Attorney gambling and gaming law
Legal consulting on gambling law
The gaming sector is diverse and is a business activity that has had enormous economic significance for many centuries. Due to increased legislative activities, first and foremost of which is the Interstate Treaty on Gambling (GlüStV), an increased number of legal issues that require specialised consulting have also arisen. Any business activity in this market is thus met with a high level of regulation and requires targeted communication with regulators. Attorney at Law Dr Robert Kazemi in particular has been active in this area of law and advises national and international companies on all administrative and civil matters. Accordingly, our experience with clients working in the gaming sector goes hand in hand with legal consulting that is up-to-date. We also work intensively with recognised colleagues abroad, especially when it comes to criminal issues.
Even a normal entrepreneur can quickly become a gambling provider
Gambling within the meaning of the Interstate Treaty on Gambling assumes that a fee is charged within the context of a game in order to obtain a chance of winning and that the decision concerning the win depends entirely or mainly on chance. Accordingly, betting for money on the uncertain occurrence or outcome of a future event is a form of gambling.
Within this context, a furniture shop became the focus of regulatory authorities when it held a promotional campaign with the slogan "You will receive the goods for free if it rains on ..."
Customers who had purchased goods for a purchase price of at least 100 EUR within the specified promotional period were eligible to participate in this promotional campaign. If it was officially determined that it had rained at least 3 ml/m2 on the specified day, approximately three weeks after participation, between 12:00 and 1:00 p.m., the participants would receive a refund for the full amount of their purchase. The regulatory authority classified the promotional campaign as public gambling in the form of betting on the occurrence of a future event within the meaning of section 3 para. 1 sentence 3 of the Interstate Treaty on Gambling (GlüStV), which was prohibited pursuant to section 4 para. 1 sentence 2 of the Interstate Treaty on Gambling (GlüStV) due to a lack of authorisation. Participation in the chance of winning presupposed the payment of the purchase price in the amount of at least 100 EUR, and thus the purchase price for this purchase represented a fee within the meaning of section 3 para. 1 of the Interstate Treaty on Gambling (GlüStV). The Administrative Court of Baden-Württemberg did not agree and allowed the promotional campaign, reasoning that the Plaintiff had not charged a fee to deliver a chance of winning and that its customers had paid the purchase price to acquire goods, not to participate in a sweepstake. The purchase agreement was at the fore. Participation in the promotional campaign was a consequence of the purchase only in the event that this was confirmed by the weather forecast. Customers were involved in the promotional competition only when they "activated" their winnings by claiming them; their motives for purchasing the goods were therefore not involved. Finally, the chance of winning was not part of a game, as is presupposed in the Interstate Treaty on Gambling, but rather was part of a purchase agreement. This therefore fell outside the scope of application of the Interstate Treaty on Gambling. Otherwise, in terms of regulation, the Defendant would no longer be operating from the perspective of gambling oversight, but rather under competition and consumer protection laws.
Is something gambling within the meaning of the Interstate Treaty on Gambling (GlüStV) if the fee paid by the participants does not provide the individual with a chance of winning but is instead a fee for participation, which merely grants the right to participate, and which is always lost?
This question was raised by a media company that offered the Bundesliga manager game, "Super Manager" on its website during the 2009/2010 Bundesliga soccer season. The game was structured to allow participants to draft a fictional team from existing players, which competed with the teams of other players over the course of the actual season based on fixed assessment criteria. Thus assessment points were awarded by experts in accordance with detailed criteria established for specific soccer players. Participants, who could draft at most 10 teams, paid a participation fee of € 7.90 per team. The participants with the highest placings each month and the participants for places 4-100 at the end of the season received a material prize. A total of €8,000 was paid out for first place following the first and second rounds. The three best-placed teams in the overall assessment at the end of the season received a total of €135,000. The regional council in Karlsruhe banned the "Super Managers" event due to consideration of gambling law. An appeal against this decision filed with the Karlsruhe VG (Administrative Court) was unsuccessful, as the Karlsruge court shared the view that the game in dispute was gambling within the meaning of the Interstate Treaty on Gambling (GlüStV). Only the administrative court of Baden-Württemberg saw the matter differently and again approved the promotional campaign.
On 25 January 2013, the BILD newspaper headline read: "Dschungelcamp's Georgina has 70,000 paid Facebook fans - How celebrities, companies and politicians buy fake friends".
