Germany: New State Treaty On Gambling In The Pipeline

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New State Treaty On Gambling In The Pipeline IN SUMMARY: Federal states agreed on a new gambling regulatory framework Some of the proposed restrictions and controls raise serious issues March 5, the final decision date, followed by ratification and EC approval 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 casinoslots 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 – HesseNordrhein-WestfalenSchleswig-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.

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.

https://www.gamblingnews.com/news/new-state-treaty-on-gambling-in-the-pipeline/

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Schleswig-Holstein claims that Germany’s 16 federal states have made a breakthrough in negotiations over a new State Treaty on Gambling, describing the agreed model as a “really good result” for all jurisdictions.

The new model will retain the monopoly structure of Germany’s state lottery industry, the state said, while lifting the prohibition on online casino. Sports betting, legalised in the current State Treaty, would of course continue to be allowed.

Nationwide licences for products such as slots and poker will be made available, with a new national regulatory authority to be established to process licence applications and enforce gaming laws.

While the state did not provide exact details of what these regulations may be, they will include responsible gambling safeguards, as well as consumer and minor protection measures.

However, while this regulatory authority will issue national licences, Schleswig-Holstein said states would have the option to develop their own controls for online casino.

"States will formulate and enforce regulatory and technical requirements [for casino],” Dirk Schrödter, head of the Schleswig-Holstein State Chancellery, explained.

In practice, this suggests that in their licence applications, operators will have to show that their systems and processes comply with the regulations set out in the states where they are looking to operate.

In Schrödter’s eyes, the new regulations will "be the basis for a sufficiently attractive online gambling offering, to ensure the channeling of gambling into the legal market”. It would "create a suitable alternative to illegal gambling and to counteract the development and spread of black market products”, he added.

Schleswig-Holstein’s update, while suggesting that a final model is close to being agreed upon, leaves significant questions, such as where the regulatory authority will be based. It should also be noted that other states are yet to comment on the apparent breakthrough.

Hesse has previously argued in favour of hosting the regulatory body, citing its experience in processing licences via the Regional Council of Darmstadt. The likes of Nordrhein-Westfalen, Schleswig-Holstein and Baden-Württemberg have also been suggested as potential locations.

The exact controls with which operators will be required to comply - as well as the tax structure - also remain unclear. A report in German tabloid Bild last week claimed that a series of stringent restrictions were to be enforced.

These included a three-hour daily window in which online casino would not be available, and a five-minute delay between logging into different gambling sites (effectively preventing players from comparing odds) would be enforced. Advertising on TV would also be prohibited between 6AM and 11PM, Bild claimed.

However, industry sources have told iGamingBusiness.com that the Bild report was based on an earlier draft, and that the regulations currently under discussion were less restrictive.

Lawmakers will next meet on 30 January, at the next conference of the chiefs of the State and Senate Chancelleries, with the Minister-Presidents to meet on 5 March, which is when a final decision could be taken.

Should it be ratified, then approved by the European Commission, it could replace the third amended State Treaty, which came into force from 2 January 2020. The Regional Council of Darmstadt, which is processing applications, has received 11 applications to date, with at least a further seven expected.

https://www.igamingbusiness.com/news/schleswig-holstein-hails-breakthrough-german-gambling-talks