- Legal States
Mike Johnson April 28, 2020 3 min read
Another Payment Provider Prohibited from Operations in Germany
The Ministry of the Interior and Sport in the German province of Lower Saxony has issued a prohibition order against an unnamed payment provider company, due to processing payments related to illegal online gambling operators.
Online Gambling Illegal
According to the third amendment of the State Treaty on Gambling, online gambling in almost all of its forms is illegal, with the exception of sports betting, the states lotteries and within the province of Schleswig-Holstein due to a special law. But even sports betting, despite being legal under the Treaty, is yet to see an online sports book accept a wager, after the licensing process has been challenged to be lacking transparency and halted by court.
The crackdown on illegal online operations started back in the summer of 2019, when the Minister of the Interior and Sport in Lower Saxony, Boris Pistorius, issued a blocking order against an international payment provider that remained anonymous by that time, but later on turned out it was PayPal.
The issue authorities are facing is that, as a rule of thumb, online gambling companies are utilizing the offshore model. By operating outside of the country they remain under the radar of regulators, and even outside of the law, continue to channel players.
Looking for a solution to this, Germany authorities decided to crack the money flow to this type of operations. The Minister sent a letter to the leading banking associations in the country to kindly remind them that, according to the third amendment of the gambling treaty, payment processors are expected to comply with the law and not participate in payments related to illegal gambling operations.
During the times when the priority is the health concerns for everyone and most of the land-based gaming facilities are closed, major online operators reported a surge in player activities, mainly related to online casino and poker. If payment providers feel tempted to bridge players with gaming companies, they should know the punishment will be serious.
Fail to Comply and Get Blocked
The new blocking order comes to further stress the resolve of the Minister to deal with illegal online companies. By putting pressure on payment service providers to re-organize their business processes to make sure they comply with the gambling limitation, Boris Pistorius is looking to send a strong message to the industry that rules are there to be followed.
The Ministry of Interior and Sports in Lower Saxony reiterated its stance that further blocking orders are in the works, warning any payment provider company to stay away from processing gambling transactions.
According to the Treaty on Gambling, the Ministry of Interior and Sports in Lower Saxony is the supervisory body regarding responsible gambling and its decisions are enforced not only within the province it represents but throughout the whole country.