Germany Rules That Promotions Offered as Raffles and Sweepstakes Constitute Gambling

Gaming websites offering casino games with sweepstakes or lucky draws to win real money have become popular in tightly regulated and unregulated gambling jurisdictions. This is because, in both instances, the rules around what constitutes "gambling" revolves around the transactional relationship between deposits, real money wagers and player winnings.

 Globally Sweepstakes Are Not Considered Gambling

Sweepstake casinos circumvent this relationship by offering no cash prizes based on the amount of money spent, the value of the tokens wagered and player prizes. To claim a cash prize, players need to use special tokens called Sweep Coins, which are distinct from the coins used to play the available online slots and table games the site offers.

 These Sweep Coins are received as rewards for membership, completing in-game quests, and other actions, but are never linked to the amount a player spends at the site. The prizes these Sweep Coins unlock are also unrelated to the amount spent at the gaming site to ensure that the operator cannot be accused of offering illegal gambling.

This distinction is so binding that even a region like the United States, which was historically vehemently anti-online gambling, and even now has extremely stringent state-based regulations, allows sweepstake casinos in 46 of its fifty states.

 German Courts Rule Counter Culturally

Germany is the one region where this attempt to circumvent the gambling act has been met with firm resistance. The country’s federal gambling authority, Gemeinsame Glücksspielbehörde der Länder (GGL), took a private broadcaster to court for airing advertising for gambling-related raffles and in a landmark decision, the court ruled in their favour!

Speaking of the victory, GGL Board Member Benjamin Schwanke said:

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“The approach taken by GGL is having an effect. With the judicial confirmation of the ban, a further step in the fight against illegal gambling has been taken. Paid games designated as “raffles” are to be classified as games of chance if the chance of winning depends on chance.”

The broadcaster argued that in addition to the offer being contextualised as a raffle, the site only required players to spend €0.50 in order to trigger the offer. This argument was shot down by the Munich Administrative Court when it noted that the State Treaty on Gambling does not consider the size of the stake, only that staking real money constitutes the act of gambling.

The courts further noted that the promotional offer may have allowed players to participate in "competitions", but there was a fee associated with participation, and there was the chance to win prizes based on the outcome of a random number generator. All of which fall within the purview of the gambling act.

GGL member, Ronald Benter, commented:

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“We are assuming that this judgment will have a role model effect and that other providers will take their illegal offers off the market at the request of the GGL.”

The GGL stated that the operator had removed the offending offer from their website at the regulator’s request and now offers a compliant promotion in its stead.