Abstract
When you try your best but you don't succeed,
when you get what you want but not what you need
I. Introduction
In 2005, the betting scandal surrounding football referee Robert Hoyzer caused a shock within the German sporting community by highlighting the lack of a sufficient protection of sports integrity in Germany. The Federal Court of Justice (hereinafter BGH) in the specific case found a way to sentence referee Hoyzer to two years and five months imprisonment and a ban for life from football‐related activities by applying a new interpretation to existing principles established in the context of the existing criminal provisions on fraud. 1 The case revealed the problem that existing laws were not truly capable of appropriately dealing with and punishing fraud and manipulations committed in sports or sports betting contexts. 2 Policy‐ and lawmakers were therefore called to act.
Following a legislative process in which multiple stakeholders were invited to comment and share their thoughts, the Federal Council of Germany, on March 31, 2017, passed a new law to introduce specific provisions on sports‐betting‐related fraud and the manipulation of professional sports competitions, §§ 265c–f of the German Criminal Code.
Athletes, fans, sports representatives, politicians, and gaming operators will all agree that the integrity of sports is important and worth protecting—not just in the interest of ensuring actual and entertaining competition in sports, but also from an economic perspective. Gaming operators, in particular, will have absolutely no interest in matches being fixed and fraudulent bets being placed, as such behavior will negatively influence their odds and result in them potentially suffering severe economic losses. The introduction of laws intended to protect sports integrity and the financial interests invested in sports, therefore, was welcomed.
However, in markets such as Germany, where a modern, functioning, and EU‐law‐compliant regulation is yet to be introduced, the question arises whether and to what extent the introduction of new criminal provisions, as opposed to amendments to the malfunctioning and legally questionable regulation, can effectively achieve the goal of protecting sports integrity as such (rather than protecting merely economic interests). It is even more so if they themselves raise certain questions as to their actual practical relevance, scope, and applicability. The following will discuss this and examine the newly introduced criminal provisions in detail.
II. Overview on German Gaming Regulation and its Potential to Protect Sports Integrity
Sports integrity, meaning the goal of ensuring actual and fair competition between athletes, is one of the core goals of German gaming regulation. At least it is set out as such on paper in § 1(5) of the principal German legal framework on gaming, the Interstate Treaty on Gambling of 2012. However, stakeholders in the gaming industry with an interest in Germany will most likely primarily associate German gaming regulation with discussions on reforms, failed attempts at licensing, and an overprotective approach towards maintaining a state monopoly.
Over the past decade, it has almost become a characteristic of German gaming regulation that its compatibility with EU and German constitutional law is constantly called into question. Whilst this criticism generally may be understood to concern both Germany's sports betting and online casino gaming regulation, it was the German sports betting regulation that most of the attention was drawn to in recent years. The sports betting licensing process that was initiated in 2012 and the first German sports betting licensing process open to private operators failed in 2014. It was subsequently confirmed that this licensing process would never be completed due to its multiple flaws and confirmed incompatibility with EU law without the regulation undergoing a reform and the unlawful persisting de facto monopoly being abolished. The Court of Justice of the European Union (CJEU) confirmed this most prominently on February 4, 2016 in the case C‐336/14 (Ince). 3
The German states have agreed on so‐called “minimalist reforms” in the form of the Second Treaty Amending the Interstate Treaty on Gambling (“Amendment Treaty”). Following the state elections in Germany's northernmost state, Schleswig‐Holstein, it is almost impossible that these will enter into force as planned in January 2018, so ongoing discussion of reforms can be expected.
To provide some background: in order for the Amendment Treaty to enter into force, all sixteen German state parliaments have to ratify the treaty before December 31, 2017. The newly formed government of Schleswig‐Holstein has, however, publicly announced in its coalition agreement that it will not ratify the Amendment Treaty. Instead, potentially in cooperation with other German states, it will attempt to create a viable and EU‐law‐compliant gambling regulation. 4 This development may be considered positive considering that the Amendment Treaty would have likely followed in the footsteps of its predecessors 5 due to its inherent flaws 6 sooner or later anyway. At the same time, it is clear that there will be further delay in Germany actually achieving a functioning gaming regulation since the German states will have to go back to the drawing board.
So where does this leave sports integrity? It seems to have been overlooked that in order to effectively play the pivotal role it has in the prevention and fight against betting‐related fraud and match fixing, the betting industry requires a regulated and secure environment and not only protection from economic losses suffered from match fixing.
