EU Continues its Crackdown on Lottery Monopolies Among its Member States

Earlier this month, a court in Germany upheld a complaint issued by a Bavarian firm that was blocked from unveiling a lottery for the Upper Palatinate administrative district.

The Bavarian operator, which remained unnamed throughout the legal process, was denied the chance to launch its own lottery as the Administrative Court of Munich deemed they weren't qualified to run a lottery and that any desire to operate a state-operated lottery monopoly contravened Article 56 of the Treaty of the Functioning of the European Union (TFEU) which prevents the development of any protectionist policies among all EU member states.

At present, the EU allows member states to have monopolies on certain types of gambling, which could be construed as leading to high risk of addiction, but only if specific circumstances are met. State monopolies are still permitted providing operators do not operate big-money marketing campaigns to promote their products. Sweden's Svenska Spel has long held an online gambling monopoly in the country, but the EU took the organization to task over significant rises in its marketing budget which could have been construed as attempts to boost government revenues.

Sweden is not the only country to have been brought before the European Court of Justice for infringing EU gambling laws. Eight other member states (Czech Republic, Lithuania, Greece, the Netherlands, Cyprus, Belgium, Romania and Poland) have incurred the wrath of the European Commission.

The outcome of the court ruling has placed a significant question mark specifically over Germany's new federal gambling treaty, which is planned to take effect in all 16 states from January 1, 2018. However, each individual state must approve of the treaty in its entirety before it becomes legally binding and, with provisions for private lottery companies likely to need incorporation into the treaty to gain EU approval, the treaty still hangs firmly in the balance. At least four German states already opted not to sign the dotted line. This is good news for iGaming and lottery operators with licences in other EU jurisdictions looking to tap into the German market.

Online lottery betting firm, Lottoland recently filed for its own German operating license, seeking to become the nation's inaugural privately-owned lottery brand. Numerous applications had been submitted in several states throughout Germany to run "major lottery" products. Lottoland, which is licensed in Gibraltar, already allows German customers to place bets on lotteries occurring outside the German border with more than €44m dished out in prize money to German-based players during the last two years.

Furthermore, Lottoland also officially expanded into Ireland this year, securing a remote betting license from the Irish government in 2016. Dr Rolf Stypmann, a spokesman for the brand, pinpointed its success in the UK, Austria and Italy to prove that "private companies are able to handle lotteries at the level of state lotteries".