In Search Of A More Cohesive Gambling Market In Germany

The Remote Gambling Association (RGA), representing most of the licensed and stock-market-listed remote gambling companies in the world, has expressed its disappointment with Germany’s policy of keeping away from regulating and licensing online gambling. Unlike Denmark and Spain, the i-gaming sector in Germany lacks a comprehensive system to regulate all types of online casino and gambling services. It also lacks a more viable taxation model.

As of now, only one state has met with the compatibility standards as set by the European Union (EU). Schleswig-Holstein had broken away last year from the other German states and proposed a model with full private operator’s participation on a competitive basis. The RGA is not happy with the latest proposals from the other German states. The trading body believes that the latest recommendations are not according to the criteria set to ensure competitive standards in the German market for both the private operators as well as consumers.

The gambling law in Germany contradicts the EU law. The EU law allows gambling in all forms and promotes competition. The Interstate Gambling Treaty had prohibited all forms of online gambling in the country with effect from January 1, 2008, the only exception being horse-race betting. The online versions of all other games such as Casino games, sports betting, and lotteries were not legal in Germany. According to the law, the German banks could not transact with gambling sites. After the expiry of this treaty on January 1, 2012, there was hope that the German gaming market would become more open.

But, the liberalization of the gaming industry in Germany still remains elusive at best. Fifteen of Germany’s 16 federal states have agreed to a new draft treaty proposing to regulate online sports betting with 20 licenses and a five percent turnover tax. The new draft treaty also maintains a ban on online poker and casino. Schleswig-Holstein is the only German state forwarding its own bill to regulate online sports betting, poker, and casino games.

Several applications have been received for the issuance of licenses. But, licenses cannot be issued unless the state gets a go ahead from the European Commission. The monitoring arrangements as proposed by Schleswig Holstein have to be approved first by the Commission for them to take effect. The necessary clearance could take as long as three months.

The elections in Schleswig Holstein held in May have further confused matters. Early results from the state’s election have not brought about any certainty about the regulatory status of the online gambling industry in the country in the coming days. Despite three licenses being issued for sports betting by the previous coalition government made up of the Christian Democrats and Liberal Democrats, the future remains obscure. The Social Democratic Party (SDP), which has been vehemently opposed to the idea of online gaming regulation, might form the next government according to provisional results. In that event, the new government might revoke the gambling licenses issued so far.

If SDP comes to power, it may mean the state is moving back to the regulatory framework of the Interstate German Treaty supported by the 15 other German states.

The joint proposal of the other German states has been met with a mixed response from the European Commission. The exclusion of online casino games has been criticized. The German states have been asked to amend and notify the relevant legislation before seeking approval.

The RGA has expressed its reservations in no uncertain terms on the intentions of the other 15 states of Germany to regulate online casinos and gambling in Germany. The contentious issues included limited issuance of licenses, exclusion of online casino and poker game operations, and an uncompetitive tax regime.

Although the state of Schleswig-Holstein has proposed gambling laws more in tune with RGA standards, the treaty of the other 15 states and political compulsions in Schleswig-Holstein leave much to be desired for a more cohesive gambling market in Germany.