As we will see in the following points, the Austrian model for regulation of gambling is a quasi state monopoly. The motivation behind the creation of a state monopoly was expressed by the legislator in the supporting documents (Parliamentary materials, GP XVII RV 1067.) to the GSpG in 1989 in connection with a new version of the GSpG. The two main aims of the law are, on the one hand, to promote public order and obtain socio-politically related objectives and, on the other hand, to increase fiscal revenues for the purposes of promoting public order. The legislator’s aim is also to confine mankind’s seemingly inherent desire to gamble within more controlled channels. Instead of a complete prohibition of games of chance – which would be inefficient as it would only confine gaming to an illegal activity and therefore removing it from any form of government supervision or control, a state monopoly was created to allow the government to intervene for the protection of players.
This approach is also confirmed by the jurisprudence. Under constitutional law, the restriction of the freedom of trade inherent in a state monopoly (Decision of the Administrative Court of 23.12.1991, Zl. 88/17/0010; Decision of the Constitutional Court, VfSlg. 12.165.) is justified by the very important public interests in the gambling sector. Therefore, the aspects of public order and player protection, especially in the field of consumer protection and prevention of gambling addiction and their socially negative and destructive effects, are the main goals of all regulations in the gambling sector.
The Ministry of Finance (Statements of the Austrian Ministry of Finance, 30 May 2005 and 7 July 2005.) in its capacity as the Supervisory Body for gambling service providers under the GSpG, confirms that the concession system installed by the legislator is justified by the above-mentioned aspects.
The doctrine confirms (Gerhard Strejcek/Dietmar Hoscher/Markus Eder, Games of Chance in the EU and in Austria, 2002; Gerhard Strejcek (Hrsg), Lotto und andere Glücksspiele, 2003; Heinz Mayer, Das Glücksspiel im Spannungsfeld zwischen staatlicher Ordnungspolitik und Marktfreiheit, ecolex 2000, p. 243.) the position of the legislator. But dissenting (Stefan Griller/Andreas Reindl, Die Unvereinbarkeit des österreichischen Glücksspielgesetzes mit dem Europäischen Gemeinschaftsrecht, ZfV 1998, p. 234; Franz Wohlfahrt, Der Zweck heiligt nicht immer die Mittel, ecolex 2000, p. 166; Walter Schwartz, Glücksspielmonopol mit Ablaufdatum?, ecolex 1999, p. 582; Georg Streit, Glücksspiel ohne Grenzen im Binnenmarkt?, medien und recht 6/99, p. 360.) opinions also are expressed by some authors who doubt the validity of consumer protection and social order as justifications for this regulation, especially given the fact that in order to protect consumers, it would be logical to assume that gambling opportunities should be reduced, whereas in reality the range of gambling services is being constantly broadened and intensively advertised, at least in part in order to generate higher tax revenues for the state. With the exception of a sum fixed by the GSpG which is to be dedicated to sports sponsorship, gambling tax revenues are allocated to the general state budget.
As a general matter, under § 168 of the Penal Code the organisation of games of chance which may result in a pecuniary advantage is punishable by imprisonment for up to six months or a money fine, unless the game is played only for the purpose of raising money for charitable purposes or for entertainment only and for low stakes. Section 168a of the Penal Code specifically punishes the organisation of so called Ketten- or Pyramidenspiele.
Sections 52 et seq.of the administrative penal provisions of the GSpG also prohibit gaming activities not in compliance with the GSpG. Section 56 of the GSpG contains administrative penal norms prohibiting the participation in or solicitation of, foreign games of chance. Pursuant to §56a GSpG, the competent authority may order the immediate complete or partial closure of the business if games of chance are organised or carried out in contravention of the GSpG.
Section 3 of the GSpG provides for a quasi state monopoly for the organisation of Lottery games. The State has licensed one private company – the Österreichische Lotterien Gesellschaft mbH – which holds the only license for Lottery games.
Pursuant to §14 ss 2 GSpG, a licensed corporation must be domiciled in Austria. Section 14 ss 5 GSpG provides for only one single license and no additional license may be granted as long as a previously granted license remains valid. Pursuant to §14 ss 3 GSpG the period of validity of a license is limited to 15 years. A licensee is not permitted to establish a branch abroad; nor may the licensee acquire a qualified participation in a foreign company if such acquisition would result in a reduction in revenue from the license fee (§15 ss 1 GSpG).
With regard to the conclusion of contracts for Lotto and Toto Services with players, tobacco kiosks are granted priority as authorised locations, in particular if such kiosks are operated by handicapped persons (§16 ss 14 GSpG).
