Germany ratifies amended interstate treaty

Germany’s 16 member states have agreed to adopt an amended version of the Interstate Treaty on Gambling, following parliamentary meetings yesterday afternoon.

The treaty removes a 20-licence cap on sports betting licences, while at the same time extending the so-called experimental phase until 30 June 2021, pending the development of a new legal framework in the intervening period.

At present the treaty is limited to sports betting, while the pre-existing ban on online casinos in all German states except Schleswig Holstein, will continue.

EGR understands the German state of Hesse will be put in charge of the licensing process, with draft licensing conditions to be presented to other German states for approval over the coming month. The full details of the licensing process are expected to be released in summer 2019, with the treaty due to come into force at the start of 2020 if fully ratified.

When new licences are issued, the gaming authorities will be instructed to ban unlicensed sports bets nationwide.  This can also include the revocation of a licence if the operator offers unlicensed gambling in addition to licensed sports betting.

Jens Bader, co-founder of egaming payments company MuchBetter, said German politicians had missed an opportunity to deal with the issue of legalising online casinos and attacked the new agreement as a “placeholder”, creating more uncertainty.

Bader added: “It is very naïve to think that these issues will go away, or that a country can pick and choose which parts of gambling it likes. This is not how the rest of the world works and by only allowing betting, Germany could make it very difficult for operators to comply.”

However, there is hope that the casino vertical may become regulated on a state-by-state basis, with Schleswig Holstein recently publishing a draft law extending the validity of its existing online casino licenses until mid-2021.

The state of Baden Wuerttemberg has publicly reiterated its intention to license online casino as well, while states like Hesse and North Rhine Westphalia are also seen as pro-casino by market incumbents.

One German operator, speaking off the record, told EGR: “The expected state-by-state regulation, combined with the previous criticism the casino ban has attracted from the EU,  and the fact online casino has been generating a significant tax take for Germany suggests the German authorities may have a reduced appetite to take action against operators in the near future.”

Dr. Michael Stulz-Hernstadt, partner at DLA Piper, said the temporary re-regulation was a first step in creating more legal certainty.

Stulz-Hernstadt called the amended agreement the “lowest common denominator” in that it solved the problem temporarily, placing the emphasis back on the states to negotiate a new treaty by 2021.