TIPP 24 AG v. GERMANY
Inadmissible
André Potocki;Angelika Nußberger;Ann Power-Forde;Helena Jäderblom;Mark Villiger;Paul Lemmens
1. The applicant, Tipp 24 AG, (“the applicant company”), is a stock company based in Hamburg. It currently operates under the name Tipp 24 SE. The applicant company was represented before the Court by Mr T. Masing and Mr N. Wimmer, both lawyers practising in Berlin. 3. In Germany, jurisdiction over gambling is divided between the Federal State and the Länder. In most of the Länder, there is a regional monopoly on the organisation of sports betting and lottery games, while the organisation of betting on horseracing and the operation of gaming machines and casinos are entrusted to duly authorised private operators. By way of a State Treaty on lottery games (Staatsvertrag zum Lotteriewesen in Deutschland), which entered into force on 1 July 2004, the Länder created a uniform framework for the organisation, operation and commercial presence of games of chance. Under this treaty, the professional intermediation of lottery games was lawful without special licensing, so long as retailers complied with certain conditions. 4. In a judgment of 28 March 2006 (1 BvR 1054/01) the German Federal Constitutional Court held that the regional monopoly on sports betting in the Land of Bavaria infringed Article 12 § 1 of the Basic Law, which guaranteed freedom of occupation. The court held in particular that, by excluding private operators from the activity of organising betting, without at the same time providing a regulatory framework capable of ensuring the effective pursuit of the aims of reducing the passion for games of chance and combating gambling addiction, the monopoly had a disproportionately adverse effect on the right to freedom of occupation. 5. A majority of the German Länder later concluded the State Treaty on games of chance (Glücksspielstaatsvertrag ‒ “the State Treaty”, see paragraph 18 below), which established a new uniform framework for their organisation, operation and intermediation. The State Treaty was ratified in the Länder of Berlin and Lower Saxony on 15 December 2007 and entered into force on 1 January 2008, subject to certain transitional provisions. It subjected the organisation and intermediation of games of chance to a licensing system whereby licences could be issued by separate Länder and were limited to the territory of the respective Land. Furthermore, the State Treaty prohibited outright the online organisation, intermediation, and advertising of public games of chance. 6. From the year 2000, the applicant company operated an Internet platform which allowed the placing of bets with lottery operators run by the German Länder. This intermediation was operated on a contractual basis with the lottery operators, who paid a commission to the applicant company. The applicant company held about 60% of the overall market share in this area. By the end of 2008, it had around two and a half million registered customers. 7. Before the entry into force of the State Treaty, the applicant company requested the Länder authorities to grant it permission to continue its professional activity under Article 25 § 6 of the State Treaty for a transitional period of one year. Only the Länder of Hamburg and Hessen granted such permission. Accordingly, the applicant company continued its activity in these Länder until 31 December 2008. Following that date, the applicant company ceased all its activities relating to the intermediation of the State-run lottery. Instead, it continued to use its Internet platform for hosting so-called “ability games”, which, however, attracted significantly fewer customers. 8. On 29 February 2008 the applicant company lodged a constitutional complaint against a number of provisions of the State Treaty as implemented by the laws of the Länder of Berlin and Lower Saxony. The applicant company alleged, in particular, that the prohibition on online organisation and intermediation of public games of chance set out in Article 4 § 4 of the State Treaty violated its right to freedom of occupation under Article 12 of the Basic Law. It further complained of a violation of its property rights, and of its rights to freedom of expression and equal treatment. 9. On 14 October 2008 the Federal Constitutional Court, sitting as a three-judge panel, refused to accept the applicant’s constitutional complaint for adjudication. The court observed that Article 4 § 4 of the State Treaty restricted and (as from 1 January 2009) prohibited outright the online intermediation of public games of chance, and thus the carrying out of a professional activity which had until then been exercised by the applicant company in a lawful way. Furthermore, Article 4 §§ 1 and 2, by subjecting the organisation of public games to State licensing, restricted the applicant company’s right to carry out a specific professional activity. These provisions were closely linked to Article 9 § 4 of the State Treaty, which provided that licences were issued by the Länder authorities and were limited to the territory of the respective Land. The Federal Constitutional Court concluded that these provisions interfered with the applicant company’s freedom to provide services. The same applied to the provisions relating to advertising and to its prohibition on television, the Internet and via other means of telecommunication. Conversely, the applicant company’s complaint did not come within the scope of the right to protection of property (Article 14 of the Basic Law), as that right only applied in case of interference with the use of acquired property, but not in cases concerning interference with specific professional activities. 