Federal Administrative Court Darmstadt suspends sports betting licensing proceedings

Only three months after the new regulations came into force, the process to obtain licenses for online sports betting offerings is Germany came to an abrupt end.

In 2019, the German federal states passed a revised gambling law. On the basis of the new rules, the competent authority in Darmstadt was supposed to issue the first licences in January 2020. However, online gambling providers must once again show patience. In its decision published in April 2020, the Administrative Court of Darmstadt stopped the process for granting sports betting licenses. The origin of the proceedings was an action brought by an Austrian operator who aimed at entering the German market. The claimant criticized a lack of transparency in the licensing procedure causing the entire process to be discriminatory. The Administrative Court Darmstadt followed this line of argument as stated in its press release:

The procedure was discriminatory.

The court found that the unequal treatment has already started in August 2019, when the competent authority offered an information event to which the authority only invited the providers known on the market at that time. Although the event was also announced on the website, other providers, especially those from abroad, had hardly a chance to be aware of the event. In the opinion of the court, this lack of information alone caused unequal treatment.

The procedure was not transparent.

One of the conditions for the award of the sports betting licence required the gambling provider to provide a security amounting to EUR 5 million. Upon request, the authority indicated that this amount could be reduced. However, it did not provide any specific criteria for the reduction.

Further, there was some confusion regarding the distribution of competences. According to the new rules, the authority in Darmstadt is responsible for the licensing procedure. Nevertheless, a consortium of members from all state authorities (so-called Glücksspielkollegium) was also involved in the process. The scope of power of this institution remained unclear to the sports betting providers.

Outlook

It is reasonable to assume that the authority will appeal the decision. It must also be borne in mind that the decision was taken in interim relief proceedings. Therefore, there is a possibility that the court of the next instance or the court of the main proceedings will reach a different conclusion. Until then, it is quite possible that authorities will not take action against sports betting offers.

Depending on the length of the further court procedure, a decision may also become obsolete. On July 1, 2021, the new Interstate Treaty on Gambling enters into force providing for a different license procedure for online sports betting. The suspended process was only intended as a stopgap measure. Any sports betting licenses granted before July 1, 2021 shall remain effective until December 31, 2022.