German State Passes Online Gambling Legislation

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To pass or not to pass was the question plaguing the German state of Schleswig-Holstein. After getting its draft online gambling bill approved by the European Commission (EC), last month Schleswig-Holstein indicated that it would prefer to go with the other German states for a unified online gambling treaty. Now it has been learnt that the Parliament of Schleswig-Holstein has narrowly passed its online gambling legislation.

The online gambling verticals that will be allowed under this legislation include betting exchanges, sports books, poker and all online casino games except roulette, blackjack and baccarat. The law will come into effect from January 1 2012 and the licenses will be issued from March 1, 2012. There is no limit on the number of licenses that can be issued. The state will earn 20% gross profits tax on all products.

Betfair is an online gambling operator with a large stake in the German market. It has for long been pushing for a regulated market in that country and has also initiated legal proceedings. Betfair has welcomed the Schleswig-Holstein legislation and has declared its intent to apply for a license there. It has hoped that the other 15 German states will fall in line. It added, “Betfair is committed to participating in the online gambling market in Germany, ready and willing to pay taxes there and offer German consumers competitive, innovative and safe products."

Bwin.party, another online gambling operator echoed these sentiments. It also said that it would apply for a license when the implementing provisions are in place. The share price rose by 14% on the news of Schleswig-Holstein passing the online gambling bill. The stockbrokers Numis Securities issued a ‘Buy’ recommendation on Bwin.party shares, explaining that the legalization of online gambling in Schleswig-Holstein will greatly reduce the risk to the operator in relation to its largest market.

Another company set to apply for licenses in the German state is the Kiel based Jaxx, whose MyBet brand was recently granted a license in Belgium. Jaxx has confirmed its plans to apply for licenses for its subsidiaries for sports betting, poker and online casino games under the new law as soon as the parameters have been finalized. Jaxx spokesman Mathias Dahms said, “The other 15 federal states would be well advised to copy the Schleswig-Holstein model. The new law provides legal certainty and strikes a fair balance between protecting players, the interests of consumers and entrepreneurial liberty.”

The expert opinion is that the other German states would now be compelled to open up their online gambling markets on more reasonable terms than the ones currently proposed by them. Only time will tell that how far they are prepared to go.

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