The Gambling Law Review: Germany
In contrast to other jurisdictions where 'gaming' or 'gambling' might serve as useful terms to distinguish between products that will be subject to specific gambling regulation, in Germany, a product must qualify as a 'game of chance' to fall under the scope of the Interstate Treaty on Gambling (the Interstate Treaty), the main legal framework of relevance in this context. This is the case whenever valuable consideration is given in exchange for a chance to win and the determination of winnings is entirely or predominantly a matter of chance in the context of a game. In this chapter, such games of chance will also be referred to as 'gambling'.
Bets are also considered games of chance as per the Interstate Treaty, yet a licensing regime open to private operators was only established for fixed-odds sports betting offerings. Horse-race betting offerings are also licensable. Betting on events other than sports (and horse races) – such as political events or financial products and tradings (including spread betting, FX trading, binaries, contracts for difference, etc.), sometimes also referred to as 'social betting' – is impermissible as per German gambling laws and may be subject to other regulation, namely financial services and banking regulation, rather than gambling regulation. Pool betting offerings are reserved for the state monopoly, since such offerings are commonly classified as a kind of lottery.
Lotteries in general are defined as games of chance that are directed at a majority of persons, involve a certain payment, a specific game plan and the chance to win money as opposed to other prizes of monetary value (this would be referred to as a draw in Germany).
Games that do not fall under the Interstate Treaty's definition of a game of chance and, consequently, are not subject to specific gambling regulation (but may likely still be subject to other rules and regulations that are aimed at ensuring consumer protection),2 depending on the element of a game of chance they lack, are commonly either referred to as skill games (no predominant element of chance) or free-to-play games (no consideration paid to participate, free prize draws acting as an example). Although ultimately subject to a case-by-case analysis, where German jurisprudence may, but only to a limited extent, provide some guidance, social games will mostly be classified as skill games. In the absence of specific regulation, the legal classification of fantasy league games offered to German players will depend on the specifics of the product (i.e., its overall design and structure), and the question of whether, with this design and structure, the game qualifies as a game of chance as defined in the Interstate Treaty.
Against this background, skill competitions and competitive sports for prizes also do not typically fall within the scope of gambling regulation in Germany.
ii Gambling policy
Consumer protection, in particular the prevention of gambling addiction and protection of minors and other vulnerable persons, the channelling of players towards the regulated market, the guarantee of an orderly and fair gambling offering, combatting of fraud and other gambling-related crimes as well as the protection of the integrity of sports are the declared goals of German gambling regulation. While Germany has been known to take a fairly restrictive position towards gambling, gambling – with the exception of online casino gambling – is neither generally prohibited nor particularly encouraged through licensing in German gambling laws. The protectionist approach of the German states over their lottery (and, with respect to the previous Interstate Treaty, sports betting3) monopoly and years of continued criticism under EU law (which go hand in hand), however, must be seen to be characteristics of German gambling regulation. As a result, gambling regulation in Germany is constantly undergoing some kind of reform usually triggered by a decision from the Court of Justice of the European Union (CJEU) or national courts or intervention on the part of the European Commission confirming that the European fundamental freedoms are not sufficiently ensured, and the regulatory goals cannot be achieved by means of the current regulation and licensing opportunities. However, the European Commission announced in December 2017 that, as a general policy regarding the gambling sector, it would close all pending infringement procedures and complaints. After years of interstate negotiations, German policymakers in March 2020 agreed on a reform of the regulation, which again follows a more restrictive approach. While the fourth iteration of the Interstate Treaty, which is supposed to come into force in July 2021, provides for the licensing of 'virtual slot machines' and online poker with very limited stakes and winnings, online casino in general will not be licensable. The new law will also clarify that in-play betting per se is permissible, but the scope of permissible sports events to bet on is yet to be determined.
