Concept and Legal Foundations of the Lottery
Definition and Distinction
Lottery refers to a game of chance in which participants, for a fee, select numbers from a predetermined series. In a draw, the winning numbers are determined randomly. The term ‘lottery’ encompasses various types of games, including the classic number lottery (‘6 out of 49’) as well as supplementary and special draws. The legal classification of the lottery is a central issue in German gambling law and requires differentiation from similar types of gambling such as Toto, Keno, or sports betting.
Historical Development
Lottery games originated in the 15th century and were initially used in Central Europe to finance public projects. In Germany, the number lottery was first held under state control in 1955. The regulation of lotteries is strongly influenced by socio-political and fiscal interests.
Legal Framework for Lottery in Germany
Statutory Foundations
State Treaty on Gambling (GlüStV)
The central legal basis is the State Treaty on Gambling (GlüStV, in its current version since 2021). According to Section 3(1) GlüStV, lottery games are considered public gambling since participation requires a fee and the outcome depends on chance. The GlüStV’s regulations are designed, in particular, to channel gambling offerings, protect players and minors, and prevent and combat gambling and betting addiction.
State-Level Regulations
In addition to the GlüStV, federal state laws and regulations exist, in particular to govern the organizational structure as well as the responsibilities of the lottery and gambling supervisory authorities. The operation of lotteries is the responsibility of lottery companies established in the federal states. These are subject to state supervision and control.
Licensing and Concession System
The organization and brokerage of lotteries requires a license. Licenses can only be granted to legal entities under public law (in the form of state or partly privatized lottery companies). Private operators are generally excluded from holding standard lottery licenses. The concession system aims to concentrate operations among a few monitored providers (so-called monopoly) to achieve the objectives of the State Treaty on Gambling.
Distinction from Illegal Gambling
Lotteries offered or brokered without the required permit constitute unauthorized gambling under Section 284 of the German Criminal Code (StGB). Participation can have criminal consequences for both the operators and the players. The distribution of lottery offerings over the internet is also subject to strict license and monitoring obligations.
Consumer Protection Aspects
Minor Protection
Participation in the lottery is restricted by Section 4(3) GlüStV and state laws to individuals who are at least 18 years old. Lottery companies and retail outlets are required to implement appropriate measures for verifying and securing age limits.
Addiction Prevention
Lottery companies are required to implement measures for addiction prevention and player protection. These include educational services, information materials, and the option for players to self-exclude according to the requirements of the player exclusion system (“OASIS”).
Tax Law Considerations
Gambling Tax
The operation of lotteries is subject to lottery tax under the Racing Bets and Lottery Act (RennwLottG). The tax applies to the wagers placed; the burden falls on the operator, not directly on the players.
Income Tax on Winnings
Lottery winnings are generally tax-free for winners, as they do not qualify as income under the Income Tax Act (EStG). However, exceptions may apply if the winnings are repeatedly used with the intention of making a profit (for example, in the context of commercial gambling activity).
European Law Influences
The regulation of lotteries in Germany sits at the intersection of national gambling law and European Union requirements (in particular, the freedom to provide services under Art. 56 TFEU). The European Court of Justice (ECJ) has repeatedly emphasized that gambling regulation is permissible as long as it is non-discriminatory and designed to protect the public interest.
Content and Organizational Requirements for Lottery Operations
Transparency and Information Requirements
Lottery companies are required to publish the rules of the game, odds, draw dates, and procedures for payouts and winnings transparently. Draws must be conducted according to clear and verifiable rules.
Supervision and Control
The proper conduct of lottery games is monitored by the state. The key responsibilities of supervisory authorities include overseeing draws and payouts as well as checking compliance with legal requirements in sales and advertising.
Advertising Law Aspects
Advertising for lotteries is subject to strict regulations (§ 5 GlüStV). Advertising must be moderate, factual, and responsible, and in particular, must not create the impression that gambling is a solution to financial or personal problems.
Liability and Sanctions
Operator
Operators of lotteries are responsible for ensuring compliance with statutory regulations. Violations can result in regulatory action, fines, or revocation of the license.
Brokers and Distribution Partners
Retail outlets and online service providers are also subject to strict controls. Legal violations are sanctioned accordingly.
International Aspects and Cross-border Distribution
Lottery offerings that span multiple countries (e.g., Eurojackpot) are subject to additional regulatory requirements and international agreements. Cross-border participation is only regularly possible under clear eligibility conditions.