Pursuant to §36 GSpG the state may transfer its rights to operate some specific types of lotteries (other number lotteries, tombola games, lucky harbours and jokes games) to a legal entity domiciled in Austria. Firstly, authorisation is only permitted for the conduct of tombola games, lucky harbours and joke games with prizes of up to and including 15.000 Euro by legal persons domiciled in Austria if the event is not for commercial purposes. Secondly, for the conduct of tombola games, lucky harbour and joke games with higher prizes, as well as other number lotteries by legal persons domiciled in Austria and who are deserving of support owing to their activities being beneficial for the public well-being, if the event is designed to achieve individual goals of a charitable, ecclesiastical or philanthropic nature in Austria.
Section 3 of the GSpG provides for a quasi state monopoly for the organisation of Casinos Games. The state has only licensed one private company – Casinos Austria AG – which holds all twelve licenses for Casino games in Austria.
In accordance with §21 ss 2 GSpG, the operator must be a public limited company (Aktiengesellschaft) domiciled in Austria. Pursuant to §21 ss 4 GSpG the number of licenses which may be granted is limited to twelve and currently all are allocated to one private company, Casinos Austria AG. Also the period of validity of the license is limited to 15 years (§22 GSpG).
Under the terms of §24 GSpG, a licensee is not permitted to establish a branch abroad and acquisition of a qualified participation in a foreign company is prohibited if it would result in a reduction in revenue from the license fee.
Machine Gambling Outside Casinos
Prize games using a gaming machine are not subject to the Gaming monopoly if the amount of the player’s stake does not exceed 0.50 Euro or its equivalent and the prize does not exceed the amount of 20 Euro or its equivalent. Games for non-cash prizes carried out using a gaming machine are not subject to the gaming monopoly if the amount of the stake or its equivalent does not exceed 1 Euro, otherwise §§3 & 4 of the GSpG are applicable.
Gaming machines outside of Casinos that do not fall under the monopoly of the GSpG are regulated by state law, either under the Events Acts or Gaming Machines Acts. With the exception of Vienna, Styria and Carinthia, the operation of Gambling Machines which offer cash prizes or merchandise is prohibited.
The respective state laws contain norms which can most likely be qualified as barriers to the free movement of services in the internal market. Generally, the concession is granted for a limited number of gambling machines per location and for a limited period of time.
Additionally, in Vienna, a managing director resident in Austria must be appointed if the operator is not domiciled in Austria. In Lower Austria, an individual who applies for a license must be domiciled in Austria. Nevertheless, in Vienna exceptions from the limited number of gambling machines are foreseen for specific areas where many hundreds of gambling machines per location are allowed (§ 15 ss 2 Events Act Vienna).
In accordance with § 7 ss 3 and 6 of the Events Act, a concession is granted for a maximum of eight gambling machines and the concession period is limited to three years.
Under § 4 of the Events Act, a managing director resident in Austria must be appointed if the operator is not domiciled in Austria. The concession is granted for a maximum of two gambling machines per location: for more than three gambling machines specific structural conditions must be met (§ 15 ss 2 and 2b Events Act). Under § 15 ss 5 the concession period is limited to ten years. Exceptions from the limited number of gambling machines are foreseen for specific areas where many hundreds of gambling machines per location are allowed (§ 15 ss 2 Events Act).
In accordance with § 7 ss 2 of the Events Act, the concession period is limited to a maximum of ten years.
Section 3 of the Gaming Machines Act prohibits the operation of Gambling Machines which offer cash prizes or merchandise.
Pursuant to § 5 of the Gaming Machines Act an individual who applies for a licence must be domiciled in Austria. Such a license is limited to a period of validity of two years (§ 4 ss 3 Gaming Machines Act). In accordance with § 6 ss 1 of the same Act, only three gaming machines may be installed in any one location outside of a specifically labelled gambling hall.
Under the terms of § 2 ss 4 and 5 Gaming Machines Act, the concession period is limited to three years and the concession is granted for a maximum of three gambling machines per location.
Section 4 of the Gaming Machines Act prohibits Gambling Machines which offer cash prizes or merchandise.
Pursuant to § 4 ss 4 Gaming Machines Act the concession period is limited to three years. Section 3 ss 1 of the Gaming Machines Act prohibits Gambling Machines which offer cash prizes or merchandise.
Section 15 ss 1 no. 5 of the Events Act prohibits Gaming Machines which offer cash prizes or merchandise.
Section 21 ss 1 lit. b) of the Events Act prohibits Gambling Machines which offer cash prizes or merchandise.
Section 19 ss 1 lit. b) of the Events Act prohibits Gambling Machines which offer cash prizes or merchandise.
Betting is not covered by the federal gaming monopoly as it is an issue of state legislation. Operators of betting are required to obtain a license in accordance with the norms of the respective state (Land). There appear to be no specific barriers to the internal market regarding the conditions for obtaining a license. One norm in Lower Austria (§ 3 of the Betting Act Niederösterreich) might be considered to be a barrier since a location in the territory of that Land is required which could be a disadvantage for operators from other EUmember states offering betting services on the Internet.