It can be expected that sports integrity will remain one of the core goals of any kind of German gaming regulation. However, German legislators, as the above shows, will have to invest considerably more effort into making German gaming regulation compatible with EU law and making it work long‐term than has been the case. This suggests that the practical relevance of provisions on sports integrity in gaming regulation will be extremely low. If, however, sports integrity is not ensured through regulation and gaming regulators take no actual interest in ensuring sports integrity, there is a risk that sports integrity will be nothing but an empty shell without functional meaning.
The newly introduced criminal law provisions are unlikely to change this. They may be understood to act as a symbol of goodwill towards wanting to better protect sports integrity to a certain—but limited—extent. This will contribute to that goal as a by‐product to protecting financial interests invested in sports, symbols, or draconian punishments and will not actually ensure, promote, or better protect sports integrity in practice.
III. Analysis of the Newly Introduced Criminal Provisions on Sports Betting Fraud and the Manipulation of Professional Sports Competitions
As mentioned in the introduction, the betting scandal surrounding referee Hoyzer and the subsequent BGH decision were the triggers for German politicians deciding to introduce the new provisions on sports betting fraud and the manipulation of professional sports competitions. The case revealed that the German criminal provision on fraud was not capable of appropriately dealing with and punishing fraud and manipulations committed in sports or sports‐betting‐related contexts.
The first paragraph of the German criminal provision on fraud, § 263 of the German Criminal Code (StGB), reads:
Whosoever with the intent of obtaining for himself or a third person an unlawful material benefit damages the property of another by causing or maintaining an error by pretending false facts or by distorting or suppressing true facts shall be liable to imprisonment not exceeding five years or a fine.
In the Hoyzer case, issues arose in particular due to the fact that it was difficult to establish that there was a “damage of property”—or, as would have been an alternative relying on established German jurisprudence, 7 a “risk which could be seen as an equivalent as a damage of property”—in the specific case. This was because the damage, which occurred in Hoyzer, related to the betting quotes, instead of the property, i.e., the financial assets of sports betting operators. By manipulating the competitions, the manipulator increased the probability of winning the bets placed on the manipulated event. The sports betting operators were thereby harmed because they would have offered different quotes had they known or suspected any manipulations. This, however, can neither be qualified as a “property damage” nor as a “risk which could be seen as an equivalent as a damage of property.” Consequently, from a dogmatic point of view, the fraud provision arguably was not capable of addressing the problem. In order to overcome the problem that existing legal principles could not be applied here, the BGH invented the so‐called “quota‐damage.” 8 In part, this was considered to unlawfully extend the offense of fraud. Therefore, the decision was heavily criticized in legal literature, for example, for violating the prohibition of analogies and principle of legal certainty under criminal law. 9 It was further argued to incorrectly reclassify the character of the offense of fraud. 10
A. Sports betting fraud
Section 265c(1) StGB, which includes the key elements of the new provision on sports betting fraud, reads as follows:
An athlete or a coach commits sports betting fraud when he demands, takes or has himself promised an advantage for himself or a third party in return for him influencing the course or result of an organized sports competition in favor of the opponent in order that an illicit pecuniary benefit may be achieved through public sports betting on this competition. The penalty for sports betting fraud is either up to three years of imprisonment or a monetary fine.
1.
Consequently, the person receiving the advantage has to be either an athlete or a coach. Athletes are understood to be persons who take part in a sportive competition. As per § 265c(6) StGB, a coach is a person who decides how the athletes shall be used and instructed in sporting competitions and is directly in charge of the team's guidance and tactics. Anyone who has direct access to and influence over the athletes in tactical or matters relating to the competition due to his/her professional or economical position, such as team doctors, directors of a club, etc., therefore, may, given the circumstances, be treated as a coach as well. 11
For the demanding of an advantage, a unilateral behavior is sufficient. It is not required that an advantage is accepted, whereas taking or having promised an advantage requires there to be an illegal agreement between the advantage‐giver and advantage‐receiver.
An advantage may be any benefit the receiver does not have a right to but objectively improves his or a third party's economic, legal, or personal situation—no matter if materially or immaterially. 12 The necessary illegal agreement between the advantage‐giver and the advantage‐receiver must contain a link between the advantage and the promised performance. So far, for fraud to be committed under German law, i.e., in accordance with § 263 et seq. StGB, an agreement between acting parties is not necessary. It rather is a characteristic of § 263 StGB that, instead of an agreement, the offender deceives or misleads another in order to gain advantages for himself or others. In a way, the illegal agreement required in the newly introduced provision on sports betting fraud thereby deviates from the traditional elements of the criminal provisions on fraud. Overall, it provides for a new character of the provision, which is alien to the traditional concept of fraud under German law. Due to the required illegal agreement, the newly introduced provision on sports betting fraud, in fact, in terms of its character must be considered much more similar to the offense of “corruption” set out in § 331 et seq. StGB than the offense of fraud set out in § 263 StGB.
