It is impossible to enforce a ban on internet gambling and so such a ban is 'null and void', according to a German court. The Court of Appeal in the state of Hessen reversed a ruling from a lower court banning an Austrian firm from operating.
The ruling comes just weeks before German states are expected to ban internet sports betting across the country. It forms one episode in a long struggle between some European countries who want to control online gambling and the EU institutions that want to promote free cross-border trade.
BWIN Interactive, a major Austrian gambling company with plans for Europe-wide expansion, had been banned by a lower court in Hessen from operating there until the overturning of the ruling.
Germany and France are trying to keep state monopolies on gambling intact but have fallen foul of European legislation mandating free trade of goods and services within the EU.
The French Government lost a case earlier this year when the country's highest court, the Cour de Cassation, ruled that Zeturf, a Maltese company, could operate in France. That undermined the French state monopoly.
The court said that the monopoly, operated in horseracing by Pari Mutuel Urbain (PMU), was inconsistent with EU competition law.
Disputes have focused on Article 49 of the EC Treaty, which guarantees free movement of services within the EU's borders.
France was also involved in a scuffle with BWIN when it arrested the company's two chief executives. It later released them, and BWIN claimed that the arrests only happened after it had made a formal complaint with the European Commission about France's maintenance of a gambling monopoly.
Italy was also involved in a case in which its attempts to restrict gambling trade were thwarted. It had used criminal legislation to restrict heavily the number and type of betting licences that it granted.
The case, which involved three operators, Mr Placanica, Mr Palazzese and Mr Sorricchio, reached the European Court of Justice (ECJ). It ruled that Italy could not use criminal law to undermine freedoms guaranteed under the EU Treaty.
"A Member State may not apply a criminal penalty for failure to complete an administrative formality where such completion has been refused or rendered impossible by the Member State concerned, in infringement of Community law," said that ruling.