A Berlin court ruling has boosted the hopes of private lottery distributors in Germany seeking protection from a ban on online lottery sales scheduled to take effect in January of next year, legal observers agree.

Two private German lottery operators have won a victory in their case against the activities of the state lottery cartel. While the decision is unlikely to halt the further implementation of the Interstate treaty in January, the prospect of a hefty compensation claim may cause the cartel operators to reconsider their approach.

Doubts over the constitutionality of Germany’s Interstate Gambling Treaty have been settled by the German Federal Constitutional Court’s recent decision to throw out a challenge issued by private lottery company Tipp24, the country’s largest public lottery grouping has claimed.

Private companies now altogether excluded from the German lottery market under new laws that took effect this month have leapt to criticize Germany’s state-run lottery operators over their reported plans to launch a pan-European game to rival the EuroMillions lottery before the end of the year.

The Higher Regional Court in Dusseldorf has upheld an earlier ruling of August 2006 that the Deutscher Lotto - und Totoblock's regionalised division of the German lottery market constitutes a violation of both European and German law.

Challengers to Germany’s Interstate Gambling Treaty are running out of options in the country’s domestic court system, legal observers warn, as state gaming authorities continue to take steps to lock out foreign online gaming firms ahead of crucial European Court of Justice (ECJ) cases due to be heard next year.

Europe and Germany are eagerly awaiting the ECJ judgments relating to eight referred gambling cases, in the hope that some clarity will be provided on the legal status of the country's monopolistic, state-based, and often prohibitory approach to gambling regulation.

Analysts and legal experts expect the ECJ’s ‘Bwin Liga’ ruling will act to further freeze out those private internet gaming operators still active in the German market, but the country’s state monopolies may await further clarity from the European Court next year before expanding their own presence to the web.

German-based online lottery and sports betting provider JAXX has acknowledged that recent legal developments could force it to suspend its lottery business in its home market. German lottery sales are already on the decline, JAXX said, adding that the company expects its growing Spanish-facing business to compensate for further losses.

A decision upholding the validity of Bwin’s old East German sports betting licence to offer internet betting could shelter the company from the worst effects of the impending ban on all internet gambling in Germany established by the Interstate Lotteries Treaty, according to one expert. However, the latest decision adds further speculation to exactly how the treaty will be applied in Germany in early 2008.