The influencing of the course or result of a competition on which the parties of the illegal agreement agree has to be immediately connected with a competition of an organized sport. Section 265c(5) StGB defines what a competition of an organized sport is. According to this provision, a competition of an organized sport is “any competition, whether individual or in the course of a whole tournament, arranged by a national or international sports organization or on behalf of such or with their acknowledgement.” The rules of such a competition, irrespective of whether it will be considered a professional or amateur event, have to have been set out by a sports organization.
The influencing has to favor the opponent. Therefore, it is not necessary to cause a victory of the opponent. In some situations, it can be sufficient to favor the opponent so as to reach a tie 13 or not to lose a game too dramatically. 14 The criterion of having to favor the opponent aims to exclude the liability for advantages promised to players and coaches, such as bonuses for winning a match or tournament, 15 which are meant to encourage their own competitive behavior.
To commit the criminal offense of sports betting fraud, the offender further has to act intentionally. His intent must include intent regarding any kind of achievement of an illicit pecuniary benefit obtained by any person through public sports betting on the influenced competition. It is important to note that the benefit must not necessarily be obtained by the advantage‐giver.
Public sports betting means betting on organized sporting events. Such betting opportunities have to be accessible for a larger, non‐confined group of people or at least have to be part of a customary betting event organized by sport clubs or other non‐public groups of people. 16
Subjectively, the advantage‐receiver must at least take into consideration that others will use his manipulative act to commit betting fraud. Therefore, it is not necessary that the athlete or the coach have a specific bet or even a specific pecuniary benefit in mind. 17
The following example intends to illustrate the vast scope of the new provision incriminating sports betting fraud: A tennis player participating at the Hamburg ATP Masters is offered EUR 10.000,00 for losing the second set of the first round. He shall receive the payment when the match is finished. The tennis player accepts the offer of the “advantage‐giver” based on the assumption that someone will place a bet in public sports betting on him losing the second set. The closing of the agreement already completes the offense of the new provision.
2.
Referees may also be held criminally liable for betting fraud as per § 265c(3) StGB, a provision which essentially follows a similar structure as the provision incriminating the demanding, taking, or being promised an advantage for influencing a sports competition in an improper way by athletes and coaches. The only difference between the provisions is that referees will be held liable no matter which way they influence the competition. They do not have to favor one of the participants to the competition. For a referee to commit an offense according to § 265c(3) StGB, the way the referee influences the course or the result of the competition has to be against the rules. 18
3.
Inversely to §§ 265c(1) and (3) StGB, the offer, promise, or granting of an advantage directed to an athlete, coach, or referee influencing the course or result of an organized sports competition—for athletes and coaches: in favor of the opponent—for the achievement of an illicit pecuniary benefit through public sports betting on this competition is sanctioned by § 265c(2) StGB. 19
B. Manipulation of professional sports competitions
Section 265d(1) StGB, which includes the key elements of the new criminal provision on manipulation of professional sports competitions, reads as follows:
An athlete or a coach commits a manipulation of a professional sports competition when he demands, takes or has himself promised an advantage for himself or a third party in return for him influencing the course or result of a professional sports competition in an anti‐competitive way and in favor of the opponent. The penalty for a manipulation of sports competition is either up to three years of imprisonment or a monetary fine.
The newly introduced § 265d StGB concerns match‐fixing and sanctions the manipulation of professional, high‐class sports competitions, and even the agreement between two parties to manipulate a professional sports competition suffices.
Just as in § 265c(1) StGB, the first paragraph of this provision addresses athletes and coaches who manipulate a competition in favor of their opponent in order to gain an advantage given by a third person. The other elements of the provision also correlate with the elements described and defined above in the context of § 265c StGB. However, for the offense of manipulation of professional sports competitions to be committed, the manipulation must occur in an anticompetitive way, which will usually be the case as soon as a behavior favoring the opponent can be established. Possible exceptions, in other words, cases where an anticompetitive behavior cannot be assumed, are only imaginable if the manipulation, at least indirectly, also favors their own team or personal sportive success, e.g., in cases where both teams would benefit from a tie and, therefore, agree to play towards a tie as the end result. Transfers of athletes or other actions that may act as a benefit but occur outside the actual competition that are usually permitted by the responsible sports organization are also not considered anticompetitive behavior. 20
Sections 265d(2)–(4) StGB correlates with §§ 265c(2)–(4) StGB and address the same group of persons, i.e., referees and advantage‐givers trying to reach an agreement to manipulate a professional sports competition.
