ISTG 2021: New regulation on online gambling in Germany will enter into force July 2021

In March 2020, the German federal states agreed on a new German Interstate Treaty on Gambling (ISTG 2021) from July 1, 2021 onwards. The ISTG 2021 still needs to be ratified by the individual federal state parliaments.

Background

The current Interstate Treaty on Gambling that regulates German gambling law will expire on 30 June 2021. For a long time it was not clear whether the German federal states would be able to agree on a new unified regulation. An earlier attempt had already failed in the past. The reason for the disagreement was in particular whether the online gambling market should be liberalised.  While some federal states strongly advocated the introduction of a licensing procedure for online casino and poker, others wanted to retain the online ban. Thus, the ISTG 2021 represents a compromise. Although it provides for licenses for almost all forms of online gaming, the licensing conditions will be all the more stringent. They even go beyond the current requirements for sports betting licenses.

New regulations

The ISTG 2021 envisages fundamental changes to Geman 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 landbased casinos.