Games of Chance
Any game is considered to be a game of chance if the player is required to pay considerable stake money (BGH 34, 175; Bay NJW 90, 1862) in return for a chance to win and if success depends predominantly or completely on chance or coincidence and cannot be influenced by the player. (BGH 2, 274, 276; 9, 37; 29, 152, 157; 36, 74, 80; LG München I NJW 02, 256; BGH wistra 2003, 145; Schönke/Schröder-Eser/Heine, Strafgesetzbuch, 26th ed., § 284 para. 5.) A game of chance is operated in public when it is offered to an open circle of persons or regularly organized in associations or other similar groups open to the majority of the public.(Sec. 3 para. 2 Staatsvertrag zum Lotteriewesen (LottStV, 18.12.2003, 13.2.2004).This corresponds with the general definition made within the scope of sec. 284 StGB, RG 57, 193; Tröndle/Fischer, Strafgesetzbuch, 52. ed. 2004, sec. 284 Rn.14.)
Media gambling services and typical promotional games are in general not considered to be games of chance because they either are qualified as games of skill and/or do not require that significant stake money be paid.(Tröndle/Fischer, Strafgesetzbuch, 52. ed. 2004, sec. 284 Rn.3a.; RGSt 62, 163, (166).) The qualification of sports bets as a game of chance is still controversial.(In a classical understanding sports bets were always considered to be games of chance; e.g. BGH, judgement from 14 March 2002 Az.: I ZR 279/99 ‘ sport bets ‘, as well as BVerwG, judgement from 28 March 2001 Az.: 6 C 2,01 ‘ Oddset bets ‘; different opinion however: LG Bochum (reversed), judgement from 26 February 2002, , AG Karlsruhe Durlach, judgement of 13.07.2000 – Az.: 1 DS 26 Js 31893/98 – GewArch 2001, 134 f., thereafter comparable with stock broking.The situation seems to have been clarified in the LottStV (Fn. 3), but is still questioned in doctrine.)
General Prohibition of Games of chance
The organization and operation of games of chance in Germany is prohibited unless the operator is validly licensed. It is equally illegal to act as an intermediary in the participation of unlicensed or foreign games of chance or to advertise such games.
Criminalisation of Unlicensed Gambling
The central and very controversial provisions are sections 284 (Section 284 StGB – Unauthorized Organization of a Game of Chance (1) Whoever, without a licence granted by the relevant public authorities, organises or runs a game of chance for the general public or makes the equipment therefore available, shall be punished with imprisonment for not more than two years or a fine. (2) Games of chance in clubs or private parties in which games of chance are regularly organized shall qualify as publicly organized. (3) Whoever, in cases under subsection (1), acts: 1. professionally; or 2. as a member of a group organised for the purpose of the continued commission of such acts, shall be punished with imprisonment from three months to five years. (4) Whoever promotes or advertises a game of chance (as described in subsections (1) and (2)) to the general public, shall be punished with imprisonment for not more than one year or a fine.) and 287 of the Criminal Code (StGB) according to which the public organization or operation of a game, the provision of equipment for such game, or, respectively, the organization of public lotteries or raffles shall be punished if the activity is exercised without a license issued by German public authorities.(Sec. 284 StGB addresses only humans and not entities, as a criminal liability of entities as such does not (yet) exist according to German Criminal law.) In addition to the sanctions concerning the offer of games without license, section 284 para. 4 StGB prohibits advertising for such activities.
