Germany submits State Treaty to European Commission

3 May 2019

Germany has notified the European Commission of its third amended State Treaty on Gambling as it seeks approval to bring it into law.

Already ratified by the Minister-Presidents of Germany’s 16 federal states, the Treaty sets out proposals to allow operators to apply for sports betting licences in the market, with Schleswig-Holstein allowed to run its own liberal regulatory regime.

Licences are due to come into force from January 1, 2020 and run until June 30, 2021, effectively acting as a placeholder, with a view to a complete overhaul of national gambling regulations by 2021.

Should the European Commission (EC) grant its approval to the Treaty, Germany could begin the licensing process later this year. The EC will confirm its decision following the expiry of the three-month standstill period set aside for member states to review the legislation in late July.

Key features of the Treaty include the removal of a 20-licence limit in order to help open up the market, while operators that do secure a licence will have to pay tax at a rate of 5% of their turnover.

As before, sports betting is the only vertical permitted, but in-play wagering is prohibited. Consumers will only be allowed to spend a maximum of €1,000 (£857/$1,120) on betting each month.

In addition, Schleswig-Holstein will be permitted to continue with its own liberal regulatory model until 2021. First introduced in 2011, the state has does not impose any restrictions on product verticals, and sets a 20% gross revenue tax.

Steps towards renewing licences issued in 2012 began in February, with a view to having these run until June 30, 2021. The state will effectively act as a testing ground for a more liberal model, which from 2021 could be rolled out across the rest of the country.

However, even if the European Commission gives its approval to the Treaty, there is still some way to go.

The transitional law is due to pass and come into law in Schleswig-Holstein this month, while June will see the Minister-President Conference take place in Berlin.

The licensing process for sports betting, handled by Hesse, is scheduled to launch after the summer and, by the end of the year, it is expected that all state parliaments will formally ratify the State Treaty. This will allow the Treaty to come into force in January 2020, when betting licences will begin to be issued.

Wulf Hambach, Stefan Bolay and Stefanie Fuchs of leading German law firm Hambach & Hambach spoke to about this process and what needs to happen to ensure a satisfactory conclusion for all stakeholders.