Germany No More Shades Of Grey

By Christina Thakor-Rankin

For as long as anyone can remember most operators have looked upon Germany as one of the palest of pale grey markets. Whilst it may be illegal for an operator based in Germany to offer online or remote gambling, there is no such restriction on operators from outside of the country and therefore outside the scope of the law from doing so. Nor is there any law specifically restricting or preventing German citizens from accessing and using these ‘overseas’ gambling sites.

For many, the pull of one of Europe’s most lucrative betting and gambling markets, has been too strong to resist. Even the best efforts of national legislators trying to address the shortcomings of gambling legislation through Wire Act style financial laws preventing financial institutions from processing gambling transactions, have done little to stop those determined to maintain a presence in the county.

But all that looks like it is about to change. After failed attempts at a unified national approach in the past – due to a lack of agreement on the treatment of online gambling with some states leaning towards liberalization and others towards prohibition – the Lander (federal states) came together earlier this year and finally agreed a new German Interstate Treaty on Gambling (‘ISTG’) due to come into effect on 1 July next year 2021.

Between now and then is a Transitional period which began on 15 October and is ambiguous enough to allow operators a small window of opportunity (payment providers willing) to make some hay whilst the sun shines – for there are storm clouds on the horizon.

In order to arrive at a Treaty that all the Lander are happy with, those in favour of liberalization and a regulated domestic online gambling market have had to make some big concessions, with the result that Germany’s new regulated betting and gambling market is likely to be one of the most stringent and restrictive in the world.
It all starts off on a fairly positive note, the scope of the new regulations – the Gluecksspielneuregulierungstaatsvertrag – extending to online poker, sports betting and casino. And that’s where it ends. So far so good, and also where it slots and with online slots being deemed the virtual or digital equivalent of traditional land-based slot games there by making them subject to the individual laws of each federal state.

The ISTG 2021 includes a license regime to enable providers to obtain licenses to offer online sports betting, virtual slot machines and online poker. According to the new law, virtual slot machine games are simulations of terrestrial slot machine games offered on the internet. The possibility for obtaining a license for online casino games will be subject to separate laws of the individual federal states (see below).

Requirements for online gambling licenses

The requirements for obtaining a license to offer online sports betting, virtual slot machines and online poker are very similar and only vary in details. The common requirements particularly contain the following:

Security deposit: The applicant must provide a security deposit of at least 5 million euros. In individual cases, this amount can be increased up to the amount of the expected monthly average turnover (maximum 50 million euros). For online sports betting licenses, the competent authority indicated that this amount could be reduced upon request. Whether and under which circumstances this will be possible under the ISTG 2021 remains unclear.

Separation of different offers: Gambling providers may offer different forms of gambling (i.e. sports betting, virtual slot machines and online poker) via the same internet domain under the condition that the operator creates independent and graphically separate areas for each form of gambling. The separation also means that it is prohibited to do “cross advertising” among the different forms of gambling. Further, a player must not be able to play in different areas at the same time.

Players’ accounts: Players must create an individual player account with their true credentials for every provider. The provider has to verify the player information. The ISTG 2021 only stipulates that the verification must be carried out by appropriate and reliable procedures. It does not contain any further specifications. The authority may define specific verification measure in the license.

Cross-supplier deposit limit: Upon registration on a website, the player must set a monthly cross-provider deposit limit of a maximum of EUR 1,000.00. This means that the limit will apply per player, not per operator (i.e. as a general rule 1.000 EUR/month/player across all operators). The competent authority will monitor compliance with the limit via a central “limit control file”. Providers must pay a fee to connect to and use the limit control file. In addition, providers have to offer separate provider-related deposit limits which the player may set voluntarily.

Limitations of parallel playing: Players must not play offerings of different operators at the same time. Thus, providers have to check the players’ “activation status” with the authority’s activations system prior to enable them to play on the provider’s website.

Advertisement: Advertisements for online gambling offerings are generally allowed with specific limitations. In particular, advertising must not be aimed at minors and must not be presented as a means of solving financial problems. The limitations further include a ban of broadcast and online advertising between 6 am and 9 pm. In addition, the authority will specify certain notification obligations to be met by the provider.

Special requirements for virtual slot machines.

In addition to the general requirements, the ISTG 2021 provides additional requirements for virtual slot machines:

*A game must last at least five seconds.
*The maximum stake is EUR 1.00 per game.
*Stakes and wins may not be used to build up a jackpot
*Special requirements for online sports betting

It is positive to note that regarding sports betting, bets will be allowed on the outcome of a game as well as on events during the game, or a combination of both. Further, live bets will be allowed under specific requirements. In addition, online sports betting licenses granted before July 1, 2021, will remain effective until December 31, 2022. However, a German court suspended the current licensing procedure in April 2020.
Special conditions for online casino
The ISTG 2021 defines online casino games (in contrast to virtual slot machines) as virtual simulations of casino games and live broadcasts of terrestrial casino games with the possibility of participation via the internet (e.g. roulette, black jack). The law itself does not regulate licenses for online casino games. However, the German federal states can provide for respective regulations in their individual local laws. It is expected that online casino licenses will be available but subject to the specifications for a license to operate an offline casino. This particularly includes a restriction on the number of licenses. The ISTG 2021 stipulates that the competent authority may not issue more online casino licenses than licenses available for landbased casinos.
Germany is currently in the middle of approving new online gambling platforms, having introduced new gambling regulations earlier this year. Here is a look at those regulations in more detail.

What are the current regulations for online gambling in Germany?
The Gluecksspielneuregulierungstaatsvertrag regulates online gaming activities such as betting at internet-based casinos. However, it must now be ratified by each state parliament in the country and be approved by the European Commission. The new regulatory framework of the Glücksspielneuregulierungstaatsvertrag includes strict measures with regards to elements like player protection guidelines and measures for tackling gambling addiction.

Under the new framework, online casino operators can provide poker, slot games, and sports betting. However, limits will be in place for spin-stakes, and online table games like roulette and blackjack will not be allowed during the transition period. If any online gambling platforms breach the regulations, it will result in license withdrawal and possible blacklisting.

What do the new regulations mean for sports betting?
Despite online sports betting becoming legal under the new regulations, there are still restrictions in place. For example, live sports betting is limited to markets on the next scorer or final result, even though that policy has been criticized by official bodies like the gambling operator association the Deutscher Sportwettenverband.

What do the new regulations mean for slot games?
Under the new regulations, slot games will be subject to a stake limit of EUR1 per spin. They must also be offered separately to table games, and they cannot include jackpots or auto-play functions. Furthermore, each state in Germany will be able to decide whether to allow table games or not.

What do the new regulations mean for marketing?
The new rules mean operators of online gambling platforms will not be allowed to advertise between the hours of 6 am and 9 pm. However, some private broadcasters are challenging that decision because it will mean a reduction in potential advertising revenue for them and a reduction in attracting new visitors to the online casinos.

Do the new regulations mean there will soon be lots of new online casinos operating in Germany?
The official body that now regulates licenses for online gambling platforms, the Regional Council of Darmstadt, which is located in the state of Hesse, has yet to approve any new online casinos in Germany. But shortly after the new regulations were announced, the Regional Council of Darmstadt received 30 applications in February, and 20 more operators signalled that they intended to apply. If all 50 applications are approved, it is thought sports betting alone will increase the online gambling market by up to 99%. But you will have to wait until next summer to see how many new online gambling establishments are actually granted approval.

Read more great articles from Christina Thakor-Rankin in the Infinity Gaming Magazine