I think the way that the EC reaction to Germany’s proposed law has been reported in the press this morning gets it all wrong, but I’m running about generally right now, which is the main reason I have posted so little lately. We saved 1300 jobs recently by saving a company under the cosh from the FSA from going into administration, and I haven’t even had the time to write about that, as I plan to, to make ‘the case for lobbying’.
Luckily, as regards Germany, I was sent an analysis this morning which I think hits the nail on the had as regards why the EC’s letter should be seen as a positive rather than a negative for the gambling industry, so rather than waiting for a time to write – by which time it will be old news – I instead reproduce that analysis below. It is written by Ivor Jones of Numis; and in case you’re wondering, yes, I have asked him if I may! This is what he had to say.
We have now had the opportunity to read the EC letter to Germany in relation to the online gambling treaty proposed by 15 States. The EC makes it clear that the treaty, as amended and including technical details, will have to be properly “notified” to the EC along with evidence which justifies its restrictive elements. The EC makes it clear that the treaty as it currently stands cannot be passed into law.
Treaty must be notified. “The [EC] will only be in a position to assess compliance…once all relevant legislation has been amended and notified”. Our translation: “Thanks for the letter but you will have to go through the proper process.”
Technical regulations. The EC “would like to remind [Germany] of the obligation to notify”. Our translation: “and when you do go through the proper process don’t forget the important details like last time”.
Cumulative effect. The EC had previously said that the cumulative effect of the proposed regulations on sports betting made it “very difficult” to make a profit and therefore excluded commercial operators. The EC now “note that the Federal States are now convinced that [it is]..possible..[for] future licensees..to..operate profitably”. However, the EC also notes that “on the basis of the information provided” it is “not in a position to assess the economic viability”. Our translation: “You still haven’t shown how your treaty doesn’t unfairly, and therefore unlawfully, favour your State lotteries”
Restriction on number of licences. The initial draft Treaty provided for seven licences to be issued but the revised draft provides for 20. The EC confirmed that Germany is entitled to restrict the number of operators “if it pursues the objective to reduce gambling opportunities”. However, the EC goes in to say that “the suitability and proportionality of the measures needs to be properly demonstrated”. Our translation: “You haven’t shown why a 20 licence limit achieves yours supposed social policy objective”
Ban on casino and poker. 15 States attempt to justify ban in current draft Treaty on the basis that “such games are vulnerable to rigging and have significant addiction potential”. The EC notes that “no data has been provided” as “evidence”. Our translation: “If you want to ban a game online which is permitted offline you have to provide data to justify ban.”
The process of redrafting the Treaty, getting approval from the States and notifying it to the EC will take months, if it happens at all. We believe that some of the States have expressed dissatisfaction at the restrictive legislation being pursued. Meanwhile, back in Schleswig Holstein, the EC approved regulatory regime is in place and licences are expected to be issued in the next few weeks. We believe the level of regulatory risk in Germany is declining.