iii State control and private enterprise
The principal German legal framework on gambling allows, only to a limited extent, for gambling to be operated by private enterprises rather than the state. For example, in most German states land-based casinos are owned by the state and the operation of lotteries is exclusively reserved for the state-owned lottery companies, which the German states are very protective of. With regard to lotteries, private operators may only apply for brokering licences, which allow them to sell lottery tickets on behalf of the state lottery companies to promote their products, (i.e., the traditional lotteries). In the sports betting sector, as prominently confirmed by the CJEU in the Ince case (336/14), the persistence of an unlawful de facto state monopoly despite the state monopoly having already been held to contravene EU law in 2010,4 led to the introduction of a new licensing process for sports betting. The licensing process started on 1 January 2020 for retail and online sports betting. No licences have been issued at the time of writing, and it remains to be seen how the coronavirus pandemic and potential shutdown of government institutions affect the further process. The government of the state of Hesse claimed in January 2020 that the applications cover 75 per cent of the market.5
iv Territorial issues
Within the German federal system, gambling law is traditionally regulated at state level. This means that, in principle, gaming is regulated by the respective state law of each of the 16 states. In order to achieve some uniformity, the states agreed on common principles and regulations for certain fields of gambling law in terms of the Interstate Treaty. This includes the sports betting sector, where the state of Hesse is authorised to act on behalf of all 16 German states.
In Germany, there are no particular localities that have a favoured status for gambling in terms of, for example, tourist islands or reservations where particular groups have autonomy. However, the German states agreed in the Prime Ministers' Conference of 21 March 2019 to allow Germany's most northern state, Schleswig-Holstein, to deviate from the Interstate Treaty's total ban and introduce a law that will revalidate Schleswig-Holstein online casino licences, which have expired. Such licences were issued between January 2012 and February 2013 (when Schleswig-Holstein pursued its own gambling policy before joining the other 15 states in the Interstate Treaty), and were revalidated in mid-2019 by local legislation.
v Offshore gambling
The attitude of German gambling supervisory authorities to offshore gambling operators (i.e., those who offer gambling products to German citizens but are based outside of Germany) can be considered to be problematic as the German states continually fail to strike a lawful balance when selecting the operators that they intend to enforce against. Ignoring the main goal of German gambling regulation (i.e., to prevent and combat gambling addiction and to ensure consumer protection), the enforcement activity of German states with regard to offshore operators tends to be targeted at EU-licensed operators for reasons of practicality rather than at operators that do not have adequate licensing or sufficient consumer protection measures in place. Irrespective of the question of how, in light of the fundamental European freedoms, enforcement taken against EU-based and licensed gambling operators can be legally justified in the current situation, the proportionality and consistency of such an enforcement practice can be questioned – an aspect that certain German administrative courts have also identified as a problem. In a judgment handed down by the Federal Administrative Court in October 2017, the requirements enforcement authorities have to adhere to were, however, considerably loosened, and the compliance of the restrictions under the Interstate Treaty to online gambling with EU law was essentially confirmed.
German authorities would derive the legal basis for acting against foreign operators from the Interstate Treaty, which, as per Section 9, allows them to make investigations into alleged violations of the Interstate Treaty and to interdict the respective offering or advertising therefor. They may also resort to payment-blocking measures under this provision, and over the course of 2018 it was noticeable that the responsible authority was changing its approach. Although payment blocking still raises a number of legal questions, mainly connected to data protection laws, the responsible regulator of the state of Lower Saxony has taken a rather rigid stance and, in a precedent case, even issued a payment-blocking order against a major payment service provider (PSP).6
Legal and regulatory framework
i Legislation and jurisprudence
As mentioned in Section I.i, the basic legal framework for gambling in Germany is the Interstate Treaty of 2012, which was amended as of 1 January 2020 in the third attempt of the German states to create a uniform and EU-law-compliant gambling regulation.
The Interstate Treaty originally entered into force on 1 July 2012 following a legislative process that had to be initiated as a result of the CJEU finding that the state monopoly on sports betting that was provided for in the Interstate Treaty of 2008 (which was itself introduced because the former state monopoly stipulated in the then applicable Interstate Treaty7 was held to be unlawful for lacking justification by the Federal Constitutional Court)8 contravened EU law.
