to block payments to unlicensed sites.

That pressure from state companies, combined with the threat of legal retribution by those who miss out on a licence, has left Hesse’s authorities hesitating over their next step.

“They are sitting in a mouse hole and they do not want to come out,” said Stefan Meurer, managing director of German betting firm Maxcat.

Hessen: Practice is ahead of the Concession Granting Process

The Hesse Ministry of the Interior responsible for the nationwide concession proceedings set the entire process to zero in November 2013. Lawyers specialized in sports betting and providers analyze the legal development and the current practice situation. Despite all obstacles one thing is clear: bets and betting shops are part of everyday life now. Whether the industry is going to pull together, is uncertain. This shows an example of mutual association work.

The granting of the nationwide sports betting licenses by the responsible Hesse Ministry of the Interior turns more and more into a farce and probably to a never ending story.

In fall, it was stated that from the 41 candidates who were already in the second stage of application, the Ministry had invited 14 providers to a personal presentation. According to information by the Ministry, these providers had already fulfilled the minimal requirements.

“A final review of the applications of all applicants who had been admitted to the second stage has been carried out in course of the concession granting process”, the Ministry stated in an email dated 15 November 2013, quoted by “Juve”, a publishing house for legal information: “It was found that […] none of the applicants were able to show compliance with the minimal requirements […] in an auditable manner,” the Ministry announced.

Thus, the second stage of the proceedings was set to zero. According to the Hesse Ministry of the Interior, the companies are to receive information about what is to be rectified by January 2014. “The (legal) situation is unclear and unsatisfactory: the new Interstate Treaty on Gambling has already existed for one and a half years, yet still no nationwide concessions were granted,” Dr. Wulf Hambach, Munich lawyer and expert on gambling law stated.
The providers did not know when they were to receive a concession. “Due to the legal ambiguities there is a lack of predictability. The conditions are hostile to the market: five percent tax on turnover, restrictive advertising regulations, prohibition of parallel casino offers”, Dr. Hambach listed the atrocities. Originally, a maximum of twenty concessions were intended to be issued by spring 2013.

“The granting of the licenses, if at all, can only be expected in the course of the year 2014. Since the tender is little transparent and open to criticism, further subsequent proceedings before the administrative courts also seem likely”, says Mirko Benesch, lawyer and partner of the law firmMorawe, Benesch, Winkler in Freiburg.

Dr. Hambach also assumes: “Until all twenty concessions are granted, it will probably take at least another year; if not a sensible legal regulation is met before.”

The lawyer also points to another legal issue: “The relation to the licences from Schleswig-Holstein is unclear. Finally, there is considerable evidence that the provisions of the new Interstate Treaty on Gambling are incoherent and thus contrary to European law. ”