Hesse threatens to go it alone with German gambling regulation
Coalition threatens to withdraw from interstate treaty by end of 2019 if no progress made
Ruling coalition parties in the German state of Hesse have said they will withdraw from the proposed German Interstate Treaty on gambling (IST) if no progress is made on ratification by the end of 2019.
In a coalition manifesto published prior to the end of 2018, the German Christian Democratic Union and Green parties confirmed they would withdraw from the treaty if no “satisfactory” regulation can be achieved by the expiry of the so-called ‘experimental clause’, which is due to expire on 30 June 2019.
In 2015, Hesse published five guidelines for ‘modern gambling regulation’ which included the abolition of licence limits on sports betting and the regulation and licensing of online casino and poker games. According to Christoph Engelmann, senior associate at DLA Piper, this will be adopted by the Hesse parliament at the end of 2019, should no progress be made.
These sentiments were echoed by Rainer Lauffs, chief operating officer at Veltyco Group, who added: “My understanding is that Hesse, Schleswig Holstein and North Rhinewestphalia are the leading states pushing for this approach and if the next conference of the prime ministers does not lead to any kind of common agreement, they will push for their alternative. So it could be, that in a year or so we will see a divided country of Germany in gaming legislation.”
As part of negotiations concerning the interstate treaty in 2012, a 20-licence limit was introduced on sports betting operations, which is currently the only form of online gambling permitted under German law, subject to a seven-year period, known as the experimental phase.
However, a 2016 revised and amended interstate treaty on gambling which removed the limit and the experimental phase completely failed to secure the necessary agreement of all 16 states. At the time the states of Hesse, Schleswig Holstein and North Rhinewestphalia refused to ratify the treaty, instead choosing to develop their own gambling regulatory regimes.
Addressing the likelihood that the amended IST will be passed in 2019, Engelmann adds: “If the states are able to agree on the general conditions, they will then have to draft an amendment to the State Treaty and then implement it in their respective state’s legislation. This takes a few months. So, it is still possible to find a new regulation for all states. But it is also possible that it will fail again.”
Discussions are currently underway between the states, with new regulations concerning a follow-up regulation for the experimental phase and new rules to strengthen enforcement among those currently being considered. The final draft of these regulations is expected to be unveiled by the German prime minister at a press conference taking place on 21 March.