Schleswig-Holstein proposes online gaming extension bill

15 March 2019

The German state of Schleswig-Holstein has put forward new legislation that would extend recently expired online casino licences in the region.

The bill sets out how operators that hold an expired licence would be permitted to continue offering igaming services in the state, based on prior approval, until Schleswig-Holstein issues new licences.

Operators would be taxed at a rate of 20% of gross revenue, reflecting the same rates set out under the expired licence agreements.

However, these licences would only run until June 30, 2021, due to association with the German State Treaty on Gaming. Schleswig-Holstein, an opponent of the State Treaty, intends to develop a new regulatory framework after this date.

The bill sets out that Germany’s states are “currently engaged in close dialogue” to find a solution that would cover and set out regulations for relevant gambling laws. Politicians in Schleswig-Holstein have previosuly claimed that Nordrhein-Westphalen, Rheinland-Pfalz and Hesse are willing to join the efforts.

Schleswig-Holstein’s existing liberalised regulatory regime runs alongside the State Treaty. Under this regime, the state issued igaming licences to a number of operators in 2012.

These licences began to expire in December 2018. This only occurred due to a change in government, which saw the state pledge to adopt the State Treaty in 2012, allowing licences awarded under the previous regime to expire.

However, the Jamaica Coalition of the Christian Democratic and Christian Social Union (CDU/CSU), Free Democratic Party (FDP), and Green Party, in power since 2017, has been a backer of more expansive, liberal regulations.

German state lawmakers will meet next week (March 21), to discuss the third incarnation of the State Treaty. A draft was outlined in a letter from Nathanel Liminski, Secretary of State and head of the State Chancellery of Nordrhein-Westphalen.

In the letter, Liminski confirms the removal of a cap on sports betting licences, alongside a number of other changes to legislation.

Should the Treaty eventually be ratified, these licences will come into force on January 1, 2020, running to 2021 as part of an experimental phase. This will enable the Minister-Presidents of Germany’s 16 federal states assess the effectiveness of the legislation.

The licences could remain valid up to June 30, 2024 provided that legislators are satisifed the Treaty is fulfilling its goals. Until the new Treaty comes into force in 2020, a “toleration period” in which operators that pay tax would be allowed to continue offering sports betting, will apply.

Other elements of the 2012 Treaty, such as an outright ban on in-play betting and a mandatory player spending limit of €1,000 (£854/$1,133) per month, remain in place. The tax rate is also still set at 5% of turnover.

Liminski said that due to lawmakers’ schedules, the legislation would need to be signed off by mid-April. Should all 16 Minister-Presidents fail to ratify proposals by January 1, 2020, it would become obsolete.

This is the third effort to force through the Treaty, with the initial effort in 2012 blocked by legal challenges against the licence cap. A second attempt in 2017 also saw lawmakers fail to reach a consensus on changes to the legislation.

However, lawmakers could face further disappointment after German sports betting operator association the Deutsche Sportwettenverband last week hit out at the latest version of the Treaty, dismissing the legislation as unfit for purpose.

The association blasted lawmakers for failing to make significant changes to the Treaty, with the only major update from its 2012 version being the removal of the licence cap.