PayPal Enforces Tougher Gambling-Related Regulation

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A PayPal loading screen on a smartphone.
  • PayPal introduces stricter polices for online payments related to casino/betting activities
  • Only the state of Schleswig-Holstein supports online betting and casinos legally
  • The Third Treaty on Gambling to be enforced on January 1, 2020 pending ratification

PayPal announces plans to enforce stricter policies regarding any transaction associated with online gaming and betting in Germany.

PayPal to Target Gaming Transactions

Global payment processing company PayPal has altered its T&C’s in Germany to introduce stricter control over online gambling products and financial transactions. The measure concerns specific products that have not been authorized by state jurisdictions, effectively blocking any financial transactions related to such operations. This follows the country’s latest nation-wide crackdown on the casino industry.

In Germany, casino products online are only legal in the state of Schleswig-Holstein, which makes for a very limited market. Having experienced some great upheavals in its time, and particularly in 2006 in the United States, PayPal has become adept at enforcing transactions bans related to the iGaming industries in the instance of non-compliance or gray areas. PayPal has faced multiple accusations of facilitating problem gambling operations in the past as well.

Specifically, PayPal is planning to enforce more restrictive policies starting on October 21, explaining that it was up to each individual vendor to establish the legality of a transaction:

‘If you are unsure as to whether or not a specific offer is permitted, you must ensure that it is legal before using PayPal’s services.

According to PayPal, the added term exists to clarify section 9.1 of its user agreement, which already prohibit clients from the “infringement of applicable law, contract or regulation.’

Is PayPal Ahead of Events?

The German landscape for casinos has been becoming more challenging. In June, rumors emerged that Lower Saxony has issued a ban to a payment service provider to cease and desist from processing any gaming-related payments.

Observers all agreed that the most likely company target of the ban was PayPal. The Ministry of the Interior for Lower Saxony, sent further notices to a number of payment processors as well, sources said. In essence, Lower Saxony’s Ministry is in charge of overseeing financial transactions carried out on the territory of the state.

Enforcing the Third State Treaty on Gambling

Germany has been working on a federal framework for legalizing gambling, but in the absence of a ratified agreement, all operators targeting German speakers are illegal and need to be suspended. The so-called Third State Treat on Gambling needs to be ratified by the 16 Ministers of each German state after which the document will come into force on January 1, 2020.

Officially, the treat will kick off on June 30, 2021, with state-backed licenses being handed to operators willing to supply the German market with casino products. However, the Treaty is restrictive in its nature insofar as it prohibits live betting and online casinos.

Furthermore, the treat places a monthly spending limit per player of $1110 and a turnover tax of 5%. Meanwhile, GVC Holdings, a global gaming behemoth with German headquarters, has said a lot of online companies continued to offer products despite the measures.

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