Hesse plots break from State Treaty on Gambling

7 January 2019

The ruling coalition government in the German state of Hesse is to break from the State Treaty on Gambling and develop its own regulations, should there be no progress on developing a federal framework by the end of 2019.

The Schwarz-Grün coalition of the Christian Democratic Unionists and Green Party said in its agreement setting out key goals for the government’s five-year term that it would push for a system that would ensure players were protected.

To do this, it said, a coherent framework that was compliant with European law and awarding licences based on the quality of applicants, rather than having a limit to the number of certifications, was needed.

If Germany’s 16 federal states were unable to reach an agreement on a model to overhaul the current and much-criticised State Treaty on Gambling by the end of 2019, the government said it would be forced to strike out alone. The end of 2019 coincides with a break clause in the Treaty, which would allow Hesse to withdraw from the Treaty and develop its own regulatory model for gambling.

The coalition aims to increase funding for the Landessportbund Hessen, the association representing all sporting clubs and associations in the state, through the expanded regulation of gambling. It aims to ensure that sports funding generated through gambling is linked to specific objectives, such as supporting competitive sports, encouraging people to participate in sports for health reasons, and to increase the number of disabled people involved in sport.

Hesse’s plans would effectively kill the State Treaty, which despite coming into force in 2012, has been discredited in a number of legal challenges, and has ultimately left operators in legal limbo. An attempt to compromise on the legislation, by removing the 20-licence limit for sports betting and adding a clause to pave the way for online casino regulation in future, failed in 2017.

This revised State Treaty failed to secure approval from the Schleswig-Holstein and Nordrhein-Westphalen governments, which meant that it could not come into force, as it required approval from all state legislatures.

Schleswig-Holstein, which had originally struck out alone with a liberal regime that allowed all verticals and had no licence cap, had already said it would develop a new model with Nordrhein-Westphalen, Rheinland-Pfalz and Hesse. Hesse, which was responsible for processing licence applications under the 2012 incarnation of the Treaty, had also attempted to offer operators temporary waivers to operate in the state, only for the proposal to be struck down in court.

In addition to its plans for online gaming, Hesse will also look to transfer regulatory oversight of slot machines to Germany’s federal states. The coalition plans to introduce a motion in the German Bundesrat, the body that represents the country’s 16 states at a federal level, to this end.