The Interstate Treaty has been subject to criticism from the time it entered into force, and the failure of the sports betting licensing process, which was introduced by the Interstate Treaty and confirmed by national courts and most prominently by the CJEU in the Ince case to be unlawful, finally triggered the reforms that led to the Third Amendment of the Interstate Treaty. Since its entry into force on 1 January 2020, the regulator responsible for the licensing process, the Regional Council of Darmstadt, has continuously increased the pressure on the industry to participate in the process notwithstanding a variety of open issues, including an open letter urging all operators to apply (see Section III).
Alongside the Interstate Treaty, gambling law is regulated by other state legislation, for example, the Gambling Acts implementing the Interstate Treaty, Casino Acts and ordinances. For historic or general reasons, some federal laws also influence gambling, such as the Race Betting and Lottery Act, the Trade Regulation Act, the Criminal Code and the Fiscal Code.
ii The regulator
In a gambling regulation context, Germany has more than one regulator, which makes the question of which authority will be responsible very complex. As a general rule, the type of gambling offered and where it is offered will be influential factors for which regulator will be responsible. The responsibilities range from individual municipalities acting as regulators (e.g., in the land-based gaming hall sector) to the respective ministries (or subordinate authorities) of the German states (e.g., in relation to bricks-and-mortar casinos or in relation to coordinating enforcement actions against suspected unlawful gambling operators or violations of the Interstate Treaty and the applicable state Gambling Act) to authorities that have assumed a central responsibility for a certain sector and, as such, act on behalf of all German states in relation to this sector. The Regional Council of Darmstadt in the state of Hesse is responsible for conducting the licensing process in Germany.
Again depending on the product, and specifically the relevance of products that do not qualify as 'games of chance' (see Section I.i), other authorities, such as the Federal Financial Supervisory Authority, may occasionally be considered the responsible regulator.
iii Remote and land-based gambling
The Interstate Treaty generally prohibits the operation and brokerage of online games of chance. The only exceptions made by the Interstate Treaty in this context concern sports betting, horse-race betting and lotteries. Online casinos, therefore, are not currently licensable, yet some German states have pushed for licensing opportunities to be included as part of reform discussions. However, the licensing provisions of the Fourth Amendment of the Interstate Treaty on Gambling, which is due to come into force in July 2021, suggest that online casinos would only be licensable in a very restricted form in terms of 'virtual slot machines' and online poker. The restrictions will include limits on stakes per spin and winnings. In contrast to online gambling, land-based gambling is widely permissible. While the operation of traditional lotteries is covered by the state monopoly, the operation of other types of gambling can generally be licensed.
iv Land-based gambling
Land-based gambling is only permissible in certain venues. Such venues have to fulfil certain requirements. Details will either be stipulated in the law, detailed in the application requirements or form part of the licence.
Casino games can only be operated in casinos. The operation of casinos in some states is reserved for the public authorities, while other states provide a limited number of licences for private operators. The number of casinos allowed per state will, however, always be limited and varies between the states. In Baden-Württemberg, for example, three land-based casinos are allowed, whereas in Mecklenburg-Western Pomerania six casino locations are provided for in the respective Casino Act.
The current Interstate Treaty no longer provides a maximum number of sports betting licences. It has yet to be determined how this change will impact the limitations on the number of permissible betting shops per operator that are set out in the current state Gambling Acts or other acts transposing the Interstate Treaty, which vary considerably depending on the state in question. The limitations on the number of permissible betting shops have been criticised for having been arbitrarily determined. For example, Brandenburg allows for 18 betting shops per licensee and Baden-Württemberg provides for a maximum of 600 shops. The limitations raise further questions when compared with the number of existing lottery ticket sale venues (e.g., about 3,250 in the state of Baden-Württemberg), which the states may be expected to want to protect.
