Regulation of gambling and online casinos in Germany
The gambling market in Europe is one of the most attractive markets for doing business. Gambling, including online, is legal here. And gamblers, in their mass, are very solvent. For most European countries in terms of gambling legislation are the same rules, which also makes life easier for entrepreneurs. However, German law has its features. Let’s look at the gambling market in Germany.
Features of German law
Most importantly, the country has not yet figured out how to regulate online gambling. Only bets on horse racing are legal online, but only government agencies accept them. As for online casinos, they are essentially illegal, both local and foreign. This is contrary not only to common sense but also to the laws of the European Union.
Also, the country consists of 16 “lands” and each of them has its laws on gambling. For example, this applies to the age limit of players. Somewhere you can start at age 18, and in other lands – only 21 years.
Because of the imperfection of the legal framework and the own opinion of each district about the regulation of gambling, this industry, we can say, is in decline. Several years ago, several major international poker websites stopped operating in Germany. Because one of them has been prosecuted.
In prison, you can get not only for opening an illegal business but also just for betting on a foreign site. There is a corresponding article in the German Criminal Code, under which you can get a large fine or up to 6 months in prison.
Because of these laws, Germany not only has problems with the European Court of Justice but also loses a significant amount of budget revenues. According to the German Gambling Research Center (GGR) in 2017, land casinos received revenue of 672 million dollars. And they paid $353 million in taxes. At the same time, illegal casinos, according to GGR, earned about $ 2 billion. But they only paid $370 million. If online casinos were subject to the same taxes as land-based casinos (which is a significant 80%), it turns out that the German budget has missed 1 billion tax revenues.
The fight for online casinos
The European Court of Justice and international companies have been arguing with the German government over the status of online gambling for almost a decade. In 2012, the first results were obtained. The government allowed 20 private bookmakers to work legally for a 7-year term. In April 2019 this agreement was extended for another two years. The permit expires on June 30, 2021. It is already known that further it can be extended for another 3 years – until June 30, 2024. It is important that under this agreement new betting companies may also gain access to the German market.
The only land that was the first to issue licenses for online casinos was Schleswig-Holstein. But, in 7 years it issued only 20 licenses. The last of which was issued in February 2019. Of course, this license allows the operator to work only on this land. And these licenses are only valid until June 30, 2021.
An important nuance – under these licenses, gambling operators pay only 20% of taxes, not the draconian 80%, which are imposed on land casinos. This level of taxation is much closer to that in other European countries.
Legislators have developed a package of amendments to the State Gambling Agreement. It should determine the legal affiliation of online casinos and give them more freedom of action. This package should remove barriers for new casinos and bookmakers to enter the market, as well as make life easier for payment systems, media, and sports clubs.
However, this amendment package retains the restrictions on online bookings and a monthly limit of €1,000 per player. The amendment package is due to come into effect on 1 January 2020. Provided that all German states ratify these amendments by December 31, 2019. If this does not happen, the country will lose at least another year.
The next package of amendments will be considered in June 2021. It aims to create a new regulatory framework. Thanks to it, all federal states, not only Schleswig-Holstein and Hessen, will be able to issue licenses.
The example of Germany in the field of gambling clearly shows that even the strictest legislation is gradually changing in favor of business. The government is faced with facts: the budget is underfunded and the people play regardless of their online entertainment status. Even criminal prosecution does not stop them.
Despite the conservatism of the laws and the slow pace of work of the German legislative system, there are already noticeable advances towards a more loyal attitude towards online casinos and online vendors. Most likely, within 2-5 years, the country’s market will be brought to a common European state on this issue.