It should be noted that a specific form of sports betting called «Toto» is regulated by the GSpG. Section 7 GSpG legally defines «Toto» as a prize game in which an organiser accepts and runs bets on the results of various sporting events (pool bet). The prize money is divided into several win categories and equally apportioned among the winners within each of these categories. The results of events which are cancelled, do not take place at the specified time or are changed in their competitive nature are to be substituted by a public draw (substitute draw).
The state has only licensed one private company – the Österreichische Lotterien Gesellschaft mbH – which holds the only license for Lottery games. This license also covers Bingo.
Media Gambling Services
The case law (Decision of the Administrative Court, 26.11.2002, 99/15/0240, The determination of whether a game is to be qualified as a game of chance or a game of skill must be made individually in every single case, if necessary by obtaining an expert opinion.) provides that in every single case the court must determine whether the offered service is to be qualified as a gambling service and therefore falls under the GSpG – including the restrictions described above. Sweepstakes and prize-draws are generally not games of chance against payment if the chance to win depends on answering a question or sending a postcard. If the player does not provide a pecuniary stake, the game of chance does not fall under the GSpG. Nonetheless, the participation in a prize-draw through the use of a value-added telephone number where not only does the telecommunication company receive a part of the telephone fees but, in addition, the organiser gets the greater part of these fees is considered to be a game of chance under the GSpG. (Decision of the Highest Court, 18.2.2003, 4Ob5/03v.) Also a prize-draw for a journey that requires a call to a value-added number is considered to be a game of chance under the GSpG because there is a pecuniary stake. (Markus Deisenberger, «Rufen Sie 0900…und gewinnen Sie…», MR 2/03, p. 71.)
For Media Gambling services, the Law on Unfair Competition, UWG, is also relevant. Pursuant to § 28 UWG, the sale of goods or services in such a manner that the delivery of the goods or the performance of the service depends on the result of a lottery or another coincidence, is prohibited. The administrative penal provision of § 29 UWG also prohibits the solicitation of the activities described in § 28 UWG. Violators are subject to a fine of up to 2.900 Euro.
Furthermore, it is prohibited to offer a «premium» (Decision of the Highest Court, 16.7.2002, 4Ob67/02k, A premium («Zugabe») is an additional advantage without additional charge which is accorded or announced upon the purchase of the main good to be sold to encourage the sale of the main good. If such an offer is repeatedly announced to the target audience, thereby creating the expectation with that audience that the offer will continue to be made in the future on a regular basis, the offer is deemed to be conclusively announced as a premium.) free of charge to purchasers of products and services unless there is a specific exemption by law from this prohibition. This exemption is granted for prize games for which the price of a ticket does not exceed 0.36 Euro and the total amount of prizes does not exceed 21.600 Euros. This exception is not valid for premiums offered to purchasers of periodicals (§ 9a ss 1 and ss 2 no. 8 UWG).
Sales Promotional Gambling
The case law provides for a determination on a case-by-case basis whether the offered service is to be qualified as a gambling service, thereby falling under the GSpG and the above-described restrictions thereof.
The Law on unfair competition, UWG, is also relevant to Sales Promotional Gambling. Pursuant to § 28 UWG, the sale of goods or services in such a manner that the delivery of the good or the performance of the service depends on the result of a lottery or another coincidence is prohibited. The administrative penal provision of § 29 UWG also prohibits solicitation such sale of goods or services; in accordance with § 28 UWG, violations are punishable by a fine of up to 2.900 Euro.
Furthermore offering premiums free of charge to purchasers of products and services is prohibited except where specifically permitted by law. This exemption is granted for prize games for which the price of a ticket does not exceed 0.36 Euro and the total amount of prizes does not exceed 21.600 Euros.
The Highest Court (Decisions of the Highest Court of 10.5.1994, 4 Ob 6/94 and 11.11.1998, 3 Ob 92/98w and) has held that prize games are not premiums offered by the periodical print media if the company does not advertise such premiums on the front page. Since purchasers of papers and periodicals read only the front page before buying the issue, they only discover the existence of the prize game by reading the paper after they have purchased it, but are not required to purchase additional issues of the periodical in order to participate. To be more precise, the Court has held that a prize game is considered to be a prohibited premium only if the premium can be linked to a significant increase of demand of the periodical.
The state can transfer its right to conduct other number lotteries, tombola games, «lucky harbours» and «joke games» to other persons by granting them authorisation to do so. First, this is only permitted in the case of the aforementioned games (exception for other number lotteries) which are conducted for prizes of up to 15.000 Euro by legal entities domiciled in Austria and provided that the event is not organised for commercial purposes.
For games with prizes exceeding 15.000 Euro, and other number lotteries an authorisation may be granted if the event is designed to achieve individual goals of a charitable, ecclesiastical or philanthropic nature in Austria (§ 36 GSpG).
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