Online sports betting license – revival of the application process

Since the German gambling law (German Interstate Treaty on Gambling) came into force in 2012, there have been ongoing discussions about the lawfulness of some regulations, in particular those relating to the online ban and the sports betting license. The current version of the Interstate Treaty on Gambling provides for an application process to obtain a license for online sports betting. The provisions include a limitation of 20 possible licensees and provide for a selection process. Nevertheless, no sports betting licenses have been issued during the last years because the application process for granting licenses for the provision of online sports betting was stopped by the courts. The courts found that the limitation of the number of granted licenses and the relevant selection criteria lack a legal justification.

In response, in mid-2018, Schleswig-Holstein 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. Currently, the transitional arrangement is the only available option to obtain any kind of permission for online sports betting in Germany. However, beginning of 2019, the German federal states agreed on a partly revision of the GlüStV reviving the application process for the online sports betting license for all German federal states, including some amendments to the application requirements. The new law will come into effect on 1 January 2020. It should be noted, though, that the competent authority in Hesse stated that earlier filing of application is possible to ensure a swift license grant. Unlike before, the law does not provide for any limitation of the number of licenses that will be issued. Thus, every applicant fulfilling the requirements may receive a license.

The competent authority to issue sports betting licenses, the Regional Council Darmstadt, held an information meeting to provide details on the application process on 13 August 2019. Further, the authority published an overview on the minimum requirements for obtaining a license. Based on these information applicants have to submit the following documents/information for the application for an online sports betting license (please note that the requirements for a license for stationary sports betting may vary):

1. General documents/information

• Information on the applicant;
• Appointment of a recipient and representative in Germany, if the registered office is not located in Germany;
• Copy of the business registration in Germany;
• Copy of the gambling permit of the country in which the applicant is registered (if the registered office is abroad);
• Excerpt from the commercial register or a corresponding document from the country in which the company has its registered office (if the company has its registered office abroad);
• Certificate(s) of good standing (“Unbedenklichkeitsbescheinigung”) issued by the competent tax office;
• Certificate from the tax office responsible for sports betting tax that there are no tax arrears with regard to the sports betting tax;
• Copy from the joint enforcement portal of the Federal States that there is no entry in the debtor register or corresponding document in the case of registered offices abroad; in the case of legal entities also for all legal representatives;
• Excerpt from the central trade register - original or certified copies -, in the case of legal persons also for all legal authorized representatives or corresponding document for business with registered office abroad (not older than three months);
• Certificate(s) of good conduct pursuant to § 30 para. 5 Federal Central Register Act (Bundeszentralregistergesetz) for submission to authorities (not older than three months);
• Proof of competence in accordance with § 4a para. 4 sentence 1 no. 1 b GlüStV;
• Presentation of the complete ownership and ownership structure in accordance with § 4a para. 4 sentence 1 No. 1. a) and § 4b para. 2 sentence 3 No. 1. GlüStV;
• Declaration of the form in which the security payment is provided (e.g. bank guarantee, savings book, deposit at Regional Council Darmstadt).
• Declaration that, in the event that a license is granted, the applicant will submit evidence of the existence of an insurance to secure the players’ funds in the event of the applicant’s insolvency;
• Declaration pursuant to § 4b para. sentence 3 no. 6 GlüStV that the applicant warrants not to offer (including via affiliated companies) illegal gambling in Germany, from the time the license is granted;
• Declaration that the applicant will comply with the obligation under the Act on Bet on a Race and Lottery (Rennwett- und Lotteriegesetz) to keep and to maintain records on the determination of the tax and the bases of its calculation;
• Evidence of the funds required for a long-term business activity by submitting a certificate from an independent auditor;
• Statement of the origin of the funds required for the organisation of public gambling;
• Declaration by an independent auditor on the separation of client funds from the other property of the applicant as well as the permanent coverage of the entire customer credit balances through cash and cash equivalents