10. The Federal Constitutional Court held that the provisions at issue were sufficiently precise and complied with the distribution of powers within the Federal State. Furthermore, they respected the principle of proportionality. In this connection, the court noted that the provisions primarily pursued the aim of protecting the population, and in particular minors, from the dangers of dependency on games and gambling-related crime. The court considered that these were important aims serving the public interest, which were capable of justifying objective restrictions on the freedom to carry out a specific professional activity. 11. The court further considered that gambling dependency could entail serious consequences not only for the person concerned, but also for his or her family and the wider community. It was true that certain types of games of chance were more likely to cause dependency than others, and that the lottery games intermediated by the applicant company were less likely to cause problematic or even pathological gambling behaviour than, for example, gaming machines and casino games. However, this did not call into question the legitimacy of the aims pursued. 12. The court considered that the legislature enjoyed a wide margin of appreciation when it came to making a prognosis on dangers to be averted from the public. This margin of appreciation was only exceeded if the legislature’s considerations were obviously erroneous to such a degree that they could not serve as a basis for the legislative measure in issue. Against this yardstick, the Federal Constitutional did not find reason to object to the legislature’s considerations. It noted that these considerations were supported by scientific research carried out by the University of Bremen, from which it could be concluded that lottery games could lead to the development of symptoms of addiction. 13. The court further held that the provisions were suitable for achieving the aim pursued. The prohibition on and special licensing of the organisation of games of chance created a channelling effect leading to a restriction on which games were offered and enhanced the transparency of the betting industry. In particular, the licensing system allowed the Länder authorities to directly influence the number of persons actively working in the betting industry. The restrictions on advertising also pursued the aim of preventing dependency and protecting minors. 14. Lastly, the court considered that the prohibition on the online organisation and intermediation of public games of chance was intended to curtail problematic forms of participation in such games. Online gambling was characterised by a high degree of convenience and unrestricted availability of the games in question. The high degree of abstraction from traditional ways of gambling could cause a player to lose perspective and, in particular, ignore the possibility of losing stakes. By cutting off the option of online gambling, participation became more difficult and the individual player was made more aware of the process of the game, which could prevent him or her from drifting off into problematic behaviour. Furthermore, there remained doubts as to whether the requirements of protecting minors could be effectively implemented on the Internet. 15. As regards the proportionality of the interference, the court further held that the Länder stayed within their margin of appreciation. It was, in particular, acceptable to ban any form of online advertising, as the State-run games of chance were exclusively devised to channel the natural play instinct, but they should not turn into a branch of the national economy. Lastly, the court held that there was no indication that any of the other basic rights relied upon by the applicant company had been violated. 16. The decision was served on the applicant company’s counsel on 22 October 2008. 17. On 1 June 2012, a new State Treaty amending the Treaty on Games of Chance entered into force. Under this new Treaty, the Länder may allow the organisation and intermediation of public games of chance on the Internet, provided specific prerequisites are met. The operator must, in particular, ensure the effective exclusion of minors or prohibited players. Furthermore, stakes must, as a rule, not exceed EUR 1,000 per player and month; particular incitements to dependency by rapid draws are prohibited; a programme of social measures adapted to the specific conditions of the internet have to be established and operated and bets and lotteries must not be offered via the same Internet domain. Advertising for public games of chance on television, on the Internet and via means of telecommunication remains, as a rule, prohibited, but the Länder may allow advertising for lotteries and horse- and sports bets on the Internet and on television in accordance with the principles laid down in the State Treaty. 18. The relevant provisions of the State Treaty on games of chance (Glücksspielstaatsvertrag – “the State Treaty”), which entered into force on 1 January 2008, read as follows: Article 1 “The State Treaty’s objectives The objectives of this State Treaty are as follows: (1) to prevent dependency on games of chance and on bets, and to create the conditions for effectively combating dependency; (2) to limit the supply of games of chance and to channel the gaming instinct of the population in an organised and supervised manner, preventing in particular a drift towards unauthorised games of chance; (3) to ensure the protection of minors and players; (4) to ensure the smooth operation of games of chance and the protection of players against fraudulent manoeuvres, and to prevent criminality connected with and arising from games of chance.” Article 4 “General provisions (1) The organisation or intermediation of public games of chance may take place only with the authorisation of the competent authority of the Land concerned. All organisation or intermediation of such games is prohibited without such