Bwin wins battle to operate legally in Germany

A battle has been won, but the war is still going on. The entire European Union is astir with gambling-related issues, and the trend seems to be moving towards opening frontiers and regulating gambling rather than banning it. Recently France and Sweden started considering changes to their gambling laws, and now it looks like it is Germany’s turn as the German state of Hesse overturned a ban on Austrian bookmaker Bwin.

The 16 German states are hotly debating the issue of gambling laws, and several had already imposed bans on Bwin since last year. The situation was not looking bright for online gambling: all the German states had agreed to ban online betting by January 1st, and on April this year they went as far as to reject a demand by the European Union to reconsider this total ban.

Not one to take it lying down, Bwin challenged these bans in several German states – including Baden- Wuerttemberg, Bavaria, Saxony and Thuringia – over the proposed nationwide ban on online gambling, and to the relief of the poker community they have won on several of them: on May, a Munich appeals court overturned the ban and allowed Bwin to operate in Bavaria, and yesterday a Hesse court issued a preliminary ruling allowing Bwin to operate while a final judgment is reached. As a result of this ruling, Bwin’s shares have seen an increase of almost 10%, their biggest since March.

On both cases, the courts found the laws technically impossible to apply, stating that it is not possible to know for sure where an internet user is located at any given time. Harald Pabst, Hesse’s court's spokesman, said in an interview today that “as a practical matter, you cannot control where a person is located when he's betting over the Internet or via cell phone. That's why a ban limited to the state territory may not be imposed by the authorities.”

The Hessian authorities are confident that they will be able to enforce the gambling ban, which they justify on the grounds of preventing gambling addiction. Thorsten Neels, a spokesman of the Hesse Ministry of the Interior, considers this just a temporary setback: “this will only be a short-lived victory,” he said. “On Jan. 1, the new national ban will apply and stop Bwin again.”

In spite of Mr. Neels’s declaration, there seems to be a trend in European countries towards opening up gambling, in response to the European Court of Justice’s pressure to ensure EU law is applied uniformly and reciprocally throughout all member countries. As Europe’s gambling market becomes increasingly liberalized, the USA will be under even greater pressure to reconsider its stance against gambling, especially regarding the WTO sanction currently under negotiation.