Concerning gaming halls, there is no statutory limit on the number of available licences, but this sector is undergoing some major changes. The strict minimum distance requirements that gaming halls must adhere to (i.e., between other gaming halls, and between gaming halls and institutions such as schools or addiction centres) and the requirement that gaming halls may not be operated in the same building as land-based casinos or betting shops, effectively limit the number of permissible gaming halls in practice.
v Remote gambling
The Interstate Treaty imposes a general ban on online gambling. As per the law, exceptions only apply for licensed traditional lotteries, horse racing and sports betting. The current Interstate Treaty does not provide for a licensing system for online casino offerings. This situation is criticised by experts of the industry as well as the European Commission. In a pilot process initiated in 2015, the European Commission made clear that it considers the ban ineffective in achieving the goals set out by the Interstate Treaty. However, in December 2017, the European Commission announced that, as a general policy regarding the gambling sector, it would close all pending infringement procedures and complaints.
The German state of Schleswig-Holstein marks an exception. Between January 2012 and February 2013, the state pursued its own gambling policy and issued online casino as well as online sports betting licences under this regime. After a change in government, the state then joined the other 15 states in the Interstate Treaty, but the licences that had been issued continued to apply for a six-year period. These licences expired at the end of 2018 and beginning of 2019. Meanwhile, the state has had yet another change in government, and this new government has been at the forefront of advocating a broad reform of the Interstate Treaty, which should include the introduction of online casino licensing across Germany. While this goal has not been achieved so far, Schleswig-Holstein did manage to have the German states agree to allow them to deviate from the Interstate Treaty's total ban by expressly not having it apply to online casino operators who have previously held one of the Schleswig-Holstein online casino licences. As indicated above, the future licensing system to be implemented under the Fourth Amendment of the Interstate Treaty continues to be subject to substantial – and potentially unviable – restrictions on remote gambling.
vi Ancillary matters
Operators applying for a licence will, as part of the licensing process, have to prove that any equipment used has been approved as per the requirements that will be set out in the respective licensing process, including that operators must provide certificates or other documents on their business-to-business (B2B) partners. There is no specific licensing process for gambling-related B2B services.
In relation to persons acting in key positions, it will again have to be demonstrated in the licensing process that these persons are sufficiently qualified and have the necessary expertise to conduct the business reliably and responsibly. There is no specific licensing process (e.g., for personal licences) that employees of gambling operators would have to undergo.
vii Financial payment mechanisms
According to the German Anti-Money-Laundering (AML) Act, before a transaction is carried out, it has to be verified that the payment account is set up in the name of the player and must be with a bank, payment institution or electronic money institution with at least branch offices in Germany. This was also reconfirmed in the Implementation Guidelines regarding the implementation of the German AML Act in the gambling sector (the Implementation Guidelines), which were published on 1 February 2019 by the highest gaming supervisory authorities of the German states. The use of anonymous payment methods is not permitted. The same requirement applies for the use of cryptocurrencies, such as bitcoin. Hence, tokens may only be permitted when the operator is able to verify the identity between the player and payment account holder.
The licensing process
i Application and renewal
In terms of general requirements that apply throughout all gambling sectors, gambling operators are usually required to demonstrate individual reliability and capability, as well as the transparency and security of their business. A peculiarity of licensing procedures in Germany is the requirement to submit 'concepts' (i.e., comprehensive descriptions of the gambling operation to be licensed that cover these aspects), such as a security concept (covering IT security and data protection), social concept (describing protection of minors and responsible gaming measures), business concept (detailing the viability of the operation and projected development over the licence term), sales or marketing concept (of particular relevance for franchising in land-based gambling operations) as well as a payment-processing and AML concept (which overlaps with the requirement for internal AML policies under the federal AML Act).
With regard to the individual reliability of managerial staff, German gambling law neither prescribes nor provides for obtaining personal licences, such as in the UK. Hence, the operator applying for a licence will have to provide evidence in the form of, for example, criminal records, CVs and qualifications of the relevant individual. The reliability of the applicant has to be proven by disclosing details on shareholders and, if applicable, on trustees. Capability involves being able to properly conduct gambling both from a financial and an operational perspective.