authorisation (unlawful games of chance). (2) Such authorisation shall be refused where the organisation or intermediation of the game of chance is contrary to the objectives of Article 1. Authorisation shall not be issued for the intermediation of games of chance unlawful according to the present State Treaty. There is no established right to the obtaining of an authorisation. (3) The organisation and intermediation of public games of chance must not contravene the requirements of the protection of minors. Minors are not allowed to take part. The organiser or intermediary has to ensure that minors are excluded from taking part. (4) The organisation and intermediation of public games of chance on the internet are prohibited.” Article 5 “Advertising (1) In order to avoid any enticement while maintaining the aim of offering lawful gaming opportunities, advertisements for public games of chance have to be limited to offering information and instructions on the offer of games of chance. (2) Advertising for public games of chance must not contravene the aims laid down in Article 1. In particular, it must not be targeted at inviting, enticing or encouraging participation in public games. It must not be addressed to minors or similarly vulnerable target groups. Advertisements must not be misleading and must contain clear information that minors are not allowed to participate as well as on the risk of addiction and the possibilities of obtaining help. (3) Any advertising for public games of chance on television, on the Internet and via other means of telecommunication is prohibited. (4) Any advertising for unlawful games of chance is prohibited.” Article 9 “Supervision of games of chance ... (4) The authorisation is issued by the competent authority for the territory of the respective Land or for a part of this territory. It has to be revocable and subject to a time-limit...” Article 25 “(6) The Länder may, for a maximum period of one year after the entry into force of the State Treaty, by way of derogation from Article 4 § 4, permit the organisation and intermediation of lottery games on the Internet where there is no reason to refuse them pursuant to Article 4 § 2 and where the following conditions are met: 1. exclusion of minors or prohibited players guaranteed by identification and authentication measures, in compliance with the directives of the Commission for the protection of minors as a closed group of media users; 2. limitation of stakes, as fixed in the authorisation, to EUR 1,000 per month, and guarantee that credit is prohibited; 3. prohibition of particular incitements to dependency by rapid draws and of the possibility of participating interactively with publication of results in real time; as regards lottery games, limitation to two winning draws per week; 4. localisation by use of the most modern methods, in order to ensure that only persons within the scope of the authorisation may participate; 5. establishment and operation of a programme of social measures adapted to the specific conditions of the Internet, the effectiveness of which is to be assessed scientifically.” 19. On 8 September 2010, the Court of Justice of the European Union (CJEU) issued several judgments relating to the compatibility of the rules on sports betting with European Union (EU) Law (case C-409/06, Winner Wetten GmbH v Bürgermeisterin der Stadt Bergheim; joined cases C316/07, C-358/07 to C-360/07 C-409/07 and C-410/07, Markus Stoss and Others v. Wetterauskreis and Others; and C-46/08, Carmen Media Group Ltd v. Schleswig-Holstein and Others). The CJEU found that the German rules did not regulate games of chance in a consistent and systematic manner. In such circumstances, the objective of preventing incitement to squander money on gambling and combating addiction to the latter could no longer be effectively pursued by public monopoly, so that the latter could no longer be justified having regard to Articles 43 and 49 of the EC Treaty (freedom of establishment and freedom to provide services; see Markus Stoss and Others, ibid., §§ 106-107). 20. In its judgment in the case of Carmen Media Group Ltd. (ibid., §§ 97-111), the CJEU, in addition, answered the question as to whether a prohibition such as that set out in Article 4 of the State Treaty (referred to below as “the GlüStV”) could be regarded as suitable for pursuing the objectives of combating the risk of dependency on games of chance and protecting minors from the betting industry as follows: “97. Concerning, first, the prohibition on the organisation and intermediation of games of chance on the internet, it should be noted that the referring court has confined itself to casting doubt on the conformity of that prohibition with EU law in the very general terms which have just been referred to in paragraph 95 of this judgment. 98. Since the referring court has not been more specific about the nature of the doubts which it has in that regard, merely referring to positions which the Commission is said to have adopted in a reasoned opinion addressed to the Federal Republic of Germany following notification by the latter of the draft of the GlüStV [Glücksspielstaatsvertrag, see §§ 5 and 17, above], without however explaining them in any way, the Court will limit its examination to the question whether a measure prohibiting offers of games of chance on the internet such as that contained in [Article] 4(4) of the GlüStV may, in principle, be regarded as suitable for achieving the objectives of preventing incitement to squander money on gambling, combating gambling addiction, and protecting young people. 99. In that regard, it should be noted as a preliminary observation that the Court has previously acknowledged that a measure prohibiting, purely and simply, the practice of a form of gambling on the territory of a Member State, in that case lotteries, is capable of being justified by such overriding reasons in the public interest (see Schindler). 