What to make of the most recent German Prime Ministers’ decision By Dr. Joerg Hofmann and Jessica Maier, Melchers Law April 10, 2019 at 2:45 am On 21 March 2019, the Prime Ministers of the sixteen German states met for a conference intended to mark an important step forward in the debate on Germany’s future gambling regulation. They agreed on a Treaty amending the current Interstate Treaty, Germany’s core legal framework governing gambling. The new Treaty, which has become known as the Third Amendment Treaty or Interim Interstate Treaty, is supposed to enter into force on 1 January 2020 and to be valid for an interim period, until 30 June 2021. But the term of the entire Treaty can be extended until 30 June 2024. The new Treaty provides the basis for a new, open sports betting licensing process intended to allow licensing as of 1 January 2020. But it also maintains the total ban on other online gambling as well as some questionable restrictions affecting the range of bet types which may be offered, and the way operators are supposed to impose limits on players. The Third Amendment Treaty therefore certainly has not resulted in the broad reform many had hoped for, and has been accordingly criticised. But what exactly does it entail and what will it actually change? This article will take a closer look at the new Treaty to make sense of what lies ahead for operators targeting Germany. The Third Amendment Treaty will make way for a new, open licensing process for sports betting. To understand what the changes mean for sports betting, it is important to remember the premise under which the German sports betting market was opened in the first place, back in 2012. Sports betting licensing was intended as an experiment to overcome the problems affecting the German gambling monopoly after that monopoly had been held to be unlawful by the Court of Justice of the European Union. The plan was to issue 20 sports betting licences and have the experiment last for seven years. Instead, no licences were issued because the sports betting licensing process was determined to be unlawfully conducted, violating EU and national law. And now the end of that experimental phase is approaching; according to the wording of the Treaty prior to the amendment, it would have ended on 30 June 2019. It therefore does not come as a surprise that the German states, who are very much divided in their views on what would be sensible gambling regulations, particularly with regard to online casinos, would first try to find solutions with regard to (the less controversial) sports betting. The German states decided to extend the experimental phase until 30 June 2021. Theoretically, this leaves the door open to returning to a monopoly when the experimental phase ends. Politically, returning to a monopoly seems unlikely, considering that a monopoly is predominantly supported by only few, rather uninfluential states. How this extended experimental phase and the new licensing process will be received by operators will heavily depend on the operator in question. Some might welcome the idea of a new licensing process, as licensing arguably provides more clarity and certainty. Others, particularly operators who were already involved in the failed 2012 licensing process, who have engaged in lobbying against unviable restrictions, or who are multi-product operators, might be more sceptical and reluctant. Scepticism may also come from the fact that the Prime Ministers did not touch the total ban on online casinos, and also did not revisit or change other provisions of the Interstate Treaty which have been criticised for years, namely the 1000 EUR monthly stake limit and limitations to the betting product range, which particularly affect in-play betting. In addition, the exact details of the licensing process are not fully clear yet. This, however, is likely to change over the summer months. The state of Hesse, which will be centrally responsible for conducting the new licensing process, already has plans to initiate discussions in April with the Gambling Committee, that is, with representatives of all German states, on how to structure and organise the process. It does not seem impossible for lobbying against unviable restrictions to gain some more traction, and there are plenty of other questions which still need to be answered. So, at the moment, it is simply too early to reach a final conclusion, let alone a general statement, on whether the new sports betting licensing process can bring Germany one step closer to resolving the flaws in its gambling regulation. The fact that the German states did not make any changes to the online casino ban (yet) certainly is another important puzzle piece to consider in the jigsaw that is German gambling regulation. The lack of changes means that online casino operators will still have to rely on EU law to justify their services and will need to monitor the risks to their business very closely, as these will likely to continue to be subject to legal challenges. The lack of change also shows that the discussions between the German states on the reform of gambling regulation simply are not over yet. There is still a strong, and seemingly growing group of supporters of a broad reform among the German states. The interim character of the Third Amendment Treaty was not only expressed by the German states, by setting its initial duration only until 30 June 2021, but also in a press conference following the Prime Ministers’ Conference. This gives hope for the ongoing discussions (which will continue in May/June 2019) and might possibly even have an impact on the enforcement appetite of German regulators, including the sports betting licensing authority, when it comes to online casino offerings. Such developments will, however, need to be monitored very closely. Finally, it is important to note in the context of the future reform discussions that the Prime Ministers of the German states agreed to allow the state of Schleswig-Holstein, which had issued online casino licences under its own gambling regulations during 2012-2013, to revalidate formerly granted licences. Schleswig-Holstein was further asked to prepare a report on its experience with licensed operations, which will be used in the discussions. A draft state law has already been introduced in Schleswig-Holstein’s state parliament and is expected to be passed around May 2019.