Summary: The lottery is a state-regulated game of chance of considerable legal significance. Its organization and brokerage are subject to strict statutory requirements, particularly regarding licensing obligations, player protection, and addiction prevention. Violations of statutory provisions are consistently sanctioned. Tax liability primarily applies to operators; for winners, lottery winnings are generally tax-free. The legal situation is shaped significantly by national, European, and international regulations.
Frequently Asked Questions
Who is legally permitted to participate in state lotteries in Germany?
Participation in state lotteries in Germany is strictly regulated by law, particularly by the State Treaty on Gambling (GlüStV). In principle, only adults (i.e., persons aged 18 and above) are permitted to take part in lottery draws in order to ensure youth protection. Age verification is mandatory when submitting a betting slip, both at physical lottery retail outlets and for online play. Participation by minors is absolutely prohibited, regardless of their ability to consent, and can result in criminal and regulatory consequences for the provider. Furthermore, persons are excluded if they are legally incapacitated by court or official order, or if certain activities are prohibited to them under the Narcotics Act. In the online sector, providers must implement technical measures to prevent access from abroad or from IP addresses blocked in Germany, thereby limiting participation to the legally permitted group of persons.
How is the payment of lottery winnings regulated in Germany?
The payout of a lottery prize is subject to strict legal requirements. According to the GlüStV and the respective state lottery laws, operators are required to pay out winnings promptly and in full. For small prizes (usually up to €1,000), payment is usually made directly at the retail outlet. For higher amounts, payment is only possible through the central lottery company once the game receipt is presented and the winner’s identity is clearly verified. A statutory limitation period applies: winnings can only be claimed within 13 weeks after the draw or after notification of the win. After this period expires, the entitlement to payment lapses and the winnings are generally used for charitable purposes, as stipulated by lottery terms and laws. Direct cash payment is excluded above certain amounts; instead, transfers are made to the winners’ bank accounts to ensure traceability.
What data protection regulations apply to participation in the lottery?
The collection, processing, and storage of personal data of lottery players are governed by the General Data Protection Regulation (GDPR) as well as supplementary national data protection laws. Lotteries may only collect personal data to the extent necessary for the proper conduct of the game and payment of winnings. Disclosure to third parties is generally prohibited unless provided for by law (e.g., to prevent money laundering). Affected persons must also be informed of their data protection rights, and have all rights afforded under the GDPR, including the right to access, rectification, erasure, and objection. For online lottery, there is an additional obligation to protect all data from third-party access, for instance, by means of encryption and maintaining high IT security standards.
What regulations apply to gambling advertising in connection with the lottery?
Advertising for the lottery and other state-run gambling is heavily restricted by the State Treaty on Gambling (GlüStV), the Telemedia Act, and other region-specific regulations. Advertising must always account for both player and youth protection and may not be directed specifically at minors or vulnerable groups. Specifically, misleading information about chances of winning, trivialization of addiction potential, and the use of celebrities in advertising are legally restricted or prohibited. The impression must also not be given that playing the lottery could be a solution to financial problems. In the online sector, additional restrictive requirements apply to the form and placement of advertising and the use of affiliate marketing.
How are lottery operators supervised by the state in Germany?
The operation of lotteries in Germany is subject to strict state supervision, which is regulated at both the federal state and federal level. Licenses are only granted to companies based in Germany that are state-owned or closely linked to the public sector. The state lottery companies are subject to regular inspections by the supervisory authority responsible for gambling in the respective federal state. This authority monitors compliance with all statutory requirements, checks player protection, the technical security of draw procedures, and the payout rules. It is also empowered to conduct spot checks, audits, and unannounced inspections. Illegal gambling is prosecuted with high fines and further sanctions.
To what extent is the taxation of lottery prizes subject to statutory regulations?
Lottery winnings are generally tax-free in Germany according to the Income Tax Act (EStG), as they do not fall under the types of taxable income. However, a tax liability may arise indirectly if income is generated from the prize money, for example through interest, business investments, or rental income after winning real estate. In such cases, the familiar taxation rules for income from capital assets or from leasing and letting apply. The payout of the lottery winnings itself must be made gross and tax-free to the winner by the lottery company.
Are there legal regulations concerning player exclusion and self-exclusion in the lottery?
To prevent gambling addiction, lottery companies and their retail outlets are required to provide for the possibility of self-exclusion (player ban) in their systems. Entries in the nationwide player exclusion system (OASIS) are made at the request of the individual concerned or an authorized person (e.g., relatives) when there are signs of problematic gambling behavior. Once the ban is in place, participation in all licensed gambling nationwide is prohibited. The exclusion period is at least one year and may be extended upon request; early lifting is only possible after careful review. Strict enforcement of these provisions is regularly monitored by the gambling regulatory authority.
