Germany Gambling Legislation

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A study undertaken in 2008 by the Federal Centre for Health Education [1] showed that over 50% of men in Germany were involved with gambling. It was believed that the legalised gambling market in Germany for 2008 earned a turnover of just short of €24.9bn. Close to €7bn came from the Lotto and over €16bn came through slot machines, roulette games and card games. There is no doubt that gaming and gambling were popular past-times in Germany but the emergence of online gaming brought new challenges and problems to the industry and the country.

There are 16 German Federal States and they used to have their own laws regarding online poker play and online gambling. The biggest concern comes with the fact that there was no request or desire to create a national system that every state can conform to. There was also no desire for neighbouring states to work together in order to create a sense of similarity or uniformity between players who may be streets or miles away. The fact that two players located very close to each other but separated by a state border faced different laws with respect to online poker ensures that there is a great deal of dubiety about what can and cannot be undertaken with respect to online poker play in Germany.

World Law Guide: Legislation Germany; Collection of German Laws. International Law Directory: Germany; Statutes, criminal and civil codes, and other legal materials. A portal of the BYU Law School. Guide to Law Online: Germany; Library of Congress guide to constitutional, legal and government documents. (Transcriptions and translations) German. The gaming industry will primarily have come across Germany as a complicated jurisdiction in which EU law and constant monitoring of regulatory developments play very important roles. The following is intended to shed some light on how gambling is regulated in Germany as well as on the trends and ongoing political reform discussions. Germany’s state leaders sign new gambling treaty 3rd November 2020 10:18 am GMT Germany’s new State Treaty on Gambling has been signed by leaders of the country’s 16 federal states, paving the way for its implementation from July 1, 2021.

The Intestate Treaty on Gambling 2012 (ISTG) is one of the most important pieces of legislation in Germany and it has been through a long and tortuous process to come to light. The emergence of the ISTG allowed sports betting, including online sports betting, to take place and there were provisions added which would see other gambling activities to become legal, which was mainly aimed at the German lottery. However, there remained a ban on online gambling, which meant that poker remains illegal under the ISTG.

The curious case of Schleswig-Holstein

Online poker in Germany has been thrown into a state of upheaval following the reveal that new legislation significantly alters the playing parameters there. Among the regulations are strict table.

Germany gambling legislation today

As of April 2014, 15 of the 16 separate states in Germany do not provide provisions for the playing of online poker in Germany under the ISTG. The 16th German Federal State that stands apart from the rest, Schleswig-Holstein [2], passed legislation that allowed online sports betting and online gambling. This Federal State has a population of around 3 million people, which equates to roughly 3% of the German population, and they decided to pass their own gambling laws. These gambling laws would be more liberal than the main gambling laws that had been introduced in the ISTG. These laws were enabled to allow operators to apply for licences for sports betting, poker and even games of chance.

Licences started to be used to firms in 2012 with PokerStars being one of the first companies to obtain the licence. Other firms who applied for a licence at an early stage were Ladbrokes and 888. By the first day of 2013, there have been more than 50 applications for sports betting or online games granted in Schlewsig-Holsten. With the maximum number of gaming licences for sports betting firms being limited to 20 and online casinos being illegal in all of the other Federal States, these licences could only have been handed out in this part of Germany. The provision of a variety of licences to a variety of firms was well received with the among community and was seen to be a bold step forward with respect to tackling the problems of online gaming and gambling in a mature manner. This provided poker players with optimism and with good cause.

Initial estimates stated that the new legislation would allow for an additional €40 to €60m to be received by the state on an annual basis. The legislation required for operators to pay 20% tax on gross revenue. While the rest of the states were unified in their stance against online gaming, the success or failure of online gaming in Schleswig-Holstein would certainly have been fascinating viewing around the country. There is no denying that many authorities in other states were hoping that Schleswig-Holstein would fail because this would justify their actions.

