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Germany and Canada continue to battle infighting over their sports betting laws




Germany's online gambling laws are not in line with the rest of the EU and Canada continues to do nothing about single game sports betting.

For several years now the federal governments in both Germany and Canada have been battling to have sports betting laws enacted. In Germany the fight has been with the EU and a rebellious state and in Canada the fight has been with the Senate. There's no question that in each case there is a political agenda for those that are opposing the laws that has nothing to do with the issue of sports betting itself. The following synopsis will hopefully give a detailed history to bettors in the rest of the world wondering what in the world is causing the delays.

Without question, the most talked about online sports betting situation is in Germany. The German government has always had a monopoly on gambling in the country and internet gambling under the old law was illegal. Nevertheless, the government realized it had to adapt to the changing technology since the country's citizens were already betting online in grey markets. The German government realized it couldn't maintain a monopoly and meet with EU laws, but they also wanted to ensure that only sports betting would be legally offered by non-German companies. So when the old legislation expired in 2012 the German government came up with a plan that they believed would solve both problems. Their solution was to allow companies in all of Europe to apply for online sports betting licenses (poker and casinos would still be illegal) and the state would choose 20 lucky companies who would be granted the right to cater to German bettors. Any other companies that did not win a license and continued to cater to German players would be deemed to be operating illegally and any managers from those companies would be subject to arrest if they entered German soil (similar to what happened to BETonSPORTS CEO David Carruthers when his plane landed in Texas, back in 2006). The country also indicated plans to put in ISP blocking, payment restrictions and other measures to make it extremely difficult for German players to wager at the non-licensed companies. The government also planned to institute a 16.66% turnover tax, but later reduced it to 5% when most of the interested companies deemed they couldn't be profitable under that tax level. The European Commission was also displeased with the solution and expressed concern that limiting the number of licenses could violate the EU treaty, and told the country to come up with a better solution. They also told Germany to make sure that the process in choosing the licensees was transparent and open to everyone.

online gambling GermanyOne state in Germany, Schleswig-Holstein, was not pleased with the German monopoly or the plan and consequently came up with their own solution. Schleswig-Holstein has deep Danish roots and only became a state of Germany after some of the land was lost to the country in World War I and consequently has a much more liberal view on gambling than other German states. As such they announced that they would opt out of the Interstate treaty and instead would operate their own system. They went to the European Commission for approval and the EC indicated that it was ok to have 2 separate systems in the same country. Under their system Schleswig –Holstein was prepared to offer an unlimited number of licenses and gambling options wouldn't be restricted to sports betting. Poker and casinos would be allowed as well which would allow companies like PokerStars and various casinos to operate legally in Germany. More importantly their tax was going to be 20% on gross profits which is similar to most other regions in Europe and which the gambling companies deemed far more realistic than the hefty turnover tax.

Not surprisingly the German federal government tried to intimidate Schleswig-Holstein into signing the federal treaty and when a new head, Torsten Albig, was elected in 2012. He gave an indication that he was going to sign the federal treaty, thereby making any plans and licenses issued by Schleswig-Holstein moot. This indeed occurred as Schleswig-Holstein announced in January 2013 it would abide by the federal treaty. Nevertheless Schleswig-Holstein continued to issue licenses which were valid for 6 years meaning companies operating under their regime would be eligible to do so until 2019. It should be noted that even though the state did not restrict online licenses to sports betting, the only licenses that were granted by the state were for sports betting.

Last year, the federal government in Hesse finally issued its 20 licenses which went to Betfair, Bwin.Party, Ladbrokes, Mybet Holding and the remainder were all German companies, most that already operated under the German state monopoly. The most notable exclusions were Bet365 and Victor Chandler which were already granted licenses by Schleswig-Holstein. Not surprisingly the losing companies appealed to the EU and the European Commission announced that the license scheme did not fit with EU standards and they were concerned that the process wasn't open and transparent. Moreover, the Sports Advisory Board (which is made up of German interests including sports teams) stated that their suggestions were ignored by the Hesse ministry when deciding on the 20 licenses, and the Administrative Court of Hesse put a temporary halting of any licenses (until September) until the whole process could be evaluated for fairness, openness and transparency. The court was also concerned about an Austrian company that was denied a license but in their view should have received one. Other courts in Wiesbedan and Frankfurt also indicated concerns about the methodology and consequently the German minister in charge of online sports betting admitted the whole process was flawed and would likely never hold up to challenge by any German court or by a court in the EU. As such there are strong rumors that Germany is now planning to scrap everything that was done to date, toss out the licenses that were granted and start over. In the meantime companies operating in Schleswig-Holstein which hold licenses from there continue to flourish and most sports bettors in the country can still bet at sites like Bet365 if they prefer, since to date nothing has been done to successfully block them.

