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Betfair Files Second Complaint Against German Legislation

British betting exchange Betfair filed a new complaint with the European Commission this week against the latest draft of Germany’s State Treaty on Gambling. Agreed upon by 15 of the country’s 16 Länder, the bill proposes up to 20 licenses for online sports betting based on a 5% turnover tax. There is a restrictive €1,000 cap on player bets, and online poker and casino games remain illegal.

Betfair said the proposal, drafted at the state premiers’ biannual summit, remains at odds with EU law. “The detailed opinion of the EU Commission contained several points of contention with the original proposals which have not yet been addressed, and in our opinion the final makeup of the new state treaty in Germany therefore remains uncertain,” the company said in a statement.

Betfair filed its first formal complaint in July, highlighting the protectionist measures keeping private operators out of the market. The European Commission issued a detailed opinion later that month against the initial proposal, which called for a restrictive opening (only seven licenses) of online sports betting based on a hefty 16.67% turnover tax.

Despite the grievances expressed during the summer, Germany “did not sufficiently take into account the well-founded criticism by the European Commission’s detailed opinion,” according to Betfair. In particular, the betting exchange argues that the regulatory framework is still set up to favour incumbent state operators, which currently monopolise the country’s €5 billion sports betting market.

“The salient points of the European Commission’s detailed opinion have as of yet not been addressed by the 15 German Länder. Under these current proposals Germany’s new state treaty will be out of line and out of touch with fundamental EU law,” said Martin Cruddace, Betfair’s chief legal and regulatory affairs officer.

“Creating a regulatory regime which unjustifiably stifles competition and prevents  private operators from offering consumers what they want inevitably lead to market failure. Expert legal, financial and political opinion has consistently been making this point to the Lander, though as of yet, other than in Schleswig-Holstein, the message doesn’t seem to be getting through.”

The country’s northernmost Länder, Schleswig-Holstein, passed more liberal legislation on September 14. The bill legalises online poker and casino games, as well as sports and exchange betting. There are also no restrictive proposals on the number of licenses issued, and the draft is based on a more favourable 20% gross profit tax (GPT).

“In the meantime, we look forward to applying for an operating licence in Schleswig-Holstein,” said Betfair.

Betfair’s call for compliance comes after last month’s adoption of the Creutzmann resolution, which seeks “consistent use of infringement procedures by the Commission to ensure compliance of Member States’ legislation with EU law.”

EGBA secretary general Sigrid Ligne told eGaming Review: “This is something we have been campaigning on for years now, this inaction by the European Commission. It’s precisely now when European states are re-regulating their online gaming markets and the inaction by the Commission has helped embed recent protectionist regimes.

“Now we have a clear call from the Parliament for the Commission to go back to its duty as guardian of the Treaty to ensure full compliance of Member State legislation with EU law, which is extremely positive.”

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