However, if Schleswig-Holstein was to achieve success in bringing in large sums on an annual basis, there would be questions asked of the states that sided with the ISTG as opposed to taking a more liberal approach as followed the leaders in Schleswig-Holstein. It was the liberal approach and decisiveness that led many in the global gaming community to sit up and take notice of Germany and this one particular state.

The gambling authority leader of the state was provided the title of Regulator of the Year by the International Masters of Gaming Law. Given that many major gaming firms around the world viewed Schleswig-Holstein to be an entry into Germany, there was a clamour for licences. However, the fact that the state was being seen as being used by some firms as gaining a backdoor entry to the country was not well received and as is common, the path to online gaming did not run smoothly.

Very shortly after this regulation was passed, the state government of the time was voted out of their role in office. The new governor of the state stated that he intended to revoke the online gaming and betting regulation and although this has not come to pass yet, it creates an uncertain future, even in this state.

Challenges and legal repercussions

One of the reasons why there has not been an immediate overturning of the law in Schleswig-Holstein is attributed to the fact that licences were handed out for a 5 year period. These licences will remain in place until 2018, allowing the current holders the opportunity to continue to act under the more liberal laws that are in place. Even if developments in the other ISTG states occur, there is likely to be an imbalance between the two different locations. The fact that there is an opposition in regimes within the country may see the European Court of Justice acting once again about the unlawful nature of the differing rules in the country. This is something that the German Federal Supreme Court is well aware of and they are taking steps to minimise any impact or potential trouble or fall-out from changes that may occur.

The Supreme Court believes that the ISTG requirements are not standing in opposition to EU rules but if the Court of Justice in Europe does decide against the ISTG, it could force an opening up of online poker and gaming in Germany. This is something that many online gaming and poker operators, currently unable to engage or act in Germany are hoping for. These firms are keen to asset the fact that they have freedom of movement and operation in Europe and that they should not be bound by these German laws. While these regulations are still being debated, there remains a great deal of uncertainty in the German gaming market.

Given that there is a high level of demand for fairness and equality across Europe, the fact that citizens from different states are subjected to varying regulations is a cause of great concern. It may be that it is the current inequality in the current European online poker market that will provide the change that German poker players are in need of.

Even within Germany there has been issues raised and one question that has been placed with the European Parliament is whether there should be a difference in how private and state owned casinos are treated in Germany [3]. It is believed that more than 50% of the casinos that are privately run in Germany are being run out of business and this therefore represents a violation of a firm’s right and freedom to conduct their business. The question put to the European Parliament questions whether the regulatory framework in Germany discriminates against private businesses and for firms who are undertaking work throughout Europe.

Germany

Potential punishments for playing online poker in Germany

Again, as of the time of checking, there has yet to be a prosecution in Germany for a player playing online poker, but this is not to say that there never will be a prosecution. Possible punishments for gambling in Germany (online or when play is carried out in venues that not licenced) include cash fines but it is also possible to be sentenced to prison for a period of up to 6 months. There are casinos that are licenced and legal in Bavaria but playing poker or gambling in other forms in other locations could result in a person being penalised to the full extent of the law. The fact that 15 of the 16 German Federal States are unable to provide proper or sufficient guidance with respect to the legality of online poker in their state is a huge concern for the poker industry and players in Germany.

Even though the German Federal States would prefer to decree online poker as illegal in Germany, EU law may prevent them from doing so. A European Court of Justice decree in 2010 stated that the banning of all online gaming is illegal and if the German Federal States push for this outcome again, it is likely to be overturned again.

Although there are people and parties on both sides pushing for a change in the law, there are not many certainties that online poker players in Germany can take. However, the following facts are known:

  • Apart from in Schleswig-Holstein, online poker is prohibited in Germany
  • As of April 2014, no one had been prosecuted for playing online poker in Germany
Gambling

Poker sites that provide options to German players

While online gaming is not licenced in Germany, there are poker providers that are based in other countries, nations or islands throughout the world who provide poker playing options to German players. Many of the international sites that allow German players to gain access are licenced or based in areas such as Gibraltar, Malta or the Channel Islands. It is not uncommon for these providers to promote their site on German television. However, the adverts will solely focus on the fun play (with no real money) version of the games, so they are technically not promoting illegal activities by promoting their site. However, there is an acceptance that these sites are acting in such a manner that they wish for players to sign up to the site and then utilise the real money gaming options.

