UPDATE 1-German state stops offering betting concessions

Thu Jan 24, 2013 2:30pm EST

* Schleswig-Holstein to join agreement of other states

* Gambling agreement caps German concessions at 20

* Could mean no more concessions across Germany

* German court: Schleswig-Holstein's solo move not illegal

By Jan Schwartz

HAMBURG, Jan 24 (Reuters) - The German state of Schleswig-Holstein will stop granting gambling concessions to private companies, which could shut the last point of entry for betting firms into Europe's biggest economy.

Germany's states have clung for years to their dominance in the online gambling and sports betting market, citing the risk of widespread gambling addiction in an unregulated scenario. Meanwhile, private companies have been trying to break into the market.

Schleswig-Holstein, Germany's northernmost federal state, broke out of the pack to become the only one of the country's 16 states to relax its gambling laws, while all others signed an agreement allowing only 20 concessions to be granted to private companies across the country.

Schleswig-Holstein's former centre-right government granted three six-year betting licences to Betfair, Jaxx and Oddset last May, only days before losing elections for state parliament. Since then, the state has granted 23 concessions for sports betting and 13 for online casino-style games such as poker.

But now its new centre-left government rescinded the liberalisation, caving to concern that a "Las Vegas of the North" could foster gambling addiction and encourage money-laundering.

The state will join its peers' agreement capping the number of concessions nationwide at 20, a level it has already exceeded by far on its own. That means that no more licenses may come onto the German market at all.

LEGAL CHECKS

The existing licenses granted by Schleswig-Holstein are still valid, though court proceedings could still change that.

Germany's Federal Court of Justice was asked to rule on whether Schleswig-Holstein's solo move to liberalise the gambling market may have been illegal.

The court passed the matter on to the European Court of Justice (ECJ) but said it believed that it was up to individual states to regulate gambling as long as they did not significantly hinder the goals of the other states' betting agreement.

"We welcome the court's decision. There appear to be inconsistencies and we now await the decision by the ECJ," a spokesman for online gaming company bwin.party said.

Bwin.party said this month that Germany should allow online gaming companies to compete on level terms with locally-based operators.

Other foreign gambling companies, including Betfair and William Hill, have scaled down their operations in Germany because of a 5 percent turnover tax on sports betting.