German Gaming Companies Challenge Colocation Rules

Posted on: September 14, 2022, 12:33h. 

Last updated on: September 16, 2022, 04:48h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Germany introduced its updated gambling laws with the hopes of helping the industry evolve. The result has been constant complaints and lawsuits, with another legal battle emerging between operators and the country.

View of Hornberg village in Schwarzwald mountains - Germany
Hornberg village in Schwarzwald mountains – Baden Wurttemberg, Germany. The state’s constitutional court will hear a case from sports betting operators regarding operator colocation laws. (Image: Shutterstock)

Four gaming operators will present a case to the Baden-Wurttemberg Constitutional Court this November. They plan to challenge a colocation ban that prevents sports betting facilities from sharing the same buildings as casinos or other gambling venues.

The complaint argues that German courts have failed to address the gambling industry effectively. Specifically, the language in the first treaty doesn’t protect operators with sports betting facilities in the same building as casino activities. The treaty, and the others that have followed, govern how German states can enact their own gambling laws while creating a countrywide regime.

Germany’s Fourth State Treaty on Gambling went live in July 2021. However, it didn’t completely supersede previous treaties. A section of the First State Treaty on Gambling prohibits sports betting and casino activities in the same building.

German Gambling Laws Fail to Impress

Baden-Wurttemberg’s state-level gaming act, which it introduced a decade ago, states that all gambling facilities must be located at least 500 meters (1,640 feet) apart. That distance is measured from the entrance door of one enterprise to the entrance door to another. The law lumps all gambling sectors into one category, even though sports betting and casino gambling only share a loose connection.

This is the latest of several lawsuits Germany is facing from the gaming industry. Sportsbooks in the state of Hesse launched a lawsuit there in May over the restrictive nature of the market. That battle involves a total of 33 sports betting and online gaming operators.

There is also frustration over the lack of progress in the online casino segment. It took a year for Germany to license only a small handful of operators. Simultaneously, their options are restricted, as not all states agreed to allow open markets.

Thuringia, for example, is running its own show where, so far, only online slots are available.

Sportsbooks May Give Up

This past June, a court in Ludwigslust told Betano it had to return a bettor’s money. Last year, Germany introduced a loss limit of €1,000 (US$999) with its new gambling laws. Although this was after the bettor lost his money, the sports betting platform was still liable.

As a result, Betano had to return €4,380 (US$4,379) of the €5,380 (US$5,379) the bettor lost. This precedent could lead to further losses for operators under the same ruling.

There are also lawsuits against operators for other reasons. If a gaming platform didn’t have a license to operate in the country, a gambler could conceivably sue to recover all the money he or she lost. A recent court decision reinforces that stance and could lead to trouble.

Earlier this month, the Cologne Regional Court ordered an unidentified sports betting operator to return €93,000 (US$92,953) to a user. The unidentified platform didn’t have a license when the bettor used the service and is liable for all of the money spent.

The individual from North Rhine-Westphalia placed wagers on the site from August 2017 to December 2019. The Gibraltar-based sports betting provider didn’t have a valid license to offer its services in the state during this period.

The judge ruled that the only qualification for the decision was that the sportsbook had no license. As a result, any bettor who can prove their gambling expenditures on an unlicensed platform is entitled to a refund.