Strange attraction?

The shirts of a local football club from Berlin’s famous district of Kreuzberg are not immediately associated with European gambling law. This might change since UK-based sports betting provider Betfair has announced it is to become the shirt sponsor of Tuerkiyemspor for the coming season.

The club is the first German football partner of Betfair and puts Tuerkiyemspor on a select list with football giants Manchester United and FC Barcelona. Betfair states that Tuerkiyemspor’s remarkable work on behalf of immigrants had influenced their decision. But this may not be the only motive.

Another ““ more business-related ““ reason could be that the betting company wishes to test the boundaries of a legal twilight zone in Germany. Under the current German Interstate Treaty on Gambling (Glücksspielstaatsvertrag), private betting companies are deemed illegal ““ as opposed to state-owned providers.

As a consequence, all advertising including shirt advertising has also been considered illegal. In 2006, German team Werder Bremen was forbidden from contracting a betting company as its main sponsor. Also, Italian side AC Milan were fined by a Bavarian authority when their team played in jerseys carrying the bwin logo on a German pitch. And last year, Real Madrid was forced to leave their bwin outfits in the locker for a friendly against Bayern Munich.

However, in light of recent developments, Betfair’s move on a German team’s shirts does not appear excessively adventurous. Last year, the European Court of Justice (ECJ) held that the German Interstate Treaty on Gambling and its rules preventing private companies from entering the German betting market constitute an unlawful restriction of the freedom of trade.

As the ECJ only decided upon the request of German administrative courts seeking a preliminary ruling, and as the ruling formally applies to a predecessor of the current Treaty, the Treaty of 2008 is still in force. There is, however, a hefty dispute as to whether its ban on private betting companies is still an effective law which achieves the purposes for which it was intended. Furthermore, the Treaty will run out at the end of 2011 in any case, so the German Länder now have to agree on regulations which are in line with EU law.

So far, Germany has failed to meet these requirements. Earlier this year, 15 out of the 16 German Länder had agreed on a draft bill which would grant seven permits to private betting operators but impose intense obligations on these operators, including a 16.66% turnover tax.

In mid July, the European Commission issued an opinion confirming what many observers of the betting industry expected: the proposed revisions to the Treaty are not in line with EU law. In particular, the Commission criticised that the number of permits which can be obtained by private betting providers is limited to only seven without any justification. Also, the levies proposed in the draft Treaty were held to be extraordinarily high. The Commission will extend its consultation period for another month to allow Germany to come up with another revision.

Encouraged by the latest developments, Betfair is said to hope to obtain a permit under a less restrictive legal framework soon. In the meantime, the players of Tuerkyiemspor will try out their new Betfair shirts in the 5th local division of Berlin ““ hoping that they will not face the same issues as their prominent colleagues did in the past.