German state lottery condemned for advertising failings

The German state of Bremen’s Audit Committee has highlighted failings in state lottery operator Bremer Toto and Lotto’s (BTL) marketing practices, and flagged a major conflict of interest in its governance.

In its review of state finances for 2019, the committee noted that BTL’s advertising heavily focused on inducements to gamble, with mandatory information warning of the risks of gambling kept to a minimum in its promotions.

This, however, goes against the guidelines set out in the State Treaty on Gambling, and BTL’s duty to support the legislation’s key aims of preventing gambling addiction and ensure customers play only in moderation, the committee pointed out.

It therefore requested a review of the lottery’s advertising practices. The state Finance Department – which oversees BTL – responded that its duty was to set financial performance goals for investment vehicles such as the lottery, and coordinate efforts to ensure these are met.

However the committee then pointed out that gambling organised for the public interest was not solely governed by financial targets. As the State Treaty dictates that lotteries must uphold its regulatory aims, they are also bound to achieving social and regulatory targets, rather than just generating funding.

While the Finance Department claimed that all advertising had been approved by the state’s Minister of the Interior, this in turn revealed that the minister in question Ulrich Mäurer also served on BTL’s supervisory board. He has since stood down from this board position.

As a result of the concerns raised by the committee, the state parliament has commissioned an inquiry into BTL’s advertising, with a final report to be delivered in October this year.

Such conflicts of interest were flagged in a 2010 Higher Administrative Court ruling, which ordered a clear separation between bodies with oversight for gambling, and those responsible for state finances.

In addition, the Audit Committee also queried the lottery’s failure to comply with state public procurement laws. The committee admitted that with conflicting legal advice, a judicial ruling was necessary to determine whether the BTL constituted a contracting authority – which would mean it is bound to follow procurement laws.

However, it added, due to the nature and purpose of the business, it was “not very convincing” that the lottery failed to apply even basic procurement laws when selecting suppliers and contractors. As it is majority owned by the state of Bremen, the Finance Department has been asked to ensure the lottery follows state legislation related to procurement going forward.