German rulling "beginning of the end" for licensing process

The much-derided process to award Germany’s 20 federal sports betting licences may finally collapse after a ruling Monday by a Wiesbaden court, which criticised every single aspect of the present method of selecting licensees.

The Administrative Court of Wiesbaden said in its ruling - issued following a request by an Austrian sports betting operator which had failed in its application - that it had reviewed the procedure and found that it contained various legal violations, was a restriction on the freedom to provide services, and impeded on the right to a discrimination-free and transparent selection process.

The Higher Administrative Court will have to ratify the lower court's decision but should this happen it would block the granting of licences for at least another year, and possibly for longer, Dr Stefan Bolay of German law firm Hambach & Hambach Rechstsanwälte said. 

"Furthermore, it is likely that the whole concession procedure (or at least a part of it) has to be conducted again," Dr Bolay said. "Therefore, these latest developments seem to be the 'beginning of the end' of the current concession procedure."

While the multi-level structure of the process was not objectionable, the court said, it lacked transparency, as the applicants were unable to see from either the tender or the legal text of the State Treaty on Gambling (Glücksspielstaatsvertrag) what was ultimately required of them for a successful application.

The applicants were informed that they would only be told the minimum requirements for securing a licence if they qualified for the second stage of the process, though the court said that this should have been explained in the original tender process.

The selection procedure was criticised as being contrary to requirements for a lawful restriction on the freedom to provide services. The tender requirements for the first stage of the process, including five key areas, were listed but there were no proper minimum requirements for the second stage, meaning operators would have to submit information with no clear idea of whether this was appropriate for the application.

The court said that the Treaty itself was not clear about the information that was required to be submitted, and said that in view of the limited length of the treaty – 7 years in total – it was crucial to be specific to ensure the licensing process could be completed within a reasonable time frame.

It also noted that the Treaty did not set out a formal concession process, but handed off responsibility for this to Hesse, without any real instructions on how this should be formulated.

It added that it was clear from the 600 inquiries seeking clarification on the requirements for the second stage of the process that there was a major lack of transparency.

"The main criteria for the minimum requirements should be set out in a clear, precise and unambiguous manner, to ensure that every applicant is duly informed and fully understands what they are being asked. It was clear that this just hadn’t happened," the court said.

It also found that the audit and decision-making processes for awarding licences had been largely opaque, with no information provided on the people serving on the committee or their qualifications. It could also find no detailed information on the decisions taken by the committee, as no detailed minutes of the meetings were kept, only the outcome of votes.

The court also noted that the authorities were operating under Hesse law while making decisions of national importance. This, combined with the fact that potential licensees were selected by a two-thirds majority as opposed to a unanimous vote, meant that the result did not represent the unanimous views of all states.

The ruling could prove to sound a death knell for the current State Treaty on Gambling, which has seen no licences issued in more than three years. A number of court decisions have criticised both the legislation and licensing process, with the German Sports Advisory Board even resigning in protest at the handling of the procedure.

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