German State Treaty on Gambling contravenes EU law – Gambling Council unconstitutional

Law professors: Gambling regulations contravene EU law and German constitution

Berlin, 11 June 2015. The gambling regulations in Germany contravene EU law and are unconstitutional. This is the verdict reached by two expert opinions on Germany’s Interstate Treaty on Gambling (“GlüÄndStV”) and Gambling Council (“Glücksspielkollegium”) – written independently of each other – by the legal experts Prof Dr Hans D. Jarass, LL.M. (Harvard) and Prof. Dr. Gregor Kirchhof.

Jarass: State treaty on gambling restricts EU freedom rights and cannot prevent gambling addiction

In his legal opinion “EU law related problems of the requirements for operating lotteries under the new German state treaty on gambling”, the Münster‐based constitutional law expert Hans Dieter Jarass argues that the state treaty of 2012 not only violates EU law but also fails to achieve its own objectives. The state monopoly for operating lotteries granted by the state treaty restricts the freedom to provide services and the right of establishment guaranteed by the EU Treaties. The creation of a lottery monopoly is subject to “increased justification requirements”. However, Jarass does not believe these requirements are met in Germany.

In 2012, the justification for the lottery monopoly was that it would help protect vulnerable players against the dangers of addiction, reduce the possibility of manipulation and criminal behaviour associated with lotteries, and steer demand towards legal offerings. According to Jarass, however, the state treaty on gambling has so far failed to achieve these goals. On the contrary. The state treaty allows additional advertising and thus makes lotteries even more attractive. Jarass: “The state lottery companies spent around 50 percent more on advertising in 2013 than in the previous year. The objective of reducing gambling addiction has thus clearly not been achieved.”

Moreover, the monopoly can not be justified with the prevention of manipulation and criminal behaviour, either. Because there is no transparent regulation and no structure in the lottery industry that is based on such criteria. Therefore it is not evident, why these intentions should be achieved better by a monopoly than by a surveillance authority.

The monopoly substantially encroaches on the entrepreneurial freedom guaranteed by Art. 16 of the EU Charter of Fundamental Rights. “As the lottery monopoly in its present form violates EU law, the relevant provisions of the state treaty on gambling are not applicable,” concludes Jarass.

Kirchhof: German gambling board undemocratic and unconstitutional

In his expert opinion “The gambling board – an unconstitutional cooperation between the federal states”, Augsburg‐based law professor Gregor Kirchhof examines the regulatory body “Glücksspielkollegium” set up by the federal states following the state treaty in 2012. Kirchhof comes to the conclusion that the board is unconstitutional and must therefore either be abolished or completely restructured.

The board – on which each of Germany’s sixteen federal states has one seat – adopts resolutions with a two‐thirds majority on permits, licences and guidelines. This gives it extensive decision‐making powers in the field of security and economic law – sensitive areas of the constitution. However, these rights are not based on a high level of democratic legitimation. For example, its decisions greatly restrict the freedom to exrecise a trade or profession. In such sensitive areas with regard to fundamental rights, the principle of democracy requires an effective supervision of the decision‐makers and an increased level of democratic legitimation. As the Council adopts resolutions with a two‐thirds majority, one state can be overruled – thus no longer guaranteeing effective legal and technical supervision. The public power exercised by the Council is no longer sufficiently traceable to the people of all states and therefore there is a democracy deficit. “The majority decisions of the board contravene the principle of democracy,” says Kirchhof.

The requirements of a democratic state governed by law, which are the clear allocation of responsibilities, regulation of administrative processes in a proper manner, and secure and effective legal protection “call for a revision of the existing gaming legislation,” states the professor for constitutional and financial law.

About the professors

Prof. Dr. Hans D. Jarass, LL.M., has been Director of the ZIR Research Institute for German and European Public Law at Münster University since 1995. From 1996 to 2011, he was Head of the Institute of Environmental and Planning Law at Münster University. From 1982 to 1990, Jarass lectured as Professor for Public Law and European Law at Bochum University and was Director of the Institute of German and European Environmental Law there from 1990 to 1995. Jarass has been a professor of public law focusing on constitutional law, environmental and planning law, European law and media law since 1978.

Prof. Dr. Gregor Kirchhof, LL.M., has been a university professor and Head of the Faculty for Public Law, Financial Law and Tax Law at Augsburg University since April 2012. From 2009 to 2012, he was visiting professor at the Universities of Hanover, Augsburg and Munich. From 2000 to 2008, Kirchhof was a research associate and assistant of Prof. Dr. Dr. Udo Di Fabio at the Universities of Munich and Bonn. Kirchhof has been a professor of public law with a focus on constitutional law, tax law and European law since 2009.

Information about the expert opinions

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