Germany’s new online gambling regime: a mixed bag with significant potential By Jeroen Laemers, Gaming in Holland February 19, 2020 at 12:30 am Recently, the sixteen German federal states agreed in principle on a treaty that will allow country-wide online gambling – including poker and virtual slots – in the future. The news created a veritable buzz at the recent ICE trade show, resulting in much excitement as well as a packed meeting on the topic of German gambling regulation. Industry associations, such as EGBA and DSWV, responded in a somewhat more subdued manner, as several of the proposed restrictions in the new draft state treaty are expected to negatively impact the ability of licensed operators to compete with their black-market rivals. So what can the industry expect? Timeline Before getting into the nitty-gritty of the new draft State Treaty on Gambling Regulation, let us first take a look at the proposed timeline for the implementation of the new regulatory provisions. The new treaty is expected to be approved during the next conference of the prime ministers of the German federal states, which is scheduled for March 5. Subsequently, the updated treaty will have to be ratified by at least thirteen of the sixteen state parliaments. The treaty will probably also have to be submitted to the European Commission for review, which would trigger a three-month standstill period. In spite of these hurdles, the updated State Treaty on Gambling Regulation is currently scheduled to come into force on July 1, 2021. Product restrictions The new State Treaty on Gambling Regulation distinguishes between four broad online product categories: Online casino table games This category includes virtual bankholder games, such as virtual roulette, blackjack, etc., as well as the live broadcasting of land-based bankholder games (i.e. live casino). The states will either have the option to offer online casino products themselves by way of an extended state monopoly or to opt for a licensing model, which, however, may only make available as many licenses as there are land-based casino licenses in the respective state. Currently, there are only two states in Germany with more than one land-based casino license holder: Hesse (3) and Rhineland-Palatinate (2). Virtual slot machines Virtual slot machine licenses will be made available through an open licensing model. The restrictions on virtual slot machines will be similar to those on their land-based counterparts: maximum stake of €1 per spin; minimum spin duration of 5 seconds; no autoplay; no jackpots. Online poker As there is no central bankholder, poker is distinguished from other casino table games; and will be subject to an open licensing model. Sports betting Sports betting will continue to be licensed, but with new restrictions on in-play betting. Only bets on the final result, or next goal or score, or similar element of a final result will be allowed. Further bet types may only be offered if they have previously been authorized by the new national regulator. Restrictions on multi-product operations Sports betting, virtual slot machine games, and online casino table games can only be offered via the same internet domain if an independent and visually separate area is set up for each of these games. It will not be permitted to show ads for gambling products in one area that must be played in another. Sub-accounts should be created for each area to separately record the current player account balance for each product category. Funds that are transferred between sub-accounts will only be available after a waiting period of one hour. The new national regulator will also maintain a central database that registers in real time whether an individual player is logged on with a licensed operator. Players will not be allowed to be logged on with more than one licensed operator simultaneously. Player registration & deposit limits Upon registration, players will be asked to set an individual monthly deposit limit across all operators. Setting a limit is mandatory. The monthly deposit limit may not exceed €1,000. The new national regulatory authority may decide to increase this monthly deposit limit at a later stage, effective January 1, 2023 at the earliest. Newly-registered players may bet up to €100 until their personal details are verified. Withdrawals are not permitted during this period. Advertising & marketing Broadcast advertising for licensed gambling products is permitted between 21:00 and 06:00. Ads promoting bets on a particular sporting event are not allowed immediately before or during the live broadcast of said event. Telephone marketing and affiliate marketing based on a revenue sharing model are also not permitted. Current & new licenses Sports betting licenses issued under the current Interstate Treaty will remain valid until 31 December 2022, but new licenses will have to be obtained by 1 January 2023. Licenses for the operation of sports betting, online poker, or virtual slot machines will be issued by the responsible authorities for a period of five years when first issued, and for seven years in all other cases (online casino). How to learn more While the regulation of online gambling in what is potentially Europe’s biggest market should undoubtedly be welcomed, the proposed regulatory regime will confront operators with several challenges that are far from insignificant. As is often the case, the devil is in the detail; and the industry has its work cut out to find ways how to prosper under the new regime. Also, as it is still early days, significant uncertainty remains. Those who are interested in learning more about the new State Treaty on Gambling Regulation, as well as its concomitant challenges and opportunities, should consider attending the Gaming in Germany Conference on March 24-25 at Frankfurt International Airport. Featuring a wide range of expert speakers representing varying stakeholders, as well as an IMGL Masterclass, the GiG Conference will be a key opportunity to stay abreast of the latest developments and to connect with local decision makers. We hope to see you there!