The Coin-operated Gaming and Amusement Machine Industry and the Conflict between Entrepreneurial Freedom and Public Regulation

Günther Vieweg

in ifo Forschungsberichte from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: Commercial gaming is an economic activity governed by federal law. As part of the federalism reform, regulatory authority over the amusement arcades was assigned to the Länder. They used the acquired competence with the Interstate Treaty on Gambling, which came into force in 2012 (GlüStV 2012), and regulated gaming by means of quantitative restrictions (e.g. mandatory minimum distances, the ban of multi-concessions). The transitional period for the application of the provisions also for existing amusement arcades largely expired on 1 July 2017. The Federal Administrative Court (BVerwG) with its judgments of 16 December 2016 and the Federal Constitutional Court (BVerfG) with its decision of 7 March 2017 have indeed confirmed the legality of the Interstate Treaty on Gambling. However, the constitutionally granted fundamental rights of the operators must be guaranteed. The extent to which the selection procedures developed by the executive body meet this requirement is currently under legal review in a large number of pending legal proceedings. So far, only a few amusement arcades have been closed due to this state of uncertainty. If the legal situation remains unchanged, however, a reduction of more than half of all amusement-machines with prizes (AWP) can be expected. This study provides in a first section a description of the German coin-operated gaming and amusement machine industry, its economic relevance and its performance. The second section deals with regulation relevant to the sector. In addition to the gaming market, the gambling market must also be considered. This is necessary because commercial gaming is no longer exclusively subject to the jurisdiction of the federal government but also to that of the Länder. Moreover, in the age of internet and digitization, the boundaries between different market segments are merging. The third section examines the prospects for the amusement machine industry in the context of the regime currently being put in place by the Länder, which is aimed at pushing back the industry, and its implications for the effectiveness and efficiency of market regulation. In conclusion and based on experience, essential elements of a regulation of the gaming and gambling market are detailed which are in conformity with European law, coherent and systematically consistent across all forms of gaming and gambling.

Date: 2018
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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