There are certain standards that have to be considered in order to determine what will be considered a professional sports competition. These are set out in § 265d(5): with reference to the basic regulations on competitions of an organized sport, a professional sports competition requires that it be organized by a federal or international sports organization or at least on their behalf or with their acknowledgement. The competition rules have to have been determined by a national or an international sports organization and have to have a binding effect on all member organizations. Furthermore, it is required that most partaking athletes have to make a considerable amount of money of their income directly or indirectly with their sport. This income includes, e.g., salary paid by clubs, money resulting from promoting sports, and sponsorship money. 21
C. Legal appreciation
When analyzing the newly introduced criminal provisions it becomes immediately apparent that their scope is extremely wide. This is especially so when comparing the new provision with the traditional criminal provisions on fraudulent behavior, § 263 et seq. StGB.
The moment in which the offenses of sports betting fraud and the manipulation of professional sports competitions must be considered to be (completely) committed is a lot sooner, i.e., at a point in time where neither an actual manipulation has to have occurred nor a bet has to have been placed and where there is no financial damage or materialized risk for sports integrity. It suffices that preparatory discussions have taken place.
Surprisingly, there is no possibility for an offender of sports betting fraud or manipulation of a professional sports competition to act remorsefully, e.g., by deciding to refrain from manipulating the sports competition in the way the parties of the illegal agreement agreed. This would render his former behavior—a behavior that already constitutes the criminal offense—unpunishable. 22 This is quite unusual considering that German criminal law provisions which provide for offenses that will be committed at an extremely early stage, usually provide for such exemptions to allow for some flexibility to account for specific circumstances of the case. The new provisions lack this flexibility. Consequently, there is a risk that the new laws cannot ensure just decisions in certain situations.
In light of the penalties that the new provisions set out for committing the offenses, this risk must be considered to be even higher. The level of potential penalties (up to three years of imprisonment or a fine) arguably is highly disproportionate considering how soon it is theoretically possible to commit the offenses. This is even more true when taking into account the traditional provision on fraud (which may be punished with imprisonment up to five years or a fine) which is in contrast to the new laws, that always requires there to be a pecuniary damage, but still provides for a more flexible handling by the courts in terms of reducing a sentence and accounting for specific circumstances of the case.
Given these aspects, it is questionable whether the new provisions can be considered to be in accordance with the German constitution, as they may be understood to violate the principle of certainty. 23 The principle of certainty plays a pivotal role in particular in criminal law since it is a key principle that no one may be punished without there being a criminal provision (nulla poena sine lege). It seems likely that a constitutional complaint might be filed against the new law.
IV. Conclusion
The newly introduced criminal provisions on “sports betting fraud” and “manipulation of professional sports competitions” raise a number of questions as to their scope, level of penalties, and, with that, their constitutionality. It is also highly debatable that they can meet the high expectations that have been associated with them, namely, the achievement of a higher level of protection of sports integrity as such.
In light of the fact that criminal law was chosen as the route to go down to seemingly protect sports integrity, this is not surprising. When analyzing the wording of the law and supporting legislative materials, it becomes apparent that it is primarily the financial interest invested in sports by various stakeholders, rather than actual and fair competition between athletes, that the new law seeks to protect. 24 The protection of sports integrity, in this sense, must be considered to merely act as a by‐product.
To a certain extent, this makes sense—and, again, this is associated with the fact that the introduction of criminal provisions was chosen as a means to protect sports integrity. Regarding the protection of the financial interests invested in sports, it can be argued that the introduction of criminal provisions and sanctions for violations serves a purpose. In particular, they deter offenders from causing damages that could severely harm sports organizations, clubs, and other stakeholders. This is particularly true for sports betting operators who are directly affected by betting scandals financially and their attempt to adequately deal with such severe economic impacts.
On the other hand, we could look at sports integrity as such in terms of the goal and morals of ensuring actual and fair competition and in isolation of the financial interests invested in sports and sports‐betting‐related contexts. This is clearly an important legal asset and in need of protection—regulation is the most appropriate way of actually ensuring sports integrity. The only way that sports integrity can be adequately protected in practice is if it actually became—as the Interstate Treaty intends—a core value of German gaming regulation. This arguably can only be achieved by ensuring an EU‐law‐compliant and functioning regulation—not least as it will only then become of actual interest to German regulators and lose its symbolic character.
It's in the interest of protecting sports integrity as such, and, essentially, all Interstate Treaty goals including consumer protection and the channeling of players towards the regulated market. German legislators, therefore, are called again “to try to fix you”—meaning German gaming regulation, of course.