Tottenham Report: Casino regulation in Germany — The clock is ticking By Michelle Chelsea Hembury September 28, 2021 at 10:00 pm The German gambling market is mainly regulated by the Interstate Treaty on Gambling (IST 2021). With the approval of their state parliaments, the German federal states agreed on a common denominator that, after ratification, legally binds them and forms the basis for further federal state laws. Since the long-awaited IST 2021 came into force in July 2021, operators can now, for the first time, apply for permits to organise virtual slot machine games and online poker, in addition to organising and brokering sports betting. However, the joy over the transition from the previous treaty-based regulatory regime, which postulated a total ban on these games of chance, to the expansion of forms of gambling that can be licensed, especially on the internet, is clouded by an impractical licensing procedure, a new taxation law, and a complex web of interim responsibilities. Before the IST 2021 came into force, the representatives of the federal states had agreed in October 2020 on the so-called “transitional regime,” within the framework of which the offer of virtual slot machines and online poker – albeit still generally prohibited by the treaty and thus illegal – was tolerated and should not lead to a disadvantageous reliability assessment in later licensing procedures. The expansion of the forms of gambling that can be licensed with the IST 2021 for the purpose of curbing the black market places the protection of players and minors at the centre of the regulatory intention. With this in mind, the federal states have agreed on deposit limits of in principle 1,000 euros per month, a technical cross-operator blocking procedure, a jackpot ban for virtual slot games, as well as various technical specifications concerning the presentation and use of the operator’s websites. The IST 2021 will be flanked by a 5.3 % tax on players’ stakes. The tax obligation applies to all gambling operators, regardless of their registered office, as soon as the gambling offer can be accessed within Germany and results either in burdening the player with the tax rate or a reduction of the GGR. The granting of a licence requires a corresponding application, including various documents that on the one hand revolve around the commercial reliability of the applicant and on the other hand concern the protection of players and minors. The reliability is to be demonstrated by a cumulation of various documents, such as a certificate of good conduct. Compliance with the regulations for the protection of players and minors should be demonstrated by a variety of concept papers. In these, the applicants are to present their ambitions and the implementation of the legal requirements affecting them after the granting of a licence. For the first time, this also includes the submission of a profitability concept (“business plan”) and a money-laundering concept. One of the central legislative prerequisites for granting a licence is the connection to the nationwide data servers that are set up and maintained by the authorities. A distinction must be made here between the OASIS blocking file and the LUGAS limit and activity file. While OASIS is used to supervise and organise the blocking of gamblers at risk of gambling addiction and gambling addicts on a cross-operator basis, LUGAS is used by the authorities as a central file to monitor compliance with the monthly deposit limit of 1,000 euros, as well as the prohibition of parallel gambling on more than one domain or website of different operators. As far as the responsibility for the respective servers is concerned, a distinction must also be made between the responsibility of the Darmstadt Regional Council for OASIS and the responsibility of the Saxony-Anhalt State Administration Office for LUGAS. In any case, operators must be connected to all files, regardless of whether they offer only one or all possible forms of gambling at the same time. Thus, the situation in Germany is currently as follows. Interested parties can apply for licences to organise virtual slots and online poker for the first time since 1 July 2021, while licensed sports betting operators must adapt their permitted offer to the new regulations and those who have not yet completed the licensing procedure by 30 June are to fulfil extended licensing requirements. Those who have not yet been granted a licence remain in the transitional regime. The fact that the authorities now want to conclude this status quo as quickly as possible is evident from the letters circulated in mid-September by the Saxony-Anhalt regulator to operators who have not yet applied for a licence, with the express request that they make up for the latter immediately and otherwise face legal enforcement. In Germany, organising illegal gambling is punishable by both fines and penalties and is a violation of competition law. This is apparently also the line taken by the Darmstadt regulator, as it had already sent a list of additional demands to the already-licensed sports betting operators in July, as well as to those who were still in the process of obtaining a licence. It is therefore to be expected that the transitional regime will come to an end in the next few weeks and that any offer, licensed or unlicensed, will be governed solely by the IST 2021. Michelle Hembury, originally from Frankfurt a.M., Germany, recently completed her legal training at the University of Heidelberg and joined MELCHERS Rechtsanwälte Partnerschaftsgesellschaft mbB as an attorney in Heidelberg at the beginning of 2021. As part of her legal practice, Ms. Hembury advises clients in the areas of administrative and gambling law.