Violation of Interstate Gambling Treaty: Heuking Kühn Lüer Wojtek Obtains Preliminary Injunction Against Westlotto

On October 8, 2010, the law firm of Heuking Kühn Lüer Wojtek obtained a preliminary injunction for a foreign online provider of betting and gambling offerings against Westdeutsche Lotterie GmbH & Co. oHG (Westlotto), its general partner GmbH and the latter's general managers at Cologne Higher Regional Court (Case 6 W 142/10).

The grounds are that test purchases had been carried out with individuals barred from gambling at Westlotto sales outlets. These test subjects participated in Westlotto's sports betting offerings and used another person's "Lotto base card" to do so. Said card does not contain a photograph. A number of Westlotto sales outlets sold sports betting offerings to this test subject despite being barred from purchasing.

The proceeding is a far-reaching response of German courts to the judgments of the European Court of Justice of September 8, 2010, in which the non-compliance of the German Interstate Gambling Treaty with Union law was established. In the first instance, Bonn District Court had denied the foreign provider, which is represented by lawyers Michael Schmittmann and Dr. Georg Jacobs from Heuking Kühn Lüer Wojtek any need for legal relief since the provider's offer was "illegal" in Germany (due to the online ban in the German Interstate Gambling Treaty).

This has now been overruled by Cologne Higher Regional Court: It holds that the foreign betting and gambling provider's motion for an injunction is permissible since the market behavior of the holder of the state monopoly gives grounds for a need for legal relief. A competitor in a legally highly competitive market may not generally be excluded from the use of the courts. This is even more the case where effective controls by Westlotto are not evident to the state regulatory agencies.

As to the merits of the case, the Higher Regional Court referred to the fact that Westlotto, its general partner GmbH and its general manager did not adequately prevent the participation of individuals from sports betting who were barred from gambling. In particular, Westlotto's Lotto base card failed to comply with the requirements of Section 21(3) of the Interstate Gambling Treaty since it does not contain a photograph.

As a result of this judgment, Germany's largest state company of the Lotto and Toto block will have to convert its card system. It is to be expected that the block companies of other German states will follow suit.

Also procedurally, the judgment is a landmark decision: Online providers from other EU Member States, which operate on the German market based on the freedom to provide services can have their cases against the state-run monopoly companies heard by German courts. Thus, the opening of the German gambling market by the judgments of the European Court of Justice of September 8, 2010 has also been implemented in procedural terms with the decision of October 8, 2010

Counsel: Heuking Kühn Lüer Wojtek, Düsseldorf: Michael Schmittmann, Dr. Georg Jacobs, LL.M.

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