A German Federal Court ruling due later this week could provide some indication as to whether the ban on online lottery sales under Germany’s Interstate Gambling Treaty will come into effect as scheduled next year. Private lottery distributors, already suffering under the Treaty, are banking on obtaining legal protection from the Treaty’s full scope.

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.

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.

Still reeling from a failed challenge to the German Interstate Gambling Treaty, Tipp24 released its latest results showing turnover up, but operating profits down heavily on greatly increased costs. The company also announced it had won an online gaming licence in Italy.

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.

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.

The European Court of Justice (ECJ) will scrutinise Germany’s Interstate Gambling Treaty next month, but local gaming operators predict it will still be 2012 at the earliest before the German market opens up to private competition.

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.

Tipp24 looks to have managed the trick of replacing its German-facing lottery business – which has been destroyed by the full impact of the German State Treaty on gaming – with a booming international business. But the company has said the German government will not find it so easy to replace the billions in potential tax revenues it would have gained if Tipp24 and other private operators had been allowed to continue lottery retail operations.