Who: Conference of the Minister Presidents of the German Federal States
When: 27 and 28 October 2016
Law stated as at: 8 November 2016
For more than ten years, the legal framework for sports bets and gambling in Germany has been chaotic. German gaming law has long been subject to conflicts between private and state providers especially in relation to sports betting, which was subject to a state monopoly for many years. However, in 2006 the German Federal Constitutional Court and in 2010 the European Court of Justice ruled that the German gambling and sports betting regime in force at that time was infringing German and European law.
As such, a State Treaty on Gambling was produced, which allowed 20 providers to obtain a licence for sports betting. The procedure for awarding licences started in 2012 and but the process has been short of smooth. The awarding of the licenses did not take place as planned, as some of the unsuccessful applicants took legal steps against the relevant Ministry’s decision. As a consequence, the Administrative Court of Wiesbaden stopped the procedure by an interim ruling and no licenses have since been granted.
However, on 27 and 28 October the Conference of the Minister Presidents of the German Federal States met in order to find a solution for the chaotic licensing procedure and agreed to change the State Treaty on Gambling. The following changes were agreed.
- The limitation that only 20 licenses may be granted shall be dropped and in the future, each applicant shall be granted a licence where certain minimum standards are met.
- The gambling regulatory bodies shall examine and report on how enforcement against illegal gambling providers can be improved sustainably in the medium and long term. In order to support this, it shall consider whether a public agency should be established to support such enforcement.
- The gambling regulatory bodies will meet in an attempt to simplify the process of identifying and authenticating online gamblers. It may also be considered whether the current existing monthly limitation for stakes of 1,000 Euros may be replaced by a monthly limit on gambling losses to the same amount and whether a blacklist may be introduced for players who exceed this amount.
- The gambling regulatory bodies shall be asked to analyse the latest developments in the range of online gambling available and which measures can be taken to support the objectives of the State Treaty on Gambling, with consideration to the experience of other European countries. At present, online gambling is not permitted in Germany.
Why this matters:
The announced opening of the sports betting market for an unlimited number of providers is a breakthrough in the battle of market liberalisation and may also bring some legal certainty concerning the licensing procedure for sports betting providers.
However, such legal certainty is likely to have an effect on the current sports betting providers. At present, the regulatory bodies are rather reluctant to enforce gambling laws against sports betting providers as several courts have decided in favour of the private sports betting providers. This may change once there is increased clarity in relation to the legal framework and the licensing procedure; enforcement against private providers may increase, including actions against certain types of sport betting such as live betting or betting on events within a game, which are not allowed under the existing legal framework.
In addition, if the entire system of licensing is overhauled, the market leaders will have to adapt their current consumer offerings to the new legal situation, in order to avoid being hit by any fines or penalties. Nonetheless, the effects on existing betting providers will be outweighed by the benefit gained by other potential gambling operators, as it should finally be possible to successfully apply for a gambling license. This increase in competition will provide more offerings to consumers and may also lead to an improved and more secure market.