You will find that many of the sites which provide services in Germany offer a lengthy list of terms and conditions. These conditions clearly state that players from countries who are not legally allowed to play online poker (such as Germany) are doing so at their own risk and the responsibility is all on the player. This is a clear move from the online poker sites to absolve themselves from any blame or liability while also looking to reinforce the fact that it is the player who is breaking local law by playing online poker.

Is poker a game of chance?

It is not just Germany and German officials that have struggled with the question of whether poker is a game of skill or chance. It may not seem like a major issue for many people but when it comes to determining the legality or otherwise of poker, it is a very important issue. Research undertaken in the country has stated that the strategy element of poker constitutes around 25% to 40%. For some people, this is more than enough to have poker classed as a game of skill. For other people, this is not enough because the element of luck or fortune is still the larger element in the balance between skill and fortune. Comparisons have tried to have been drawn on the fact that winning sports teams will often show skill and benefit from luck in the winning of a game and titles but that the strategy and skill element is always likely to be the most important factor in the grand scheme of things.

Given the size of Germany, there is clearly going to be a lot of people that want to play online poker and gamble. Studies undertaken indicate that Germany, even with all of the regulations, can still claim to be the second biggest nation in the world with respect to online gaming [4]. With some studies, including those carried out by Goldmedia [5] indicating that online gaming is continuing to rise in Germany, the legislation may not have the intended effect.

References

  • [1]↑Federal Centre for Health Education
  • [2]↑Schleswig-Holstein – Gambling Information
  • [3]↑European Parliament Questions
  • [4]↑ISA Casino Guide
  • [5]↑Goldmedia

Overview, Update and Outlook By Dr. Matthias Spitz and Jessica Maier, LL.M.,MELCHERS Law Firm, Germany

Germany has been an attractive gambling market for a long time. This does not come as a surprise considering its population of roughly 83 Million and economic strength. However, the legendary German efficiency, which is sometimes attributed to Germany, seems to be lacking considerably when it comes to (online) gambling regulation. The gaming industry will primarily have come across Germany as a complicated jurisdiction in which EU law and constant monitoring of regulatory developments play very important roles.

The following is intended to shed some light on how gambling is regulated in Germany as well as on the trends and ongoing political reform discussions. The article will briefly touch on licences available in the land-based sector, but will focus on the regulation and reforms affecting online operations, specifically online sports betting and online casino.

Overview

In Germany, gambling regulation has been made subject to state law. In theory, each of the sixteen German states therefore can make its own decisions on how to regulate gambling for its respective territory. At the moment, the German states regulate gambling by means of a so-called Interstate Treaty on Gambling, which each German state has implemented into its respective state law. The intention of this Interstate Treaty, which was enacted in 2012, was to create uniformity between the states with regard to the cornerstones of gambling regulation. It provides for a state-monopoly on the operation of (online) lotteries (private companies may only apply for licences allowing them to act as brokers for the state-lottery companies), sets certain standards how the states should regulate their bricks-and-mortar casinos (which, depending on the state, will be state-run or can be privately-run) and gaming halls and prohibits online games of chance with the exception of horse race betting and sports betting.

In a sports betting context, the Interstate Treaty of 2012 introduced a licensing opportunity for the first time after the German states had been forced to do so following a judgment of the Court of Justice of the European Union (CJEU), which had held the previous state-monopoly to contravene EU law (Carmen Media-case).

Theoretically this licensing process should have led to the issuance of 20 sports betting licences, which would have been valid in all German states, covering online and land-based operations. The licensing process, however, failed and was rightly criticised from the start – as was ultimately confirmed by the CJEU in the Ince-case in February 2016. The CJEU held that the sports betting licensing process had been designed in a non-transparent and discriminatory manner and criticised the German states for not having introduced a licensing system fit to overcome the unlawful state-monopoly. It confirmed that EU based sports betting operators could not be blamed for operating without a German licence in such an unlawful legal environment and thereby made perfectly clear that reforms of the current regulation were needed.