In Canada the big issue revolves around single game sports betting. Until Bill C-150 was passed in 1969 the only forms of legal gambling in Canada were horse racing and games of chance at fairs like money wheels and crown and anchor. Bill C-150 expanded gambling to allow for lotteries and in 1974 the Canadian government introduced the first lottery to help pay for the 1976 Olympic Games in Montreal. In 1985 the right to all gambling was turned over to the provinces. The provinces increased the number of lottery games offered including Sport Select, a parlay style lottery similar to what is offered on NFL games in Delaware. Sports bettors can bet parlays on money lines, totals, point spreads and props. In some provinces pools are offered too. The takeout on Sport Select is extremely high (comparable to other lotteries) and as such the sports lottery never really attracted serious sports bettors. As well in Ontario betting on NBA games on Sport Select is not permitted since that was a requirement the NBA had in granting Toronto its team. To date the Toronto Raptors still pay the Ontario government a sum of money to make up what they believe is being lost because they can't offer parlays on NBA games. Other provinces do offer NBA betting.

Along with lotteries the provinces decided to introduce casinos. Manitoba introduced the first casino in Winnipeg and Ontario introduced a casino in Windsor (a border town with Detroit). The hope was that the casino would attract more tourism and also entice Americans to come across the border and spend their greenbacks in Canada. It worked and Casino Windsor, owned and operated by Caesars, was a success. Casinos also were built in Sault Ste. Marie, Orillia and Niagara Falls. Not surprisingly the U.S. border cities protested to their states that money was leaving the cities and hurting their economies and consequently casinos eventually were passed and built in Detroit, Sault Ste. Marie Michigan and Niagara Falls, New York.

sports betting in CanadaThe Canadian casinos felt an immediate impact so Windsor MP Joe Comartin introduced a private members bill, C-290, in the House of Commons in 2011 to allow for single game sports betting. The criminal code of Canada currently requires at least two games for a bet to be legal and this bill would amend the criminal code to allow for single game sports betting for any province that wants to do so. In his view this was the one thing Canadian casinos could offer that would entice Americans back to the border casinos. Moreover, he believed that it would convince Canadians who were wagering offshore or with illegal bookmakers to wager legally in Canada. Industry figures suggested single game sports betting would increase revenue at the Windsor casino by almost $24 million and $12 million at the Niagara Falls casino and would add up to 300 jobs. The bill was expected to go nowhere in the House of Commons since private members bills are rarely passed, but surprisingly it passed unanimously with all party support in 2012. The next step was to send the bill to the Senate (an unelected body of patronage appointments) who have never blocked a bill that passed unanimously in the House of Commons. Once they rubber stamped it, single game sports betting would become a reality. Shockingly the Senate decided that this was the one issue they were going to take a stand on. Officially Senators said they opposed the bill because there was never any real debate in the House before they voted on it and those who were allowed to speak on the issue were all from the gambling industry. The Senate was also apparently won over by concerns stated by Major League Baseball and the NFL that single game sports betting would increase the chance of corruption. The Senate is filled with past players, coaches and team executives like Paul Beeston and while Frank Mahovlich indicated he didn't believe there was a concern with single game sports betting, the rest of the Senators decided to side with their former leagues.

To add to the situation, the Senate is facing a major scandal relating to illegal spending and it is widely believed that many Senators chose this issue to take a stand on to show that they are still relevant and to hopefully halt a call by Canadians and some in the House to have the Senate abolished.
One senior Senator, Bob Runciman, lambasted the Senators for acting undemocratically:

"This is a debate about whether the Senate should thwart the will of an overwhelming majority of those in the Other Place (House of Commons) and whether we should deny the wishes of the provinces we were sent here to represent," he said in the Senate. Runciman also went on to provide reasons why he believed the sports leagues were hypocrites and he argued that it's not the government's job to ensure the player's act honestly, but rather the leagues themselves.

Despite this, a vote has never been taken on C-290 in the Senate because the Conservative Senate leader said that there isn't even close to enough votes to pass it. And as each session goes by in the Senate with no vote there is less chance it will be passed. Regardless the International Olympic Committee stated it welcomes betting on its sports, the Canadian Football League is indifferent and just last month the NBA withdrew its opposition to the bill. A letter from the NBA was as follows:

"Consistent with the NBA's current position regarding legalized sports betting in the United States, the NBA is no longer opposed to legalized sports betting in Canada so long as there is an appropriate legislative framework that protects the integrity of the game under strict regulatory requirements and technological safeguards. These would include, at a minimum, mandatory monitoring and reporting of unusual betting-line movements; a licensing protocol for betting operators; minimum-age verification measures; geo-blocking technology to ensure betting is available only where it is legal; mechanisms to identify and exclude people with gambling problems; and education about responsible gaming."

Both Germany and Canada will continue to see infighting over their respective issues but one thing is certain – as long as nothing is done to address the real issues at hand, sports bettors in both countries will continue to wager offshore and the only losers will be the governments and their potential tax revenue.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!

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