Concept and Legal Classification of Lotteries
A lottery is an organized game of chance in which the acquisition of chances to win is made against payment of a specified stake, with the outcome of the game being determined essentially by chance. Lotteries are comprehensively regulated both nationally and internationally and are subject to a multitude of statutory provisions. The legal classification, the distinction from related forms of games, and the regulatory framework form central elements for the execution, supervision, and authorization of lotteries.
Definition and Essential Characteristics of Lotteries
A lottery is legally characterized above all by the following central criteria:
- Consideration: To obtain the chance to win, a financial contribution is required, usually in the form of purchasing a ticket.
- Principle of Chance: The determination of winners occurs exclusively or predominantly by chance.
- Predetermined Prize Schedule: The prize amounts and their distribution are generally established before the drawing takes place.
- Public and General Accessibility: Lotteries are generally directed at an undefined group of participants.
A more precise definition in Germany is provided in particular by Section 3 (3) of the State Treaty on Gambling (GlüStV): Lotteries are “a game of chance in which a majority of persons acquire, in return for payment, a chance to win of material value, granted according to a specific plan and allocated by chance.”
Distinction from Other Forms of Games
Raffle
A raffle is a special form of lottery, regularly used at events with a social or charitable background. It is subject to separate legal conditions, particularly if there is no public interest or charitable purpose fulfilled.
Prize Draw
A prize draw differs from a lottery in particular through the unity or indivisibility of the prize offered, whereas lotteries typically distribute a variety of prizes.
Betting
Lotteries must be legally distinguished from betting. While lotteries are characterized by pure chance, betting involves predicting a future event, the outcome of which is uncertain and depends on an actual occurrence.
Legal Framework for Lotteries in Germany
Statutory Basis
State Treaty on Gambling (GlüStV)
The central provisions for the operation of lotteries can be found in the State Treaty on Gambling. The GlüStV defines, regulates, and restricts the organizing as well as the brokering of games of chance, including lotteries, especially regarding youth protection, addiction prevention, player protection, and criminal law aspects.
Criminal Code (StGB)
The German Criminal Code contains in Sections 284 ff. relevant criminal offenses related to unauthorized gambling, including the unauthorized organization or advertising of non-approved lotteries.
Lottery Tax Act (LotStG)
Lotteries are also subject to the Lottery Tax Act, which regulates the tax treatment and obligation to pay levies on lottery revenues.
Authorization Requirement and Approval Procedure
Operating a lottery generally requires official authorization. The respective state authorities are responsible. Obtaining a permit is tied to strict requirements, such as proper business conduct, ensuring payout of winnings, fulfillment of purpose (for example, charitable aims), and ensuring player and youth protection.
Supervision and Control
The conduct and compliance with statutory requirements is monitored by gambling supervisory authorities. These authorities can, as part of their review, also issue orders, revoke permits, and in the event of violations, impose fines or initiate criminal measures.
Legal Consequences and Sanctions for Unlicensed Lotteries
Criminal Consequences
Organizing or brokering a lottery without official approval is punishable under Section 284 of the Criminal Code. Possible legal consequences include fines and imprisonment.
Administrative Sanctions
In addition to criminal sanctions, under the GlüStV, administrative measures can also be imposed, such as prohibition orders, fines, or the confiscation of illicit gains.
Lottery in International Law
There are also numerous regulations at the European and international levels in connection with lotteries. While national law primarily applies—especially regarding authorization requirements—provisions of the European Union concerning the internal market, consumer protection, and the freedom to provide services must also be considered. Cross-border lotteries, such as Eurojackpot, are often governed by multilateral agreements and specific regulations.
Special Forms and Digitalization (Online Lotteries)
With the rise of the internet, online lotteries and the brokering of tickets via digital platforms are gaining increasing importance. In Germany, the organization and brokering of online lotteries is only permitted under special conditions according to the GlüStV. Additional provisions apply here, such as participant identification, age verification, data and player protection, as well as technical safeguards against manipulation.
Consumer Protection and Player Protection in Lotteries
A key concern of lottery law is the protection of end consumers against addiction risks, fraud, and excessive financial losses. These include advertising restrictions, disclosure obligations, measures for the prevention of problematic gambling behavior, and the implementation of exclusion systems for vulnerable or underage persons.
