Although it is far from being a known fact, some believe Germany invented the game of poker, and also had the first-ever casino established in 1769. Nowadays however, Germany seems to struggle a lot with internet gambling.
From legalization in Schleswig-Holstein to interstate treaties, the German gaming industries has flip-flopped between legality and illegality of its online gambling, including EU intervention, and just recently, withheld licenses from operators. Let’s get a better understanding of what is going on.
On the 1st of January, 2008, the Interstate Treaty on gaming was passed in Germany. The treaty banned all forms of online gambling in all 16 German states, with the exception of horseracing. EU laws on Ecommerce not only allow online gambling, but encourage liberalized internet gambling throughout the EU. A monopolized state-controlled gaming industry is simply against EU laws. Due to the infringement of EU laws, The European Gaming and Betting Association confronted the European Commission to take action against Germany and their new legislation. The verdict that the EU courts imposed on Germany was to provide proof that the legislation does not infringe on EU within 2 years’ time.
As the EU courts ruled against Germany, and their claim against the legitimacy of monopolized internet gambling, one German state decided to pass a state bill to allow gaming operations in Germany. Schleswig-Holstein passed a bill which allows for licensed gaming operators to provide internet wagering to state residents only, similar to the law passed in New Jersey. The Schleswig-Holstein state government has issued a total of 36 licenses, 23 of them to sports betting firms, and 13 to poker firms. Taxation from the state resulted in 20% of gross profits from the operators.
What Lies Ahead for a British Fintech Industry Outside the EUGo to article >>
While gaming was made legal in the state of Schleswig-Holstein, a new interstate treaty was revised in December 2012. Fifteen states, excluding Schleswig-Holstein, signed the treaty to allow legalized online sports betting in Germany, with an agreed 20 licenses to be issued to eligible applicants. The agreed taxation on operators was set to 5% of all stakes, brought down from 16.67% in earlier revisions. Later on, in January 2013, Schleswig-Holstein joined the treaty, to allow the operations to take place in the state, with the agreement that the firms who have been granted the 6 year license remain operational until the end of the license term. No more internet gambling licenses have been issued in Schleswig-Holstein since the state was added to the treaty, and the local bill was scrapped to make way for the interstate offering.
This leads us to the present day. Online gambling in Germany is legal, although no permits were issued to any of the 41 operators who applied. Earlier this month, Germany declined all 41 applications for the reason that none of them met the federal requirements needed to operate in the country. Germany has never made their minimum requirements clear, and has left some to believe that the applications with the new treaty were devised to satisfy the European Committee. As Germany announces further guidance to the applicants at the beginning of 2014, we will have to wait and see what exact requirements are needed, and if any permits will be issued throughout next year.