100. In the main proceedings, the prohibition in dispute concerns not the marketing of a particular type of gambling, but a channel through which games of chance may be offered, namely the internet. 101. The Court has already had occasion to emphasise the particularities concerned with the offering of games of chance on the internet (see Liga Portuguesa de Futebol Profissional and Bwin International, paragraph 72). 102. has thus observed in particular that, because of the lack of direct contact between consumer and operator, games of chance accessible via the internet involve different and more substantial risks of fraud by operators against consumers compared with the traditional markets for such games (Liga Portuguesa de Futebol Profissional and Bwin International, paragraph 70). 103. It should be noted that, in the same way, the characteristics specific to the offer of games of chance by the internet may prove to be a source of risks of a different kind and a greater order in the area of consumer protection, particularly in relation to young persons and those with a propensity for gambling or likely to develop such a propensity, in comparison with traditional markets for such games. Apart from the lack of direct contact between the consumer and the operator, previously referred to, the particular ease and the permanence of access to games offered over the internet and the potentially high volume and frequency of such an international offer, in an environment which is moreover characterised by isolation of the player, anonymity and an absence of social control, constitute so many factors likely to foster the development of gambling addiction and the related squandering of money, and thus likely to increase the negative social and moral consequences attaching thereto, as underlined by consistent case-law. 104. Moreover, it should be noted that, having regard to the discretion which Member States enjoy in determining the level of protection of consumers and the social order in the gaming sector, it is not necessary, with regard to the criterion of proportionality, that a restrictive measure decreed by the authorities of one Member State should correspond to a view shared by all the Member States concerning the means of protecting the legitimate interest at issue (see, by analogy, Case C518/06 Commission v Italy [2009] ECR I-3491, paragraphs 83 and 84). 105. Having regard to the whole of the above, it must be acknowledged that a prohibition measure covering any offer of games of chance via the internet may, in principle, be regarded as suitable for pursuing the legitimate objectives of preventing incitement to squander money on gambling, combating addiction to the latter and protecting young persons, even though the offer of such games remains authorised through more traditional channels. 106. Secondly, concerning the establishment of a transitional period such as that at issue in the main proceedings, it needs in particular to be verified whether the latter might not undermine the consistency of the legislation concerned by leading to a result contrary to the objective pursued. 107. In that respect, it should first be noted that the transitional measure at issue in the main proceedings applies only to lotteries, and not to other types of gambling. 108. Next, the explanations provided by the referring court show that that transitional measure is designed only to allow certain economic operators, who had hitherto legally offered lotteries via the internet in the Land concerned, to carry out a conversion of their business following the entry into force of the prohibition affecting their initial business, and that it is limited in duration to one year, which cannot be regarded as unreasonable in the said perspective. 109. Finally, it should also be emphasised, first, that, according to [Article] 25(6) of the GlüStV and [Article] 9 of the GlüStV AG, during the said transitional period, the operators concerned are obliged to comply with a series of conditions concerning the exclusion of minors and prohibited players, the limitation of stakes, the rules for and the frequency of the offer of games and the implementation of social measures, and, secondly, that the Land Schleswig-Holstein has stated before the Court that the benefit of that transitional measure was to be available, without discrimination, to all lottery operators who might be concerned. 110. It does not therefore appear that such a transitional period, in appearance justified by considerations of legal certainty (see, by analogy, Case C-347/06 ASM Brescia [2008] ECR I‑5641, paragraphs 68 to 71), is likely to affect the consistency of the measure prohibiting the offer of gambling on the internet and its suitability for achieving the objectives which it pursues (see, by analogy, in relation to a temporary exception from a prohibition on the operation of pharmacies by non-pharmacists, Joined Cases C-171/07 and C-172/07 Apothekerkammer des Saarlandes and Others [2009] ECR I-4171, paragraphs 45 to 50). 111. Having regard to all the foregoing, the answer to the fourth question is that, on a proper interpretation of Article 49 EC, national legislation prohibiting the organisation and intermediation of games of chance on the internet for the purposes of preventing the squandering of money on gambling, combating addiction to the latter and protecting young persons may, in principle, be regarded as suitable for pursuing such legitimate objectives, even if the offer of such games remains authorised through more traditional channels. The fact that such a prohibition is accompanied by a transitional measure such as that at issue in the main proceedings is not capable of depriving the said prohibition of that suitability.”