Schleswig-Holstein introduces toleration process for sport betting offers

German gambling law is very restrictive, generally establishing a state monopoly for games of chance. The law was slightly liberalized in 2012, allowing up to twenty private operators to be granted internet sports betting licences. However, the licensing process – which had started mid-2012 and should have been completed by early 2013 – has been beset with problems from the beginning: The authority has not been able to grant licenses during the ordinary proceedings until today.

Only in the Federal State of Schleswig-Holstein, for the past six years some gambling providers could offer online sports betting based on a licence they had obtained under the former gambling law of Schleswig-Holstein. Behind the background that the Schleswig-Holstein licenses will expire shortly, the competent authority in Schleswig-Holstein has recently introduced a so-called “transitional arrangement” which allows gambling providers to apply for a toleration of sport betting offers for the territory of Schleswig-Holstein. The transitional arrangement is currently the only available option to obtain some kind of permission for sports betting in Germany. Although it is regionally limited and the sustainability of the toleration is not clear, it demonstrates the applicant’s willingness to comply with German gambling law regulation and offer gambling in accordance with the respective requirements.

The transitional arrangement also attains particular relevance with regard to the judgment of the German Federal Administrative Court from October 2017 where the Court found that a prohibition order against an operator of online sports betting offers was lawful despite the suspended licensing process in Hesse. In its decision, the Court indicated that the authorities’ obligation to correctly exercise their discretion might mean that the provision of online sports betting would need to be tolerated if there was conclusive documentation that the operator fulfilled the requirements for obtaining a license under the Interstate Treaty on Gambling from 2012. As the documentation required for the application process in Schleswig-Holstein is somewhat comparable to the one required for the application process defined in the Interstate Treaty on Gambling from 2012, obtaining a transitional arrangement might provide some protection also with respect to orders from other German Federal States.

In order to obtain transitional arrangement for sports betting services in Schleswig-Holstein, the below-mentioned information and/or documents have to be submitted to the competent authority in Schleswig-Holstein. Currently, there is no deadline for filing the application.

Measures to ensure players and youth protection

• It is mandatory to join the nationwide blocking file “OASIS” (§ 8 GlüStV). A written confirmation of the application (or entry) by the Regional Council of Darmstadt is required.
• Declaration that the relevant measures for player protection are fulfilled, § 4 para. 3, 5 No. 1 GlüStV (relevant form available on the Schleswig-Holstein website).
• A social concept that adapts to the special conditions of the internet with regard to the offer of sports betting services (§ 4 para. 5 No. 4, § 6 GlüStV). This concept shall include, inter alia (complete list available on the Schleswig-Holstein website):
  • Processes to ensure authentication of players to comply with requirements of youth protection (procedure to exclude minors by identification and authentication) and anti-money laundering laws;
  • Measures to ensure a maximum limit for entry fees and losses;
  • Possibilities for voluntary self-exclusion for gamblers;
  • Fulfilling information obligations;
  • Training the staff;
  • Technical measures to enable application and deletion of gamblers’ exclusion in OASIS;
  • Information about addiction risks;
  • Designation of a responsible person;
  • Complying with reporting obligations.

• Declaration that credits are prohibited, § 4 para. 5 No. 2 GlüStV (relevant form available on the Schleswig-Holstein website).
• Declaration on compliance with advertisement restrictions, § 5 GlüStV (relevant form available on the Schleswig-Holstein website).

Reliability and transparency

• Organisation chart on ownership/shareholding structure of the applicant including all companies/persons that directly or indirectly hold shares;
• Trade register excerpt of the applicant and all companies directly or indirectly holding shares;
• Disclosure of trustee relationships;
• Certified copy of most recent shareholders agreement and statute of applicant.
• Copies of other contracts between applicant and third parties if relevant for gabling services (e.g. contract on profit transfers).
• Certificate of the responsible company tax authority (Frankfurt am Main III) attesting that applicant pays sport betting taxes.
• Confirmation of reliability and expertise of all of applicant’s representatives (at least certificate of good conduct, credit check, excerpt from German commercial central register, curriculum vitae).
• Designation of an authorised recipient as well as an authorised representative in Germany.
• Confirmation of separate bookkeeping for all gambling activities and payment transactions (relevant form available on the Schleswig-Holstein website).
• Confirmation that all betting related payment transactions are carried out via a bank account of a bank located in Germany or another Member State of the European Union (relevant form available on the Schleswig-Holstein website).
• Confirmation by independent accountant about separation of client funds and other assets of applicant.
• Confirmation by independent accountant about coverage of client funds by liquid assets.
• Declaration that applicant does not offer illegal gambling (relevant form available on the Schleswig-Holstein website).
• Sales concept (complete list of requirements available on the Schleswig-Holstein website).
• Technical features to ensure transparency according to § 4a para. 4 s. 1 Nr. 3 lit. f GlüStV), particularly implementing a safe-server in accordance with requirements of technical guidelines for online gambling in Schleswig-Holstein. This obligation must be fulfilled 4 months after transitional arrangement has been issued.
• Declaration that website with .de top level domain has been created for online sports betting in Schleswig-Holstein (relevant form available on the Schleswig-Holstein website).

Preventive measures against money laundering, fraud and other criminal offenses

• Concept for money laundering (§§ 6 et seqq. Money laundering act (GWG)) and risk analysis (§ 5 GWG), further details available on the Schleswig-Holstein website.
• Concept for payment transactions (further details available on the Schleswig-Holstein website).
• Concept to avoid fraud (further details available on the Schleswig-Holstein website)
• Confirmation to oblige with requirements for betting according to the guidelines on enforcement with regards to sports betting dated 28 January 2016 (relevant form available on the Schleswig-Holstein website).
• Submission of a current ISO-27001 certificate or comparable certificate for all IT systems used in relation with the sports betting services in Schleswig-Holstein.

Others

• Certificates and other documents that fail to be in German language have to be accompanied by a certified translation.
• The authority reserves the rights to additional claims.