Germany: A True Game of Chance with the 2021 Interstate Treaty on Gambling? | VIXIO

Germany: A True Game of Chance

The new Interstate Treaty on Gambling is coming into force in Germany on July 1, and soon,  Europe’s largest economy and the most populous country will no longer be the biggest grey market for online gambling.

The treaty is a political agreement between all 16 states of the Federal Republic of Germany. It allows online slots and online poker to be offered at the federal level, and all other online casino games at state level offering an opportunity for operators to provide games that were previously prohibited.

It may seem that Germany’s lucrative online gambling market is ready to welcome operators. However, there are still some significant roadblocks that could prevent operators from taking full advantage of the situation come July 1, such as a currently non-existent federal gambling authority, which will not be able to process early applications, unfavourable tax rates, tardy issuance of technical guidelines, and finally, markets closing to private operators in some of the states. There are five main outstanding issues that may make the market volatile in the coming months. 

I. Joint Gambling Authority of the Federal States

One gambling regulator for all the states to supervise the gambling industry, “especially online”, is not due to be established until July 1, 2021, the date the treaty enters into force. As a result, before then there is still no official entity for operators to turn to should any questions about the new law arise.

The new authority, the Joint Gambling Authority of the Federal States, will be based in Saxony-Anhalt, and will initially be responsible for monitoring developments in the gambling market and promoting research.

However, adding more confusion to the process, it will not assume further responsibilities until a year after its inception. Additionally, the authority will not grant various types of permits and licences until January 2023; in the intervening period, these activities will be the responsibility of the gambling authorities of six different federal states, including the Supreme Gambling Authority of Saxony-Anhalt, which will issue licences for online slots and poker.

II. Gambling tax for online slots and poker

With new gambling verticals come new taxes, already adopted by the Bundesrat (the upper chamber of the parliament), and currently debated in the committees of the Bundestag (the lower chamber). It is proposed that online slots and poker will be taxed at a rate of 5.3 percent of turnover, which, according to the majority of operators and gambling experts, makes offering them financially unviable, and will simply drive players to the black market.

The gravity of the new tax prompted the German Sports Betting Association (DSWV) and the European Gaming and Betting Association (EGBA) to file state aid complaints with the European Commission. They claimed that the new tax will give an unfair advantage to land-based casinos and arcades. According to the DSWV, differing tax rates would cause a “distortion of competition”, which the EGBA estimates would create a €741m tax advantage annually for land-based venues.

III. Technical guidelines

Long-awaited information about technical guidelines and access to the test system needed by gambling operators from July 1, 2021 onwards was released at the end of May by the Saxony-Anhalt gambling regulator (the Ministry of Interior and Sports), leaving only one month for operators to adjust their systems. Guidelines are available for potential EU/EEA based gambling operators on written request only and pertain to the evaluation server (which serves as a tool for monitoring gamblng operators’ activity) and central files (cross-provider registers of players’ limits and their gambling activity). Access to the testing environment for all mentioned databases is also provided.

IV. Application for online slot and poker licence manuals

The Saxony-Anhalt Ministry of Interior and Sports also published two leaflets containing application requirements for online poker and online slots licences. Both leaflets list the documents and information required by the forthcoming treaty with regard to the security of operations, payment processing, anti-money laundering requirements, responsible gambling and advertising, among other things. However, according to the leaflets, applications submitted before July 1, 2021 may not be processed early and further requirements may be imposed, once again leaving operators unable to prepare.

V. Remaining online casino games

Online casino games (other than virtual slot machines and online poker) will be subject to a state level regulation. The states may decide to operate them under state monopoly or to issue licences, the number of which may not exceed the number of licences available to land-based casinos. Currently, Saxony, Bavaria and Brandenburg have decided to provide the remaining online casino games through their monopolies, which means that about 23 percent of the population could be off limits for private operators.

To manage the influx of regulatory information, VIXIO offers the “Germany Online Gambling Tracker”, allowing users to stay updated on significant developments for online gambling in the jurisdiction and enabling an easier decision-making process for operators and suppliers by helping them understand the market and highlight barriers to entry.

Learn more about VIXIO

The most trusted source for independent, authoritative and actionable intelligence on fast-moving regulatory developments.
We use cookies on this site to enhance your user experience.