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Gambling law in Germany – an update

2012 was an exciting year for German gambling law. The existing German gambling regulation from 2008 was replaced by the new German “Interstate Treaty on Gambling 2012” (ISTG).

March 2013

The passage of the ISTG has been quite an effort – it should have entered into force in January 2012. However, the EU Commission was critical of certain aspects of it, which resulted in a delay to its implementation for a further six months. Although the ISTG allows private providers to accept sports wagers (including those placed online) and includes further provisions which act to further liberalise the German gambling industry (especially in respect of lotteries), it still stipulates a general state monopoly for games of chance and a general ban on online gambling. This was the case under the previous gambling regime. Since July 2012, the ISTG has been effective in each of the federal states, save for Schleswig Holstein.

map of GermanySchleswig Holstein, with its almost 3 million inhabitants (approximately 3% of the German population), did not join the ISTG with the other federal states but instead decided to pass its own, more liberal, gambling law which enabled gambling operators to apply for licences for most games of chance, including sports bets, poker and casino games. It also enabled such games of chance to be offered online. As at 1 January 2013, about 50 licences for online sports bets and online casino games have been granted under the Schleswig-Holstein gambling law. These licences could not have been handed out under the regime of the other 15 federal states, as the ISTG does not permit online casino games whatsoever and there is a maximum of 20 licences that can be granted to sports betting operators at any one time.

With its more liberal regulation of gambling, Schleswig Holstein managed to become one of the most important gambling legislators in Europe. The leader of the gambling authority in Schleswig Holstein was even awarded the International Masters of Gaming Law “Regulator of the Year”. Schleswig-Holstein has come to be regarded as the “entry gate” to Germany: one of Europe’s biggest gambling markets. Consequently, most well established gambling operators applied for a Schleswig Holstein gambling licence.

Recent developments

calendarIn February 2013, Schleswig Holstein’s gambling law (in force for about a year) was abolished by Germany's newly elected state government. The revocation of the gambling law was criticised by the EU Commission as it was done without sufficient justification and seemed to have been due to political reasons. As of February 2013, all German federal states have adopted the ISTG.

Still, the dream that some foster of a “Las Vegas in the north of Germany” has not yet vanished entirely. The licences which were handed out under the Schleswig Holstein gambling law remain valid for a further period of 6 years. These licences from the small state of Schleswig Holstein could even endanger the ISTG. This is because there are two different and opposing legal regimes in force at the same time: the operators that received a Schleswig Holstein gambling licence can continue to benefit from their liberal conditions which remain valid until 2018, while all other operators are subject to the much stricter regime of the ISTG.

These opposing regimes could make the general state monopoly and the general ban on online gambling set out in the ISTG incoherent; such incoherency could result in unlawfulness and – following the principles set out by the European Court of Justice – mean such monopoly and ban are not enforceable. Even the German Federal Supreme Court seems to have recognised such a risk.

EU flagsAlthough the Federal Supreme Court emphasises that it is not of the opinion that the German ISTG requirements are contradictory to EU rules, in January 2013 it referred this question to the European Court of Justice. If the European Court of Justice decides that the Schleswig Holstein licences cannot exist alongside the ISTG, it might even be argued that online gambling is permissible in Germany without a German licence, particularly if the online gambling services are consumer friendly and licensable. This is the view of several operators who cannot obtain a German licence but assert that they should have had such a right in accordance with the rules on the European free movement of services.

Nonetheless, until the European Court of Justice has considered the reference from the German Federal Supreme Court, the question on the lawfulness of the German gambling regime remains open.

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Gambling law in Germany
Paul Voigt

Paul Voigt considers whether recent changes to German gambling laws will survive challenge and the Schleswig Holstein legacy.

"Although the Federal Supreme Court emphasises that it is not of the opinion that the German ISTG requirements are contradictory to EU rules, in January 2013 it referred this question to the European Court of Justice."