The statutory elements of the organization or operation of games are rather difficult to distinguish. (Düsseldorf 2 Ss 133/90, 14.5.1990; Tröndle/Fischer, Strafgesetzbuch und Nebengesetze, 53th ed. 2006, § 284, Rn.11.) It can be stated that sec. 284 StGB addresses persons or entities (See also sec. 14 para.1 StGB.) which either establish the organisational framework for the operation of a game of chance and the participation of the public or which guide the course of the game, in both cases acting for their own account and in their responsiblility. (Bay NJW 79, 2258 ; Tröndle/Fischer, Strafgesetzbuch und Nebengesetze, 53th ed. 2006, § 284 Rn. 10, 11a-13; Lackner/ Kühl, Strafgesetzbuch mit Erläuterungen, 25th ed. 2004, § 284 Rn. 11;)
According to sec. 3, 9 StGB, sec. 284 et seq. StGB can also apply to foreign operators, operating within German territory. (BGH, I ZR 317/01, 1.4.2004.) In case of foreign operators providing games on the internet, it is controversial whether the foreign provider “operates” within German territory when his website is accessible for German participants (See also RGSt 42, 430 (433), OLG Braunschweig, NJW 1954, 1777 (1779); BGH, 1 StR 339/56, 28.5.1957; Laukemann/Junker AfP 2000, 254; Schönke/Schröder-Eser/Heine, Strafgesetzbuch , 26 th ed., 2001, § 287 Rn. 16, Schmidt, WRP 2004, 585.): It has been argued that the access to a foreign gamong website must be considered equivalent to the provision of equipment for the operation of games pursuant to sec. 284 StGB. (BT/Drs. 13/8587.BGH Intertops Extra, NJW 2002, 2175; OLG Köln GRUR 2000, 538.) It has however to be considered whether the foreign operator specifically addresses the German public (Lesch JR 2001, 383 et seq., JA 2002, 986 et seq). In consequence advertising activities for such games on German websites may also constitute a criminal offence under sec. 284 para. 4 StGB.(It is controversial whether hyperlinks to gaming websites from abroad are considered to be illegal, see e.g. LG Berlin MMR 2002, 119.)
To act as an intermediary enabling the public to participate in illegal internally organized or foreign games of chance can be interpreted as a case of sec. 284 para. 1, 4 or sec. 284 para. 1, 27 StGB (assistance in the commission of an unauthorized organization of a game of chance), depending on the circumstances of the particular case. (Tröndle/Fischer, Strafgesetzbuch und Nebengesetze, 53th ed. 2006, § 284 para.14b. 1 StGB. In doctrine the offering of an occasion to gamble has been considered to be sufficient to speak of an “operation” of games (see Schönke/Schröder-Eser/Heine, Strafgesetzbuch, 26 th ed., 2001, § 284 StGB, Fn. 12).)
The intention of this strict approach is to guarantee a control over the exploitation of the human passion for gambling with its negative consequences for public health, to avoid the risk of crime and fraud and to safeguard the maintenance of the social order. (See also BGH 11, 209 ; Bay NStZ 93, 491, Schönke/Schröder-Eser/Heine, Strafgesetzbuch, 26 th ed., 2001, § 284 Rn. 2; Leipziger Kommentar – v. Bubnoff vor § 284, Rn. 4; Dietz, Zur Problematik des Glücksspielstrafrechts, 1993; BVerwG DÖV 01, 961, 962.)
Competence of the Länder
As gaming is considered to come within the scope of danger prevention (BVerfGE 28, 119, see art. 70 para. 1 of the German constitution.), the organisation of the gaming sector is mainly governed by the legislation of the 16 German regional entities (hereafter “Länder”), with the exception of horse races and machine gaming outside casinos. The Gaming Laws of the Länder govern the sectors of lotteries, sports bets and casinos. Due to the legislative competences of the Federation for “bets on horse races” and of the Länder for any other type of game including “sports bets” both types of bets have to be distinguished.
Although this leads to a complex legislative landscape, the legal situation in the 16 Länder is de facto rather similar. (So also Hoeller/Bodemann, Das Gambelli-Urteil des EuGH und seine Auswirkungen auf Deutschland, 122 (124).) The basic structures of the Länder acts, which were initially based on ancient federal laws, are comparable, especially as regards the sectors of lotteries and sports bets, which are in practice in the hands of the State or an entity of which the State holds the majority of the shares. Moreover, the Länder Interstate Agreement concerning lotteries (Staatsvertrag zum Lotteriewesen (hereafter LottStV, 18.12.2003, 13.2.2004).) (see hereafter LottStV) which is effective since 2004 established a common framework for the operation of lotteries and sports bets in the Länder.
Competence of the Federation
The Federation regulates machine gaming outside casinos, which is subject to Trade, Commerce and Industry Law (GewO), (Trade Commerce and Industry Regulation Act – Gewerbeordnung (GewO) in the amended version, 22. 2.1999 (BGBl I 202); last amendment 30. 7.2004 (BGBl. I 2014); See also below under 2. (Definitions).) and is also competent to legislate concerning betting on horse races, which traditionally follows a specific lawful purpose and which is regulated in the Race Betting and Lottery Act (RennWLottG) (Horse races Betting and Lottery Act – Rennwett- und Lotteriegesetz (RennLottG), 8 april 1922, last amendment 24.8.2002 (BGBl. I 3412).). The exercise of these activities is subject to a strict license requirement.
