Germany: Further delays in the licensing process and a wave of complaints expected

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Recent developments in Germany indicate that the ongoing licensing process for the 20 available sports betting licences will be further delayed for procedural reasons, and that a large wave of complaints is to be expected once the licences are issued.

Administrative court confirms obligation to offer hearings to all applicants

On 30 April 2013, a German administrative court decided by interim injunction that the Ministry of the Interior of the federal state of Hesse - which is in charge of handling the nationwide licensing procedure for sports betting licences on behalf of all German gambling authorities - is to provide the plaintiff, a bookmaker and applicant for a German sports betting licence, with the opportunity to personally present its business concept to the Ministry.

Despite being admitted to the circle of eligible candidates who have demonstrated the requisite level of knowledge and reliability, the plaintiff had not been invited to the first round of presentations held by the authorities in March 2013. Fearing that the application process might be concluded after that first round of hearings, the plaintiff brought an action before the administrative court to compel the Hesse Ministry of the Interior to give it an opportunity to present its concept to the Ministry in person.

Preselection of candidates for hearing violates the principle of transparency under EU and German constitutional law

The court ruled that every applicant that has submitted an application correctly and in time and that has demonstrated its knowledge and reliability has to be given the opportunity to personally present and, if necessary, revise its security and social concepts.

According to the court, neither the German Interstate Treaty on Gambling ("ITG") nor any other applicable laws justified a further pre-selection of candidates, once the companies had officially been invited to submit their applications. Furthermore, the court held that any such unequal treatment violated the principle of transparency under EU and German constitutional law (Articles 49 and 56 TFEU; Article 3 of the German Constitution).

Operators will have to bring individual complaints in order to rely on the decision

Under German administrative law, the immediate effects of this judgment are limited to the parties involved in the case. Therefore, the Ministry in Hesse is not obliged by the judgment to invite any other applicants to a personal hearing other than the plaintiff. This means that all the other operators who, just as the plaintiff, passed the first stage of the licensing procedure but were not invited to the hearings in March will have to bring individual legal proceedings against the Ministry. While they now have very strong arguments to demand a new round of hearings, it must be noted that other courts or even chambers of the same court are also not legally bound by the present judgment and therefore might come to other conclusions.

Further delays and a wave of complaints expected

While it might be advisable to invite all of the applicants to a new round of hearings to avoid further proceedings, the Hesse Ministry has shown no signs of doing so as yet.

On the contrary, two weeks after the judgment, the Hesse Ministry published an invitation to tender for the legal representation of the Ministry in an estimate of approximately 80 administrative court proceedings related to the sports betting licence procedure. This might very well be interpreted in a way that the Ministry is not about to re-open the licensing process but will rather try to bring it to a close end, albeit risking involvement in legal proceedings for years to come.

Regardless of what the Ministry in Hesse decides to do next, once again, the only thing that remains certain when it comes to gambling in Germany is that patience is a virtue.