Although the Interstate Treaty provides an overarching framework for the regulation of gambling in Germany, additional laws may apply to the licensing process dependent on the gambling product:
- Operating licences are reserved for the state lottery companies, but privately owned lottery brokers may apply for a licence to distribute the state lottery products online and offline. Licensing requirements to retail outlets are included in the local Gambling Acts.
- Casino gaming, including slots and table games such as poker, baccarat and blackjack, is licensed under the Casino Acts of the 16 states. Licences may either be issued by the respective state government or a city, but the number of available licences is usually limited by the law.
- Slot-machine gaming in gaming halls, bars and restaurants is subject to a plethora of licensing conditions and product restrictions under the Interstate Treaty and the federal Trade Regulation Act; specifically, minimum distance requirements between gaming hall premises, limits to stakes, payouts and winnings.
- Horse-race betting may be licensed online and offline by the gambling regulators of the states to bookmakers and the horse-racing associations (totalisers), which may exclusively offer race-track betting. The number of licences for bookmakers is not limited under the federal Horse Race Betting and Lottery Act, although stringent licensing conditions have in fact reduced the interest of bookmakers in such licences.
On 1 January 2020, the licensing process for sports betting was initiated under the Third Amendment to the Interstate Treaty. Although no licence has been issued at the time of writing, a large number of operators have submitted applications to the Regional Council of Darmstadt. In terms of the timing of the process, the regulator had suggested that a first batch of licences may be expected to be issued in the first quarter of 2020; however, the coronavirus crisis may lead to further delay in the process. Sport betting operators that are active in the unregulated German market and refuse to apply may be expected to receive interdiction letters throughout 2020.
The minimum application requirements for sports betting licences have been published by the Regional Council of Darmstadt on its website.9 Applicants are expected to demonstrate the capability to operate under a licence by submitting 'concept' documents, i.e., company policies and guidelines on a number of areas, including responsible gambling, know your customer, payments, IT security, marketing and sales, and the prevention of match fixing. Responsible gambling is the key area from the perspective of German regulators, and applicants are expected to demonstrate sophisticated player-protection and monitoring systems as well as transparent information of the player on all transactions. Affordability checks are not considered a key requirement in Germany at this stage. In addition to the comprehensive concept documents, sufficient funds for the licensed operation are to be confirmed. Upon issuance of the licence, operators are expected to deposit a security in the form of a directly enforceable bank guarantee in the amount of €5 million to secure payment obligations of players and of the state. Exclusion of addicted players has to be ensured by interfacing with the public player-barring database Oasis, which is operated by the state of Hesse. According to Section 4(5) No. 2 Interstate Treaty, the maximum stake amount per player must not exceed €1,000 per month. Applicants can request an exemption from this stake limit with the regulator but will have to demonstrate why their player base requires a higher monthly spend by submitting detailed statistics.
ii Sanctions for non-compliance
Since regulators are subject to the principle of proportionality, breaching licence conditions in the first instance is unlikely to trigger fines or revocation immediately, but an order will be given demanding the licensee to explain the breach and remedy it within a deadline of a few weeks. If the order is not adhered to, it will usually be followed by a fine, which may range from a few thousand euros to tens of thousands of euros depending on the size of the gambling operation and the severity of the breach, and may be imposed in case of non-compliance within the given deadline. The regulator may also attempt to enforce compliance by suspending the licence, reducing its term or revoking it (Section 4e (4) of the Interstate Treaty).
Unlicensed gambling operations are subject to the general means of enforcement outlined under Section 9 of the Interstate Treaty, where the administrative enforcement cycle usually consists of (1) a hearing letter; (2) delivery of an interdiction letter, failure of which would result in a fine; and (3) subsequent court proceedings involving a principal lawsuit on the lawfulness of the interdiction and its legal basis (the Interstate Treaty), as well as a claim for interim legal protection to suspend the interdiction. As a consequence, it may take years for interdiction letters to become legally executable.
