Niedersachsen FDP MPs demand answers on payment blocking

30 June 2020

Members of the Freie Demokratische Partei (FDP) have questioned the government of Lower Saxony (Niedersachsen) on payment blocking orders, suggesting the orders were not justified given the imminent liberalisation of the German online gambling market.

Two state MPs - Christian Grascha and Marco Genthe - asked the Social Democratic Party (SDP)/ Christian Democratic Union (CDU) government 15 questions about blocking orders to payment processing companies.

With the exception of sports betting and state lotteries, online gambling is not currently legal in Germany outside of the state of Schleswig-Holstein, as set out in the third State Treaty on Gambling.

Payment service providers are legally obliged to refrain from making payments in connection with unauthorised gambling. Should they fail to comply with these regulations, they risk being banned from operating in Germany.

Niedersachsen, granted the power to issue blocking orders to payment providers for all of Germany, issued its first payment blocking order in June 2019 to an unnamed company.

Although the European Gaming and Betting Association (EGBA) criticised this decision and called for a “fundamental rethink” of enforcement of gaming regulations, Niedersachsen’s Minister of the Interior and Sports Boris Pistorius warned in February of this year that “further prohibition orders are expected to follow”.

In April, Niedersachsen issued a prohibition order to another payment provider.

However, with the new Fourth State Treaty on Gambling set to take effect on 1 July 2021, the two FDP state MPs questioned whether the state government’s measures were necessary.

“How does the state government justify the implementation of the ban on international payment service providers against the background of the new gambling treaty and the associated liberalisation of online gaming in 2021,” the MPs asked in their first question.

The MPs also asked about whether the blocking orders were legal under the third state treaty, which it said says that gaming providers would first have to be asked to discontinue certain types of game and only if they do not can action be taken against payment service providers.

In addition, the party asked how the government recognises which payments are for illegal gambling and which are for the legal sector.

Grascha and Genthe also asked the government how many blocking orders it has made as well as how many other measures, such as warnings, it has taken.

In addition, they asked how a payment service provider may block payments for illegal gambling itself without violating EU data protection laws. The pair also asked about the scale of damages Niedersachsen and other states may face if the state were to illegally request a blocking order.

The two FDP members then asked if the blocking orders would continue after the Fourth State Treaty comes into effect, and about the “lack of player protection” it said will follow if payment providers remain blocked.

Finally, Grascha and Grenthe closed their questioning by asking if there were any plans for a transition period in anticipation of the new treaty. Last week, the Regional Council of Darmstadt agreed to develop transitional regulations rather than pursuing enforcement action against online casino and poker operators, following a test court case brought by an operator challenging a prohibition order issued by the Regional Council.

The government will now be expected to provide a written response to the questions.

The Fourth State Treaty on Gambling will limit live betting to markets on the final result or next scorer, something that has been criticised by bodies such as operator association the Deutscher Sportwettenverband.

Slots will be subject to a €1-per-spin stake limit and must be offered separately to table games, with no autoplay function. States will also have an effective veto on whether to allow table games, and could give their lotteries a monopoly over the product.