German states discuss possible transition period for igaming
A number of German states are in discussions over a potential transition period that could allow operators to continue offering online casino products until the vertical is legalised from July 2021.
The exact nature of the discussions, and whether this would allow operators to provide online casino without any sort of restriction, is as yet unclear, with sources telling iGB that they don’t want to “pre-empt” the talks.
However, a spokesperson for the state government of Nordrhein-Westfalen told iGB: “The federal states are currently coordinating the extent to which enforcement measures against illegal gambling can be effectively implemented in the transition phase.”
While other states are yet to respond to requests for comment, local media reports that the chancelleries in Bavaria, Hamburg and Berlin are also involved in the discussions.
The discussions are playing out ahead of the implementation of the Glücksspielneuregulierungstaatsvertrag (GlüNeuRStV) from 1 July 2021. This revised regulatory model, which is currently subject to a standstill period as it is considered by the European Commission, expands the online market beyond sports betting for the first time.
From July next year, online casino and poker will be regulated, albeit under strict conditions, such as a €1 per spin cap on slot stakes, and table games licences restricted to the number of land-based casinos in each state.
Meanwhile, the €1,000 spending cap set out by the third amended State Treaty on Gambling will be extended across all verticals. That treaty in theory came into force from 2 January this year, as a temporary measure before the expanded regulatory framework was introduced.
However, operators have been left in limbo after a court challenge derailed the sports betting licensing process under the third State Treaty. A case brought by Austrian bookmaker Vierklee saw the Administrative Court of Darmstadt rule the process was being conducted without due transparency by the Regional Council of Darmstadt, the Hessian body responsible for issuing licences. The Regional Council is appealing the court ruling.
Potential for a transition period, which operator body the Deutscher Sportwettenverband has previously called for, first emerged through a separate legal challenge in the state of Hessen. This saw proceedings suspended in an unnamed operator’s appeal against a prohibition order issued by the Regional Council, to allow the two parties to negotiate a compromise agreement.
When the third State Treaty was first implemented, a similar situation arose after legal challenges brought the licensing process to a halt. This ultimately saw Hessen, as the state responsible for licensing, implement a toleration policy or Duldung, in which operators that paid tax on German revenue and integrated with the national self-exclusion system would be permitted to conduct business without a licence.
In the current limbo, states have taken contrasting approaches to online gaming operators. While some have looked to allow online casino, since it will be legal in less than a year, others have pursued action against the companies offering the vertical.
In June the Hamburg Ministry of the Interior and Sport filed complaints against a trio of operators for violating the prohibition on igaming, with one of those targeted, GVC Holdings, dismissing the move as having “no merit or legal standing”.
In Niedersachsen, the state responsible for issuing payment blocking orders against unlicensed operators, Freie Demokratische Partei (FDP) MPs have questioned the state’s hardline stance against the industry.
Under the GlüNeuRStV, the state of Sachsen-Anhalt will host a new federal regulatory authority, while should it be approved by the EC and implemented, states will be bound by its terms until 31 December 2028 at the earliest. It must still be ratified by 13 of the country’s 16 states before it can come into force.