Relevance of EU law

The Carmen Media and Ince cases referenced above already show the impact EU law has had (and still has) on German sports betting regulation. But also in the online casino sector, operators have relied on the freedom to provide services (Art. 56 TFEU) under EU law to justify their operations on the German market, arguing that the prohibition impacting on online games of chance is disproportionate (as it is unfit to achieve the Interstate Treaty objectives) and inconsistent (e.g. because there is no scientific evidence to support that land-based slot machines are less dangerous than online slots, and yet, gaming halls can be licensed whereas online casinos currently cannot).

Nevertheless, Germany’s highest administrative court, the Federal Administrative Court, handed down a judgment on 26 October 2017 stating that the prohibition of online gambling and advertising, as it is currently set out in the current Interstate Treaty, neither violates national constitutional law nor EU law. This has to be taken seriously by online operators, despite the judgment arguably applying an incorrect interpretation of CJEU jurisprudence and a constitutional complaint having been filed against the judgment.

Germany Gambling Legislation News

Update: The Third Amendment Treaty

Over the past years, Germany’s gambling politics have been characterised by a back-and-forth and an ongoing dispute between the German states regarding the extent to which reforms should be agreed. In March 2019, the Prime Ministers of the German then signed an amendment to the current Interstate Treaty, which is supposed to result in the so-called Third Amendment Treaty following notification to the European Commission and ratification in each of the sixteen state parliaments. If the Third Amendment Treaty can be ratified before 31 December 2019, it is to enter into force on 1 January 2020.

The novelty of the Third Amendment Treaty is that it will introduce a new sports betting licensing process – this time one that will not be limited to 20 licences. The authorities in charge even intend to publish details of the application requirements ahead of the law entering into force. This is highly unusual and it still remains to be seen whether this new licensing process can resolve the problems German sports betting regulation has been facing, not least since the conditions of the future licences must currently be expected to be unviable. Some of these restrictions include: limitations to the permissible betting product range (severely impacting on popular forms of in-play betting), a 1,000 EUR monthly stake limit and a prohibition of parallel online casino operations. Such restrictions would not only lead to significant disadvantages of licensed operators but also mean that certain licence restrictions will (need to) be challenged for not being sufficiently based on empiric evidence. It further is unclear how long licences, once granted, will actually be valid as the Third Amendment Treaty has been referred to as only a temporary, transitional solution by a number of politicians including the host of the last Prime Ministers’ conference who mentioned this in a press conference when announcing that the German states had agreed on the Third Amendment Treaty.

The possible transitional nature of the Third Amendment Treaty is also relevant in the discussion regarding the potential future introduction of online casino licensing opportunities. At the moment, the Third Amendment Treaty is supposed to be valid until 30 June 2021 (but extendable until 30 June 2024) and maintains the prohibition impacting on online casino. A number of German states, most prominently the state of Hesse (who will be in charge of conducting the new sports betting licensing process under the Third Amendment Treaty) and the state of Schleswig-Holstein, however, are pushing for decisions on what the future online casino regulation will look like after 30 June 2021 to be made sooner rather than later. The reason for this is that these states would like to see a fundamental change in Germany’s gambling regulation. They would like to introduce online casino licensing. That said, the state of Schleswig-Holstein actually is experienced in regulating online sports betting as well as online casino already:

