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German State Gaming Monopoly Unconstitutional

31 March 2006

LONDON – (PRESS RELEASE) -- The Federal Constitutional Court of Germany declared the state monopoly on sports betting unconstitutional in its widely publicised ruling on March 28th 2006.

Operating the monopolistic "Oddset" without even minimal checks and balances to prevent addictive gaming was declared a violation of the constitutional right of freedom of occupation for aspiring sport betting bookmakers. The monopoly could be upheld only if measures to combat addictive gaming were introduced and enforced immediately. The ruling was very specific about appropriate measures. In essence, in the view of the Deutsche Buchmacher Verband (DBuV; German Bookmaking Association), Oddset's full compliance with these measures is only theoretically feasible but practically impossible.

Two broad scenarios for the future were outlined: One, German legislators come up with new regulation to liberalize sports betting. Two, the monopoly will be upheld and Oddset has to align its offering completely with the goal to prevent addictive gaming and abandon all fiscal interests. Betbull's Directors believe that due to overwhelming public demand for regulated and professionally run sports betting that the legislators will decide to liberalize the market.

The legislators were given a period until December 31st 2007 to provide the regulatory framework for sports betting in Germany. Until new regulation becomes effective current German law and rulings remain in force. In the view of the Verband Europaischer Wettunternehmer (VEWU; Association of European Betting Operators) this part of the ruling has caused some confusion, as it is not a "carte blanche" to close down betting shops and prosecute sport betting agents at will. Although the ruling states that specifically for the state of Bavaria sports betting operations may be shut down according to existing German law it also emphasizes that it takes no point of view on the compatibility with laws of the European Union. But, according to VEWU, the laws of the European Union are violated and the application of these laws takes precedent over the application of German law, meaning: should the authorities shut down betting shops on the basis of German law the operators can go against this action on the basis of the laws of the European Union. In essence, as the DBuV puts it: "After the ruling is before the ruling".

Suffice to mention that the Betbull-Group has only three shops in Bavaria and accepts bets from one agent. No actions have been taken against these shops as of March 29th. The ruling has no negative impact on the licensed horse racing business of the Betbull-Group.

In summary, the Directors and their advisors believe that the current laws of the European Union are material in the defence against rush actions by the authorities, in particular, when it comes down to keeping betting shops open or getting them reopened.

The Betbull-Group together with the various German and international bookmaking bodies of which it is an active member will rally massive support to convince the legislators of the need of liberalizing the sports betting market.

Gunter Schmid, CEO of Betbull: "After seven years of betting with Oddset, lacking even basic means of protection against addictive gaming, it is the bettors who deserve a fresh start, i.e., a liberalized and professionally operated sports betting offering. They will be the winners of this landmark ruling of the Federal Constitutional Court of Germany."

Betbull will publish its figures for the year 2005 as scheduled on March 31st 2006.

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