German Regulator Softens the Tone with Online Casino and Poker

The Regional Council of Darmstadt was effectively forced to reconsider its enforcement policies regarding online casino and poker operators in the country, after a test court case brought by an operator successfully challenged a prohibition order issued by the regulatory body under the Third Amendment on the State Treaty on Gambling. The council is now more willing to develop transitional regulations to pave the way towards the Fourth Amendment coming into force, instead of issuing blocking orders.

Court Proceedings Suspended

The Deutscher Verband fur Telekommunikation und Medien (DVTM) informed that both the plaintiff and the Council requested the suspension of proceedings, to provide time for the development of transitional regulatory environment alongside private gaming operators. The operator will not be subjected to enforcement actions during the suspension period.

The DVTM also pointed out any continuation of the enforcement policies against payment providers such as Visa contravenes European Law and all German states face millions in financial sanctions, with the sums getting bigger the longer the prohibition order is in effect. As the Lower Saxony operates collectively for all states, all of them are facing the risk of legal action.

The regulatory body from Lower Saxony issued its first prohibition order in the summer of 2019 against Paypal, effectively forcing the payment processor out of the country. In February 2020 another unnamed operator was issued a blocking order, with the Ministry of the Interior and Sport in the state seeking to demonstrate its resolve to deal with illegal online gambling.

Sports Betting Licensing Process Challenged

Besides payment providers, sports betting operators are also liable to sanctions from the regulator, despite the licensing process being halted in court in April, when Austrian sports book operator Vierklee argued and managed to convince the judges the process was lacking transparency and was discriminatory against businesses that were not already active in the market. The Council announced in May, though, it will continue to accept license applications and will appeal the court ruling.

The report in DVTM pointed out some court proceedings in other German states are already taking into account the incoming changes agreed by the State Ministers in Berlin in May 12, 2020, along the terms of which operations that are now subdued to sanctions will be legal, effective July 1, 2021.

Moreover, DVTM Chairman Renatus Zilles insists Lower Saxony immediately suspend any enforcement actions and start working on transitory regulatory framework to facilitate the implementation of the incoming new gaming rules as per the Fourth Amendment of the State Treaty on Gambling. Otherwise, they all work in favour of the offshore operators from Asia and Russia who besides anything else, do not pay state taxes.