German gambling law: Toleration of gambling offers ahead

Under current German gambling law, the provision of (online) gambling services, such as casino games, poker and sports bets is generally prohibited to private providers. For online casino games and poker, licenses are not available, and the existing sports betting licensing regime has failed repeatedly.

The situation is supposed to change mid-2021, when a more liberalized gambling law shall come into force; however, this revised gambling law has not been finally ratified, yet.

In order to allow for some legal certainty, the German federal states have now agreed upon a “toleration” of gambling offers in Germany: Apparently from October onwards, gambling offers will be tolerated to the extent that they are provided in line with the requirements of the future gambling law 2021. To the extent that gambling providers do not adapt their services in line with the toleration procedure, they may be banned from the future official licensing procedure as they may be regarded as unreliable. Lack of compliance with the toleration requirements will likely mean strengthened enforcement by the regulators.

It is currently unclear, how the toleration shall look like in practice, and which procedure shall apply. The federal states are currently drafting “enforcement guidelines” which shall give further guidance.

Summary of the requirements likely to apply to the toleration

The future German gambling law which shall be the basis for the toleration, the Interstate Treaty on Gambling 2021 (“ISTG 2021”) envisages fundamental changes to German online gambling law: The most significant amendment includes the lift of the online ban for online poker and online slot machines (and to some extent online casino). The following overview shows the requirements that will likely affect online gambling operators the most:

Scope of the online gambling licenses

The ISTG 2021 includes a license regime to enable providers to obtain licenses to offer online sports betting, virtual slot machines and online poker. According to the new law, virtual slot machine games are simulations of terrestrial slot machine games offered on the internet. The possibility for obtaining a license for online casino games will be subject to separate laws of the individual federal states (see below).

Requirements for online gambling licenses

The requirements for obtaining a license to offer online sports betting, virtual slot machines and online poker are very similar and only vary in details. The common requirements particularly contain the following:

• Security deposit: The applicant must provide a security deposit of at least 5 million euros. In individual cases, this amount can be increased up to the amount of the expected monthly average turnover (maximum 50 million euros). For online sports betting licenses, the competent authority indicated that this amount could be reduced upon request. Whether and under which circumstances this will be possible under the ISTG 2021 remains unclear.
• Separation of different offers: Gambling providers may offer different forms of gambling (i.e. sports betting, virtual slot machines and online poker) via the same internet domain under the condition that the operator creates independent and graphically separate areas for each form of gambling. The separation also means that it is prohibited to do “cross advertising” among the different forms of gambling. Further, a player must not be able to play in different areas at the same time.
• Players’ accounts: Players must create an individual player account with their true credentials for every provider. The provider has to verify the player information. The ISTG 2021 only stipulates that the verification must be carried out by appropriate and reliable procedures. It does not contain any further specifications. The authority may define specific verification measure in the license.
• Cross-supplier deposit limit: Upon registration on a website, the player must set a monthly cross-provider deposit limit of a maximum of EUR 1,000.00. This means that the limit will apply per player, not per operator (i.e. as a general rule 1,000 EUR/month/player across all operators). The competent authority will monitor compliance with the limit via a central “limit control file”. Providers must pay a fee to connect to and use the limit control file. In addition, providers have to offer separate provider-related deposit limits which the player may set voluntarily.
• Limitations of parallel playing: Players must not play offerings of different operators at the same time. Thus, providers have to check the players’ “activation status” with the authority’s activations system prior to enable them to play on the provider’s website.
• Advertisement: Advertisements for online gambling offerings are generally allowed with specific limitations. In particular, advertising must not be aimed at minors and must not be presented as a means of solving financial problems. The limitations further include a ban of broadcast and online advertising between 6 am and 9 pm. In addition, the authority will specify certain notification obligations to be met by the provider.

Special requirements for virtual slot machines

In addition to the general requirements, the ISTG 2021 provides additional requirements for virtual slot machines:

• A game must last at least five seconds.
• The maximum stake is EUR 1.00 per game.
• Stakes and wins may not be used to build up a jackpot.

Special requirements for online sports betting

It is positive to note that regarding sports betting, bets will be allowed on the outcome of a game as well as on events during the game, or a combination of both. Further, live bets will be allowed under specific requirements. In addition, online sports betting licenses granted before July 1, 2021, will remain effective until December 31, 2022. However, a German court suspended the current licensing procedure in April 2020.

Special conditions for online casino

The ISTG 2021 defines online casino games (in contrast to virtual slot machines) as virtual simulations of casino games and live broadcasts of terrestrial casino games with the possibility of participation via the internet (e.g. roulette, black jack). The law itself does not regulate licenses for online casino games. However, the German federal states can provide for respective regulations in their individual local laws. It is expected that online casino licenses will be available but subject to the specifications for a license to operate an offline casino. This particularly includes a restriction on the number of licenses. The ISTG 2021 stipulates that the competent authority may not issue more online casino licenses than licenses available for land-based casinos.