Gambling regulation in Germany

Source: Janine Bernsdorf¸ PKF Malta¸ 13 February 2012


On the 1st January the new Gambling Act came into force in Schleswig-Holstein. At least one German state¸ Schleswig-Holstein¸ passed a state law for a less restrictive gambling industry and decided  not to wait for the overall German gambling laws to change. In contrast the other 15 states decided to draft an Interstate Treaty on Gambling that does not allow online gambling. Currently¸ Schleswig-Holstein remains the only German state that changed the German gambling laws in a way to open up the German online gambling market as legal online gambling within the state is allowed.

In 2008 lottery and sports betting in Germany were kept under a state monopoly in order to protect citizens against gambling addiction. The overall German gambling law functioned in this manner but private providers demanded changes in the existing law in order to open up the market and to allow private providers to operate on the German gambling market. Furthermore¸ in the fall of 2010 the EU Commission had judged the existing gambling law as inadmissible and demanded a reorganization of the German gambling law. [1]

In this way a new Interstate Treaty on Gambling arose¸ and 15 prime ministers agreed to the liberalization of the German gambling market. As requested by the EU Commission the state monopoly on gambling has been weakened as the market is opened up to private providers. However¸ overall¸ only 20 licenses will be awarded which entitle a vendor to operate on the German gambling market. In addition¸ the 15 federal states decided to further prohibit online gambling games like poker and roulette on the Internet – despite fantastic growth forecasts.  According to estimations by Pricewaterhouse Coopers the annual turnover of the industry in 2015 will achieve nearly 200 billion Euros. Moreover¸ German players spent approximately 340 million Euros a year on poker games on the internet that is much more than on online sports betting (EUR 290 billion). [2]

That is why Schleswig-Holstein did not agree with the new Interstate Treaty on Gambling and decided to pass its own gambling state law in order to allow legal online gambling. Gambling laws in Schleswig-Holstein are already approved by the EU Commission and came into force on the 1st January 2012. Licenses¸ issued by the state¸ will turn valid in March 2012. [3]

An overview of the most important facts:

The new state law allows operators to offer players online exchange and sports betting¸ online poker and online casinos in Germany. The only restriction with regards to online casinos is that roulette¸ blackjack and baccarat games will not be available. [3]

Gambling operators will have to pay a 20 percent gross profits tax¸ as compared to previously proposed 16.67 percent tax on individual wagers. The previously suggested tax rate was deemed draconian by the companies¸ arguing that it ruins their chances against state-run gambling operators. [3]

Furthermore¸ the online sector is fully liberalized [4]:

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