At the time, it was known that many companies and celebrities "purchase" fake friends, and thus suggest a fake level of popularity. A pointless marketing gag? Probably not. As the BILD newspaper writes: "Someone who has a lot of fans comes across as important and trustworthy. And that's worth money: products turn up higher on the list in search results, celebrities get more gigs, and parties get more voters!" According to the information provided by BILD, 10,000 German "Likes" cost around 1,000 Euro. Thus it was surprising when the Regional Court of Hamburg came back with a ruling on 10 January 2013 (admittedly before (!) the "scandal" about purchased friends) that in trade usage, using the "Like" button on Facebook merely represents "a non-binding expression of approval" with which "no further expectations of qualities of the goods" are associated (LG Hamburg, decision dated 10 January 2013, 327 O 438/11). Participation in a contest can thus be made competitively neutral by making it dependent on clicking "Like". This procedure could well be entirely inadmissible, however, if other considerations are taken into account.
In terms of the possibility of generating opt-ins for the purpose of interactive advertising, holding a contest is usually a viable alternative.
Within this context, we would refer to the decision by the Higher Regional Court of Hamburg (OLG Hamburg, decision dated 4 March 2009 - 5 U 62/08, NJW-RR 2009, 1705), which dealt with consumer consent to marketing calls via a pre-formulated declaration of consent. Within this context, the Higher Regional Court of Hamburg initially made it clear that a pre-formulated consent to marketing calls is not already simply prohibited, but rather that it depends on whether the pre-formulated consent poses an unreasonable disadvantage to opponents to its use, since the user unilaterally claims for itself contractual freedom of design for the declaration of consent and in the pre-formulated contractual conditions, and the customer can only indicate whether he wishes to grant consent, but can exert no influence on the contents thereof. Furthermore, the Higher Regional Court of Hamburg determined that such pre-formulated declarations of consent specifically in the case of contests cannot be viewed as void since the average informed and knowledgeable consumer is entirely aware that contests of the present type also serve as advertising, in particular advertising for the products of the contest operator. Therefore it should potentially pose no unreasonable disadvantage to the consumer if the pre-formulated declaration of consent should only have referred to advertising for the products of the contest operator. The Higher Regional Court of Cologne (OLG Köln, decision dated 12 September 2007 - 6 U 63/07, GRUR-RR 2008, 62) also clarified that, as a rule, it is not regarded as an unreasonable disadvantage if the consumer's participation in a sweepstake is made dependent upon the consumer's declaration that he consents to the disclosure of personal information to third parties and to marketing calls insofar as the consumer is informed about the above-mentioned coupling thereof with participation in the sweepstakes. As a rule, aspects related to data protection do not prohibit the "sale" of opt-ins for advertising purposes. Thus, within the context of the Data Protection Amendments 2009, the legislature stated:
"Thus in the future, the responsible authorities must approach the individual concerned and win his consent, for example by granting benefits. This already common practice in some sectors of obtaining a counterperformance by the customer in the form of consent by granting benefits, for example within the context of customer loyalty programs, will lead to commercial databases based on consent."
It is questionable, however, whether participation in a contest may be made dependent upon such consent. The obligation to provide consent in line with the data protection regulations could make a gambling permit necessary for such a contest. A gambling permit should be on hand when the chance to win involves a substantial commitment. At just 50 cents, the level of commitment is not especially high and the value of marketing consent obtained via a contest could be set substantially higher. The violation of the fair trade practices would then arise from the provisions of the Interstate Treaty on Gambling (GlüStV) or, respectively, sections §§ 284 et seqq. of the German Penal Code (StGB), however.
In 2004, the retail chain, Plus, held a promotional campaign, "Your Chance at a Million", in which the public was invited to purchase products from Plus shops to collect points. Collecting 20 points granted the option of participating free of charge in draws held by the Deutscher Lottoblock.
The German Agency to Combat Unfair Competition (Wettbewerbszentrale) regarded this business practice as unfair within the meaning of section 3 in conjunction with section 4 no. 6 of the Unfair Competition Act (UWG), since the consumers' participation in a contest was made dependent upon the purchase of goods, and it requested that the District Court of Duisburg prohibit Plus from engaging in this business practice.
These decisions make clear the need for the prior (!) and intensive examination of these contests which are popular across industries as an advertising medium.