Back in 2012, when the current Interstate Treaty was enacted, only 15 of the 16 German states originally formed part of the Interstate Treaty. The state of Schleswig-Holstein initially pursued its own gambling regulation allowing for online gaming licences (sports betting and online casino) to be issued. Due to a change in the Schleswig-Holstein state government, Schleswig- Holstein then acceded to the Interstate Treaty already in 2013. However, a total of 48 licences for the operation of sports betting and/or online casino gaming were issued during the time the Gambling Act of Schleswig-Holstein was in force. All of these licences have meanwhile expired but in an attempt to maintain their regulated market, Schleswig-Holstein has introduced a transitional arrangement for sports betting operations in Schleswig- Holstein. With the blessing of the other 15 German states (received ahead of the last Prime Ministers’ conference in March 2019), it also introduced a state law, which revalidates formerly granted Schleswig- Holstein online casino licences. Both the sports betting transitional arrangement and the revalidated online casino licences shall remain valid until another licence is granted on the basis of German law which is applicable to Schleswig-Holstein. They are supposed to be valid longest until 30 June 2021. Although the group of states considering alternatives to a total prohibition of online casinos is slowly growing, some “hard-liner” states have not moved an inch in the discussions and could remain opposed to the idea. Still, it will be interesting to see if the revalidation of Schleswig-Holstein online casino licences might impact on the further discussions e.g. if the other German states can consider the regulation to be a success and provide for a possible blueprint for future online casino regulation.

Outlook

Despite the many remaining question marks on the new sports betting licensing process and conditions as well as a return to a state-monopoly not having been completely ruled out (however unlikely it may be politically) by the Germany states, it is clear that there is a lot less controversy between the states on how they intend to regulate sports betting than on how a future online casino regulation should look like.

For the time being, the German states expect that the Third Amendment Treaty will enter into force as planned, so that a change of the law impacting on online casino could only take effect as of 1 July 2021. As indicated earlier, the available potential regulatory options are, however, already being discussed now and the advocates for an introduction of online casino licensing are pushing for key decisions on the way forward being made as soon as possible. The options, which are currently being discussed between the states, range from suggestions of simply sticking to the prohibition of online casino to introducing a state monopoly or an open online casino licensing system. It even seems possible that Germany could split into states, who introduce online casino licensing, and states, who do not introduce online casino licensing. From an industry’s perspective, it is positive in this context that the group of states in favour of an introduction of online casino licensing opportunities (or at least alternatives to the total prohibition) is slowly growing and consists of states which cover rather interesting parts of Germany in terms of population and wealth.

*The authors would like to acknowledge Lisa Ruess’s contribution to this article. Her input has been invaluable.

Germany Gambling Legislation

Author information and contact details:

Dr. Matthias Spitz is a Senior Partner of MELCHERS Law Firm and specialises in the area of gaming law with a focus on European law and administrative matters. He is an expert in AML, advertising regulation and the implementation of new gambling products on the German market. Experienced in communication with regulators and administrative procedures, Matthias not only offers traditional legal services such as litigation but also lobbying advice and support. Since 2013, he has been a member of the International Masters of Gaming Law (IMGL). Matthias frequently publishes articles on regulatory developments in leading industry journals.

Germany Gambling Legislation 2019

Matthias can be contacted at: m.spitz@melchers-law.com

His LinkedIn profile is:https://www.linkedin.com/in/dr-matthias-spitz-025b8935/

Jessica Maier, LL.M. is a Partner with MELCHERS Law Firm and advises on all aspects of gambling law with a focus on regulation, licensing and compliance. She has been involved in regulatory due diligence reviews in the context of corporate acquisitions and also supports clients in competition and antitrust related issues as well as in administrative court proceedings or out-of court negotiations and interactions. She has provided guidance to clients in various licensing proceedings and advises clients on the regulatory developments in Germany which impact on their business. Like allmembers of the MELCHERS Gaming & Betting Law Practice Group Jessica regularly contributes to gambling law and industry publications. She is a member of the International Association of Gaming Advisors (IAGA) and Global Gaming Women (GGW).

Jessica can be contacted at:j.maier@melchers-law.com

Her LinkedIn profile is: https://www.linkedin.com/in/jessica-maier-5263b6a8/

Germany Gambling Legislation Today

Germany Gambling Legislation

Germany Gambling Legislation 2020

Originally published May 2019