Although the Interstate Treaty provides a legal basis for payment blocking, only informal discussions between the responsible regulator, the Lower Saxony Ministry of the Interior, and banks and payment processors, as well as hearing proceedings, have so far taken place. Nevertheless, there is a risk that PSPs may become more hesitant to cooperate with gambling operators despite the uncertain regulatory situation and legal arguments that can be brought forward against the legality and efficiency of payment blocking.
Internet service provider blocking was removed from the German gambling regulations in 2012 and is unlikely to be included in the regulations in any future reform as it failed to satisfy expectations in the area of enforcement of media regulators against illegal pornography on the internet.
Participating in money laundering is a crime for any individual in Germany, and operators as well as brokers of games of chance under the current AML Act are required to take risk-adequate measures to prevent money laundering in their respective operations. Failure to do so may amount to liability for an administrative offence, which may be sanctioned by a fine of up to €100,000 or skimming of gross profits. In case of gross negligence, it may even incur criminal liability resulting in punishment by a fine or imprisonment.
In April 2017, the criminal offence of 'sports betting fraud' (i.e., match-fixing) was incorporated into the Criminal Code. Manipulating sports competitions as an athlete or coach – whether related to sports betting or not – may incur criminal liability for a fine or imprisonment up to three years (Section 265c and 265d of the Criminal Code).
The type of taxes imposed on gambling operators heavily depends on the gambling product in question and to what extent state legislation will be of relevance. The land-based casino sector acts as a good example in this context. While online casino offerings in some states will be subject to a combination of gross gaming revenue and profit taxation, operators in other German states will have to pay taxes on gross gaming revenue (i.e., the amount by which the total of all stakes exceeds the total of all winnings paid out) while being exempted from corporate taxation. Tax rates range between 20 per cent and 80 per cent depending on the respective state. Additional levies may be imposed or progressive tax rates that depend on the economic capability of the casino operator will be applied. Similarly affected by state legislation, slot machine operators are subject to municipal amusement taxes (tax rates vary from 12 to 20 per cent and the tax will be based on the gross income generated from the slot machines) that they have to pay in addition to regular corporate tax.
Other gambling offerings are subject to federal taxes. Any operator offering licensed or unlicensed sports or horse-race betting to German customers, for example, is subject to a 5 per cent federal sports betting tax on stakes. Online casino operators targeting German customers are subject to 19 per cent VAT. There had been some debate regarding the applicable tax base. The Federal Ministry of Finance, however, finally confirmed gross gaming revenue as the tax base in autumn 2017.
Advertising and marketing
Advertising and marketing of gambling overall must be considered to be subject to a very restrictive regime and influenced by a number of laws and regulations, including, for example, the Interstate Treaty, the Gambling Acts of the individual states, the Advertising Guidelines, the Act Against Unfair Competition and specific laws for the protection of children and minors.
In general, advertising of gambling offerings – irrespective of where the operator is based – is only allowed for games of chance that can be legally offered in Germany (Section 5(5) of the Interstate Treaty). German authorities interpret this to mean that only German-licensed operators may legally advertise the licensed products. Arguably, in the current situation and on the basis of the Ince case, exceptions apply in relation to EU-licensed sports betting operators. Online casino operators will generally have more difficulties in arguing that their advertising activities are legal given the total ban on online games of chance that is stipulated in the Interstate Treaty. Schleswig-Holstein licensees may be considered to have an advertising advantage but the Schleswig-Holstein Ministry of the Interior has plans to issue new guidance on advertising. At the time of writing, details of what this guidance will include are unknown.
Any advertising of unauthorised games of chance, misleading advertising or advertising that is directed at minors or other risk groups, or does not comply with basic advertising standards,10 is regarded as being unlawful advertising and as such is prohibited, as is most online and TV advertising. Online and TV advertising, in principle, is prohibited (Section 5(3) of the Interstate Treaty), but may be allowed for licensed sports betting, horse race betting and lottery operators subject to these operators obtaining a permit from the responsible authority of the states.
In respect of sports betting advertising on television immediately before and during the live broadcast of sporting events is not permitted according to the current Interstate Treaty (Section 5(3) 3 of the Interstate Treaty).
