German States Want to Keep Gambling Monopoly

By Hans-Edzard Busemann

BERLIN, Dec 15 (Reuters) - Germany's 16 federal states want to keep their monopoly on lotteries, a move likely to keep Europe's largest economy from fully opening up its lucrative betting and gambling market.

Wolfgang Boehmer, state premier of Saxony-Anhalt, said after a meeting with his colleagues on Wednesday they had agreed to keep the monopoly on lotteries but still needed to agree future regulation for sporting bets.

The states -- in control of gambling in Germany -- must draw up new regulation before current rules expire at the end of next year, but taking bets on sports events may prove a sticking point. The federal government also needs to agree.

States led by the Christian Democrats -- Chancellor Angela Merkel's party -- aim to open the market on sports bets worth billions of euros, while those ruled by Social Democrats are against allowing sports betting from private operators.

A decision on sport bets may come next February when the heads of the states' chancelleries are due to discuss it, a Saxony-Anhalt spokesperson said.

Germany has argued the monopoly protects customers from fraud and addiction by keeping lotteries, sports betting and other kinds of gambling limited to only state-run operators.

In recent years, the monopolies have come under threat from private operators wanting to enter the market, online gaming based in offshore locations and from grey areas in the law.

UNTRAMMELLED COMPETITION

'Nobody can have an interest in freeing up the whole lottery sector and in subjecting it to untrammelled competition,' said Klaus Wowereit, mayor of the city state of Berlin.

In September, Europe's highest court rebuked Germany for its gambling restrictions, saying they breach European Union law.

The verdict was a rare victory for companies seeking to break domestic monopolies in a multi-billion euro industry, such as Germany's Tipp24, Austrian bookmaker bwin and its British merger partner PartyGaming.

The European Union Court of Justice (ECJ) argued governments could restrict gambling only if the curbs were designed to protect consumers or prevent fraud. Otherwise, such bans violated laws on the free movement of services and the freedom of establishment.

The European Commission, which has pressured Germany and other EU members to open up the sector, said it hoped Germany would implement reforms in line with EU law.

'The EU Commission hopes the result of the discussion among state premiers will lead to reforms that will be consistent with EU law,' EU Internal Market Commissioner Michel Barnier told the newspaper 'Die Welt' for publication on Thursday.

Proceeds from lotteries in Germany -- 2.8 billion euros last year -- fund social, cultural and sports projects in the states.

(Additional reporting and writing by Annika Breidthardt; Editing by David Cowell)