Summary
The lottery represents an independent form of gambling under German and international law, the conduct of which is subject to comprehensive statutory conditions and authorization requirements. The legal provisions serve to protect participants, combat illegal gambling, and safeguard state and charitable interests. The increasing digitalization and internationalization of the lottery sector presents new challenges to legal practice and leads to a continuing need for adjustment in lottery law.
Frequently Asked Questions
What legal requirements must lottery operators in Germany meet?
Lottery operators in Germany are subject to strict legal requirements, in particular set out by the State Treaty on Gambling in Germany (GlüStV). The key requirement for lawfully operating a lottery is obtaining an official permit. This licensing obligation applies to both land-based and online lottery offerings. The permit is issued by the competent state authority in whose jurisdiction the lottery is held. Necessary criteria for licensing include, among others, the reliability of the organizer, safe and transparent execution, protection of minors and vulnerable players, and assurance that an appropriate share of revenues is used for charitable purposes. Additionally, measures for addiction prevention and player protection must be maintained. Non-compliance with these requirements can result in fines, prohibition of offerings, or even criminal consequences.
To what extent are lotteries subject to taxation?
Lotteries are subject to special taxation in Germany. The legal basis for this is the Racing Betting and Lottery Act (RennwLottG). Accordingly, a lottery tax of generally 16.66 percent of the stakes must be paid by the organizer. This tax obligation arises irrespective of whether the lottery is offered regionally or nationwide. In addition, operators are required to keep detailed records of collected stakes and distributed winnings and to make these available to the tax authorities. The tax is not levied on participants’ winnings, but exclusively on the gaming capital received by the organizer. In certain cases, value-added tax may also apply, especially for cross-border offerings—here, however, the specifics must be assessed on a case-by-case basis.
What legal regulations apply to lottery advertising?
Advertising for lotteries is strictly regulated in Germany. According to the GlüStV and accompanying legal provisions, advertising must not specifically target minors or at-risk groups. It must be factual and may not include misleading promises about chances of winning or the amount of winnings. Furthermore, all advertising must clearly display information about addiction risks and available assistance and prevention options. TV and radio advertising is subject to further time restrictions and, for example, may not be broadcast during programs with special relevance for young people. Violations may lead to the revocation of the permit and the imposition of substantial fines.
What requirements exist with regard to player protection and addiction prevention?
Operators of lotteries are legally required to implement comprehensive measures for player protection and addiction prevention. This includes especially the establishment of an effective system for identity and age verification to exclude minors from participation. Moreover, operators must provide transparent information on game conditions, chances of winning, and possible risks. There is an obligation to identify conspicuous or problematic patterns of play and to implement suitable intervention measures, such as issuing warnings up to blocking affected players. In addition, lottery operators must maintain a social concept and cooperate with addiction counseling centers.
How is the processing of lottery data regulated under data protection law?
The processing of personal data in connection with participation in lotteries is subject to the General Data Protection Regulation (GDPR) and other relevant state data protection laws. Lottery operators may only collect and process the data necessary for the operation of the lottery. This includes, among others, identity verification, age checks, and, depending on the design, account data for prize payments. The data must be treated as strictly confidential and protected from unauthorized access. Participants have the right to access, rectification, erasure, and restriction of processing as provided by law. If operators breach data protection obligations, substantial fines and, in extreme cases, withdrawal of the operating license may result.
What legal consequences does participation in an unauthorized lottery have?
Participation in an unauthorized lottery is legally risky for both the operator and, in some cases, the participants. Operators are subject to criminal liability under Section 284 of the Criminal Code (Unauthorized Operation of a Game of Chance), which can be punished with imprisonment or fines. Participants may also, at least if they act intentionally, be liable for participation in unauthorized gambling. In addition, there is no legal entitlement to payment of winnings, as contracts relating to illegal lotteries are generally void (Section 134 BGB). Winnings from unauthorized lotteries may be seized by the authorities.
What special regulations apply to online lotteries compared to traditional lotteries?
Online lotteries are subject to the same basic requirements in terms of authorization and protection requirements, but are supplemented by additional regulations. In particular, there are stricter requirements for technical security, protection of personal data, and identity and age verification. For online lotteries, a central exclusion system (OASIS) exists to effectively implement player bans. Geoblocking must prevent access by players from unauthorized regions. Furthermore, operators are obliged to ensure compliance with deposit and stake limits using technical control systems. Violations of statutory requirements may result in withdrawal of the online license and the imposition of substantial fines.