2. Payment processing concept (§§ 4 para. and 4a para. 4 sentence 1 no. 3 GlüStV)

• Indication whether the payments are processed by the company itself or by a third party;
• Information on the third party provider (if any);
• Proof of the account set up in Germany or a credit institution situated in a Member State of the European Union for the game-related transactions (§ 4a para. 4 sentence 1 no. 3.e) GlüStV);
• Information on accounting in Germany (§ 4a para. 4 sentence 1 no. 3.e) GlüStV);
• Overview of all payment methods offered;
• Explanation of the payment methods;
• Information on the prohibition of offsetting with regard to winnings and stakes and to the gaming account for incoming payments and withdrawals, in particular for credit balances (§ 4a para. 4 sentence 1 no. 3.gGlüStV);
• Comments on the credit ban (§ 4 para. 5 no. 2 sentence 4 GlüStV);
• Information on payment service providers (if any);
• Where a payment service provider is engaged: Proof of compliance with the PCI-DSS standard regarding the payment service provider.

3. IT-Security (§ 4b para. 2 No. 2 GlüStV)

• Submission of an ISO 27001 (or comparable) certificate together with an audit report (alternatively submission of a proof of compliance with all the standards contained in DIN ISO 27001 by certification by an auditor, who is certified after internationally recognized IT security standard, and an audit report);
•  If the above is not yet fulfilled: submission of an IT security concept based on the standard ISO-27001 (or a comparable standard for IT security);
• Appointment of an IT security officer (name, address, e-mail, telephone number);
• Appointment a contact person for questions regarding information technology (name, address, e-mail, phone number).

4. Social concept

• Appointment of a social concept officer;
•  Appointment of a player protection officer;
• Information on addiction prevention measures;
• Declaration on compliance with the linking prohibition according to § 4 para. 5 No. 5 GlüStV;
• Information on measures regarding the dealing with problematic gambling behaviour;
• Information on training provided to staff members;
• Information on measures to ensure protection of minors;
• Information on measures taken to ensure exclusion of blocked players;
• Declaration regarding possibility for voluntary self-limitation;
• Declaration that at the end of the term of the permit the gambling supervisory authority will be provided a report on the success of the measures taken for player’s protection.

5. Sales concept

• List of all brands managed by the company itself, differentiated according to distribution channel;
•  Statement that the applicant, during the term of the licence, will only sell sports betting offerings on the basis of § 21 Interstate Treaty on Gambling (GlüStV) in conjunction with the "Guidelines on enforcement in the field of sports betting during the ongoing concession procedure" (Appendix 1);
• Description of the scope / functionality of the loyalty card (if available or intended);
• Indication whether the technical processing is carried out by the company itself or by a service provider;
• If a service provider is engaged: information on the service provider;
• Indication of the internet domain(s) and mobile internet application(s) or app/s on which sports betting is exclusively offered within the meaning of § 3 GlüStV,
• Description of the website (in particular: customer hotline, language settings, information on data protection, imprint, help options, dealing with private mode, information about the permission to gamble in Germany).

6. Information obligation

• Compliance with the information obligation towards players (§ 7 GlüStV).

7. Miscellaneous

• Notification of the expected amount of bets in the Federal Republic of Germany for the years 2020 and 2021;
• Presentation of internal and external measures to avoid manipulation (e.g. participation in an early warning system pursuant to section 21 para. 3 sentence 3 GlüStV);
• Copy of the general terms and conditions for online sports betting;
• Appointment of a contact person for the betting operation;
• Appointment of a data protection officer under the requirements of § 38 Federal Data Protection Act (BDSG);
• Declaration that, during the application process, the applicant will inform the Regional Council Darmstadt about
  • any change in the relevant circumstances without delay; and
  • changes in ownership structures or other influences during the application process (notification required in writing)

  
  Relevant circumstances are all facts, which affect the content of the declarations and evidence to be submitted.

• Declaration that the documents and indications submitted with the application are complete.

All documents must be provided in German. The application must be submitted both, in paper form as well as digitally.