IAGA SUMMIT FOCUS: GERMANY SPORTS BETTING, ONLINE POKER & VIRTUAL SLOT MACHINES
On July 1st, 2021, the State Treaty on the New Regulation of Gaming in Germany (State Treaty on Gaming 2021 - GlüStV 2021) came into force. Now the permission for an event of sports betting, online poker and virtual slot machine games is granted on application. If the specific requirements are met, there is a right to approval. However, if the competent authority nonetheless refuses to grant the licence, the applicant is liable for damages under certain circumstances.
One of these ‘special licensing requirements’ pursuant to Section 4a GlüStV 2021 is the so- called ‘extended reliability’ pursuant to Section 4a (1) No. 1 GlüStV 2021, which will be discussed below. Particular attention will be paid to the reliability under gaming law within the meaning of Section 4a (1) No. 1 lit. b) GlüStV 2021.
I. Enhanced reliability as part of the special licensing requirements for sports betting, online
poker and virtual slot machine games.
Te special licensing requirements, in particular the extended reliability, must first be assessed from the perspective of risk prevention - and not from that of sanctioning. Te aim is to protect business transactions. Te determination of the extended reliability is subdivided as follows:
Te first aspect of extended reliability pursuant to Section 4a (1) no. 1 lit. a) GlüStV 2021 is full disclosure of the applicant's ownership and shareholding structure. Absolute transparency must also be ensured with regard to the respective shareholding ratios of the applicants, provided these do not fall below a certain threshold.
As a second aspect, according to No. 1 lit. b), the applicant and the responsible persons commissioned by it must possess the reliability and expertise required for the organisation of public games of chance and must guarantee that the event is carried out properly and in a manner that is comprehensible to the gaming participants and the licensing authority. In the case of legal entities and partnerships, all persons authorised to represent the entity must meet the requirements of reliability and expertise.
According to No. 1 lit. c), thirdly, the lawful origin of the funds required for the organisation of public games of chance must also be demonstrated and, finally, No. 1 lit. d) requires that neither the applicant himself nor an enterprise affiliated with him nor a person controlling the applicant nor a person controlled by the person controlling the applicant organise or broker unauthorised games of chance.
II. Origin and Meaning of the Term: ‘Reliability’ or ‘Unreliability.’
Te term ‘reliability’ used in Section 4a (1) no. 1 lit b) GlüStV 2021 is in itself a central concept of trade law (cf. Streinz, NVwZ - Extra 3/2022). Tis is an indeterminate legal concept that is fully reviewable by a court and does not grant
P52 WIRE / PULSE / INSIGHT / REPORTS
Yannick Skulski Senior Associate Hambach & Hambach Rechtsanwälte
Dr. Wulf Hambach Partner, Hambach & Hambach Rechtsanwälte
the authority any discretion. Te term “unreliability“, which is a prerequisite for a trade ban, also comes from trade law. According to Section 35 (1) of the German Trade Regulation Act (GewO), a person is unreliable if, based on the overall picture of his or her behaviour, there is no guarantee that he or she will properly carry out the trade he or she is engaged in in the future. Due to the serious consequences of a trade ban for the trader, a particularly responsible weighing up must take place between the trade authority measures that are indispensable for the proper functioning of the economy and the interests of the trader. Te competent authority must assess past conduct and ultimately make a prognosis decision on the basis of proven facts in the specific individual case. All behavior is relevant in this respect, insofar as conclusions can be drawn from it for the activity applied for (cf. Streinz, NVwZ - Extra 3/2022).
It is thus the authority's very own task to fully ascertain the facts of the case, to evaluate individual criteria and also to weight them according to the type and severity or number of violations, as well as to uphold the principle of proportionality in its prognosis decision, so that an official intervention can be foreseeable and determinable. Te obligation to be heard resulting from § 28 VwVfG means that the opportunity must be given to comment on specific objections in order to be able to eliminate or eliminate existing (alleged) deficits after clarification of the legal and factual situation.
Phillip Beumer Associate Hambach & Hambach Rechtsanwälte
It is of great importance that the burden of proof for the existence of those facts which justify the prognosis of unreliability lies with the competent authority (cf. Becker, ZfWG 1/2022). Facts must therefore be proven and speculation is prohibited.
Christian Reidel German Lawyer Hambach & Hambach Rechtsanwälte
Te explanatory notes to the GlüStV 2021 state that the required reliability (under gaming law) of the applicant and the responsible persons is modeled on the reliability under commercial law, which means that the reliability under commercial law undergoes a “modification“ under gaming law due to the special features of gaming law. It is therefore necessary to clarify by way of statutory interpretation which conduct in the area of gaming law should specifically lead to reliability or unreliability, whereby the principles set out above also apply in the area of gaming law.
III. Individual aspects of (modified) reliability under gaming law.
“The special licensing
requirements, in particular the extended reliability, must first be assessed from the
perspective of risk prevention - and not from that of sanctioning. The aim is to
protect business transactions.”
A predefined catalog of indicators for reliability or unreliability under gaming law within the meaning of Section 4a (1) no. 1 lit. b) GlüStV 2021 does not yet exist. In any case, it must be assessed in the specific individual case whether the applicant and the responsible persons offer a guarantee that they will organize and carry out the gaming offer permitted to them properly and in compliance with all regulatory requirements of GlüStV 2021 as well as the content and ancillary provisions of the license. Reliability does not mean infallibility, however, which is why the licensing authority may not refrain from weighting any violations of the law. Nor may a “bad actor clause“ (“good conduct clause“) be applied through the “back door“,
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