New State Treaty On Gambling In The Pipeline

One of the hot subjects in the online gambling industry in Germany is the ongoing talk between representatives from the 16 states regarding drafting a new State Treaty on Gambling and the recent announcement from Schleswig-Holstein that a “breakthrough” has been reached grabs the attention.

Lottery remains a state monopoly

The proposed model, in order to gain the support from the traditionally powerful state-run lottery and its association, the Deutscher Lotto- und Totoblock /DLTB/, would preserve its monopoly on the market, but would remove the ban for online casinos, while sports betting would preserve its legal state as per the active State Treaty.

As per unofficial information, the draft proposes the creation of a federal regulatory body that would deal with the process of licensing of the gaming operators that are applying for licenses regarding online casino, slots and poker, and would make sure the regulatory framework agreed by the federal states is being enforced, including the implementation of responsible gaming and minor client protection measures.

Federal regulations & state controls

Though the information provided is very scarce, it still leaves a lot of issues that need to be addressed and one of them is that despite of the federal regulator license regime, every state keeps the option to introduce additional controls for the companies operating online casino within the state’s geographic area, thus leaving the door open for further restrictions towards the operators, prior to applying for a license.

There are no details in the Schleswig-Holstein announcement that would suggest anything about the location of the proposed future federal regulatory commission, with at least 4 states – Hesse, Nordrhein-Westfalen, Schleswig-Holstein and Baden-Württemberg – being previously in the mix, as well as no mention about the restrictions that are going to be imposed on the operators, a subject that is covered by a publication in the Bild, but it not clear whether that report was not based on a previous draft.

Serious shortcomings

Initial reactions to the news that the 16 federal states have reached an agreement on a new expansive regulatory framework for online gambling show excitement, but the President of the German Sports Betting Association /DSWV/, Mathias Dahms, while hailing the legalization of online casino games, also criticized the issues regarding sports betting restrictions on live betting markets that would be limited to final score and next goalscorer betting only, claiming that leaving out markets such as over/under would steer people outside of regulation where these are available.

Other restrictions the DSWV President mentioned were the player monthly limit of €1000 across all sites and the 5min lock-out between logging out from one website to logging in to another, arguing that the former would only limit growth than protect the players, while the latter is absurd in the modern digital age.

There are no specific details how the approved draft would treat the business in terms of taxes, as currently there is a vast difference for taxing gaming to casino activities, with some proposals for gaming VAT exemption and a specific tax rate for the online operators.