The regulatory structure of gaming activities is complex and strict conditions have been fixed for the licensing of games, especially for their commercial operation. The conditions for the authorisation of games of chance vary pursuant to the type of game and to the level of control required respectively.
While the sectors under federal legislation (Betting on horse races and machine gaming outside casinos) are “only” subject to license requirements, the access to the market is the most strictly regulated in the sectors subject to the Länder legislation.
The Interstate Agreement on Lotteries and the lottery acts of the Länder reserve the commercial operation of games either to themselves, to entities organized under public law or to private law entities whose major shares are directly or indirectly held by the Land.
Licenses can be issued to private entities, however only under very strict conditions and only under certain circumstances: In the case of lotteries and raffles (but not sports bets), if there is no economic interest pursued and provided that any threat to the public order can be excluded. A general permission can be issued for lotteries with a charitable but unimportant commercial interest (total stakes of less than 40’000€).
A licence is granted by the respective Land in which the operator wishes to exercise his activity and are in general limited to its territory.
No licenses are granted to private operators for commercial lotteries and sports betting, (Information dating from 2004 with exceptions such as for charities. See BayVGH, 22.10.2002, 22 ZB 02.2126; OVG Saarland, 21.11.2003, 3 R 7/02, VG Leipzig, 6.2.2003, 5 K 658/01.) with the only exception of licenses issued to Ex-GDR betting businesses, the validity of which is controversial. (OVG Thüringen, 3 ZKO 82/01, 11.7.2003. The licenses were granted on the basis of the trade act of the RDA, 6.3.1990 (GBl. I 138) and its implementing regulation, 8.3.1990 (GBl. I 140).) The operation of Lotto, Toto (football) and oddset-sports bets is reserved to the lottery operators of the German Lotto/Totoblock.
The issuance of casino licenses is also very restrictive and is limited to a small number of casinos. The casino acts of certain Länder provide for a grant of a license exclusively to a state operator, others allow access to private casino operators either in an a complete priate ownership or a mixed form (public/private), but in general, and de facto, in the latter case the majority of shares are most often held by the Land.
It is therefore not inaccurate to speak of a de facto State monopoly for the majority of games under the Länder legislation, although with some exceptions (lotteries organised by charities and casino acts providing for private or mixed ownership). In particular with respect to sports bets, however, many private operators attempt to enter the market and operators of horse race betting try to increase the variety of bets they offer and wish to enable their clients to bet on other sport events than horse races.
Even if foreign providers are not openly discriminated against since gaming laws contain no express exclusion of operators from abroad, their possibility of operating games of chance is generally theoretical for the sectors of high economic interest (public lotteries, sports bets and casinos) as the provisions either provide for Länder operators, public law entities or private law entities dominated by the State and restrict the number of licences which may be granted.
The fact that an operator from abroad providing services within the German territory disposes of a foreign gaming licence or complies with foreign gaming provisions is (although controversial) considered to be irrelevant for the operation of games in German territory. (BGH (14.3.2002, I ZR 279/99 „Sportwetten III; Intertops”), BVerwG (5.2.2004, 6 B 10.04 ) and BayObLG (26.11.2003, 5 St RR 289/03).)
Jurisprudence and EC-law-conformity of the gaming legislation
The jurisprudence concerning gaming is vast. Most of the decisions however relate to sports bets which seem to be the most controversial topic discussed. (The jurisprudence concerning sports bets is extensive. The courts of all instances of several Länder the federal Supreme Court, the federal administrative court and recently the federal Constitutional Court rendered judgements concerning sports bets. A most recent decision of the Constitutional Court in the case 1 BvR 1054/01 has been rendered the 28.3.2006.) The decisions concern either the administrative Länder provisions relating to the admission of betting operators to the market which provide for State or de facto State monopolies or relate to the criminal provision of sec. 284 StGB, which punishes the unlicensed organisation and operation of games. In consequence the complaints lodged raise e.g. the question whether the legislation reserving the offer of sports bets to a monopolist is not unjustified and disproportionate or whether gaming with a foreign license or acting as an intermediary for foreign providers is to be considered equal to unlicensed gaming within the meaning of sec. 284 StGB.