In the Fourth Amendment of the Interstate Treaty, which is expected to come into force on 1 July 2021 and permit online casino, online poker and virtual slot machines to a restricted degree, no advertising for the forms just mentioned may be broadcast or broadcast on the internet between 6am and 9pm.
In terms of possible penalties for unlawful advertising, Section 284(4) of the Criminal Code provides for a fine or imprisonment for up to one year to be imposed. However, state prosecutors have been very reluctant to prosecute gambling operators for advertising, most likely because of the legal uncertainty and criticism under EU law, and the constitutional requirement to ensure consistency of criminal statutes.
The year in review
On 21 March 2019, the Prime Ministers of the German states agreed on a Third Amendment to the Interstate Treaty. It was notified to the European Commission on 26 April 2019 and ratified in all 16 state parliaments by 31 December 2019 and will be valid until 30 June 2021.
The entry into force of the new Interstate Treaty has led to a number of changes compared to 2019. The experimental clause for licensing sports betting and the limitation on the number of available licences (20) was removed.
The total ban on online casinos will continue during the time frame in which the Third Amendment to the Interstate Treaty will be valid. The state of Schleswig-Holstein, however, succeeded in convincing the German states that they should be allowed to introduce a state law in which they could clarify that the total ban shall not apply to operators who are licensed in Schleswig-Holstein in Schleswig-Holstein territory.
Schleswig-Holstein passed such a law in mid-May 2019. According to the Law on the transitional arrangements for online casinos, Schleswig-Holstein will not issue new licences but has revalidated online casino licences until another licence based on German law and valid for Schleswig-Holstein is granted, but not later than 30 June 2021.
One thing is certain: the German regulation of gambling will remain a constant irritant in the coming years. Against the background of a legal challenge of the licensing process, it seems rather uncertain whether licences can be issued at all in 2020. An administrative court in Hesse considered the process to be non-transparent and discriminatory and stopped the issuance of licences for the time being. Only if the regulator succeeds in appealing this decision could licences be issued in late 2020 or 2021. If the fundamental concerns are confirmed, the process would have to be repeated or furter legislative amendments could even become necessary.
While the Fourth Amendment to the Interstate Treaty provides a (very limited) licensing opportunity for online poker and virtual slot machines, online gaming operators might be very concerned about the cut in business they may have to expect under such licences. The industry might try to mitigate some of the negative impact by lobbying regulators for a practical approach to such a licensing system throughout 2020 and early 2021.
1 Joerg Hofmann and Matthias Spitz are senior partners and Jessica Maier is a partner at Melchers Rechtsanwälte Partnerschaftsgesellschaft mbB.
2 For example, the Act Against Unfair Competition; Act for the Protection of Minors; Interstate Treaty on Broadcasting; Interstate Treaty on the Protection of Minors in the Media; and Sweepstakes Ordinance.
3 The sports betting monopoly was held to contravene the EU in the CJEU's Carmen Media decision of 10 September 2010 (C-46/08). On 4 February 2016, the CJEU confirmed that, contrary to EU law, a de facto monopoly still persists to date in the Ince case (C-336/14).
4 CJEU, judgment of 10 September 2010, C-46/08, Carmen Media.
7 Interstate Treaty on Lotteries (2005).
8 Federal Constitutional Court, judgment of 28 March 2006, File No.: 1 BvR 1054/01.
10 For more details on the basic advertising standards, see the Advertising Guidelines that were issued by the Gambling Committee, a body consisting of representatives of the highest gambling supervisory authorities in the 16 states. Although the Bavarian Constitutional Court held the Advertising Guidelines to be incompatible with the Bavarian Constitution in a decision of 25 September 2015 (File Nos.: Vf. 9-VII-13; Vf. 4-VII-14; Vf. 10-VII-14), these standards must still be considered relevant for advertising content. In relation to the Advertising Guidelines, the Bavarian Constitutional Court had mainly criticised that these were issued by the Gambling Committee, which arguably is an unconstitutional body.