New German Online Lottery Laws Unlikely to Hinder Growth
Interesting times in Germany where the saga of online lotteries has been going on for well over a decade. For some reason that not many can explain, the world’s fourth largest economy has it in for most forms of online sports and lotto betting, which places the country in an odd limbo within the EU single market.
This week, the Higher Regional Court of Koblenz in the Rheinland-Pfalz palatinate confirmed an earlier ruling by the city’s lower court that so-called ‘secondary lotteries’ – ie. Lotto betting – may not be offered online in Germany.
Court ruled that online lotto betting is illegal under new State Treaty on Gambling
The ruling comes ahead of the new State Treaty on Gambling, which comes into force on 1 January 2020. This will effectively outlaw all online gambling, with very specific exceptions for the official national lottery and some forms of sports betting.
The challenger in the court case, an unidentified Gibraltar-based corporation (I’m sure you can guess who), had attempted to argue that online lotto betting was not in breach of the new State Treaty, also stating that it was in contravention of EU laws.
A ‘secondary’ lottery does not run its own draws
The court decreed that the defendant’s core product is a ‘secondary’ lottery because it does not run its own draws, only allowing bets on other games organised by official national lottery providers. As such, it cannot be considered a ‘primary’ lottery, and therefore is not permitted to operate online. The court added that the measures do not amount to a restriction on EU laws governing the free movement of goods and services.
Earlier this year, European Lotteries, the body representing official national lottery operators across Europe, made clear its commitment to drive lotto betting companies out of the market. This will be easier said than done, however, when countries such as the UK, Gibraltar and Malta are more than happy to license and regulate such operators.
The effectiveness of any online lotto betting ban will be limited
In reality, given that online lottery betting companies are perfectly able to trade in Germany under foreign licenses, the primary effect of the new laws will be to make it hard to promote and advertise online lotto betting in Germany. A similar situation already exists in Australia, where Lottoland can no longer use its Northern Territory license for lotto betting, but continues to operate under its Gibraltar license, albeit with severely limited local marketing opportunities.
Whatever happens in these countries, online lotto betting is here to stay. Not only does it make a major contribution to the $235 billion global lottery industry, it is also viewed by many players as a route to playing games that can be far more lucrative than their own national lottery. Research has shown that most online lottery betting customers play their local and national lotto games as well, which suggests that many countries are cutting off their nose to spite their face.