It is difficult to resume the pertinent jurisprudence as opposite arguments have been brought forward either against or in favour of sec. 284 StGB or of the Länder administrative gambling rules. As regards the compliance of sec. 284 StGB with the EC-freedoms the jurisprudence is non-uniform. Some courts either did not raise the question or did not discuss it in depth, those examining the compliance with EC law held that German gambling rules are a legitimate and proportionate means for protecting public interests and thus compatible with the freedoms if the EC Treaty. (E.g.: BGH, I ZR 317/01, 1.4.2004; BGH I ZR 279/99 (OLG Köln, 6 U 53/98, 22.10.1999), 14.3.2002; BVerwG 6 C 2.01, 28.3.2001; BayVGH, 24 CS 04.1101, 21.12.2004; VGH Baden- Württemberg, AZ: 6 S 1288/04, 15.1.2005; BayObLG, 5St RR 289/03, 26.11.2003; Hanseatisches OLG, 5 U 32/04, 312 O 339/03, 19.8.2004; OLG Köln, 6 U 53/98, 22.10.1999, confirmed by the BGH in the appeal; BGH I ZR 279/99, 14.3.2002 VG München, M 16 K 02.2154, 27. 1. 2004.) The safeguard of public and social order; consumer protection; the prevention of crime and fraud, of the exploitation of the human passion for gambling for profitmaking, the prevention of gambling addiction; the guarantee that the gaming activities will be operated in an orderly fashion and the net proceeds are used for purposes of public interest are the justifications on which the argumentation is based.
There is however an important number of courts which doubt the constitutionality (See in particular the decision of the BVerfG, 28.3.2006, 1 BvR 1054/01.) and/or EC-law compatibility of sec. 284 et seq. StGB or of the Länder regulation of the access to the gaming market. Courts have argued that it must be taken into consideration when an operator holds a valid license of another EU Member State. (E.g.: BVerfG, 1 BvR 223/05, 27.4.2005; BVerfG, 1 BvR 1446/04, BVerfG, 1 BvR 2495/04, 1.12.2004, 26.8.2004; HessVGH, AZ.: 11 TG 3060/03, 9. 2. 2004; Az.: 11 TG 2096/04, 27.10.2004; LG Hamburg, 629 Qs 56/04, 12.11.2004 ; OVG Schleswig-Holstein 3 MB 80/04, 18.01.2005; OVG Sachsen, 3 BS 28/04, 405/03, 22.12.2004 ; VG Karlsruhe, 11 K 160/04, 10. Mai 2004 ; VG Aachen, 3 L 17/04,12. 11. 2004 ; VG Minden, 3 L 804/04, 12.11.2004 ; LG Karlsruhe, 14 O 3/04 – KfH III, 21. 1.2004 ; LG Baden-Baden, 2Qs 157/04, 2.12.2004 ; LG Darmstadt, 3 Qs 144/05, 11.03.2005 ; LG München I, 5 Qs 41/2003 27. 10. 2003 ; AG Heidenheim, 3 Ds 424/03, 4.12. 2003 ; AG Recklinghausen ; 32 Ds 11 Js 474/04, 10.03.2004. ) It was also pointed out that the justification for a state monopoly (avoiding the dangers for the public caused by games of chance, maintenance of the social order) ceases to be credible if the monopolist itself has recourse to aggressive advertising campaigns, regularly introduces new gaming structures and if the operation of games is highly commercialised. (VG Stuttgart, 5 K 2107/03, 15.10.2003 citing BVerwG 6 C 2.01, 28.3.2001, VG Düsseldorf, 18 K 11762/96, 31.8.2001).)
In the same sense argued the Constitutional Court in a most recent decision which will have an impact on the entire German gaming structure (28 March 2006, 1 BvR 1054/01).
The State monopoly (here Bavaria) fails to pursue its objectives (prevention of gaming addiction etc.) in a coherent manner and the interplay of public interest objectives and State fiscal interests becomes contradictory when the monopolist has recourse to an aggressive marketing strategy. In another recent decision (BVerfG, 1 BvR 223/05, 27.4.2005.) the Constitutional Court criticised a trial court, ruling in a provisional procedure concerning a sporting bets case, for failing to take into account the unclear legal situation with respect to EU law which might have led to the conclusion that the interest of a sports bets operator in continuing his business would outweigh the public interest in the enforcement of the prohibition order.
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