German States Chart Online Gambling Future

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The German state of Schleswig Holstein (SH) had enacted a liberal online gambling legislation that had been approved by the European Union (EU) and accepted by the industry. Then the elections resulted in a change in political leadership. Certain prominent members of the new regime stated their intent to repeal the progressive licensing and regulation policy and join the other states in signing the restrictive State Treaty. The good news is that the Ministry of the Interior has confirmed that until the law is amended or repealed, the current legislation applies and the required processes will not be put on hold but will be executed. Fears have also been voiced that any repeal of the legislation now could result in expensive legal actions brought by the seven major online gambling companies that have made investments based on licenses already issued.

A report from the Public Gaming Research Institute stated that SH has continued to issue licenses for sports betting with a validity of six years. Earlier this month the Ministry of the Interior had issued licenses to bet-at-home, bwin, Bet365 and Sportingbet. According to the Ministry, twenty four online gaming operators have applied for a sports betting license. These applications are under consideration and are being evaluated in stages. Six new sports betting licenses are likely to be issued within the next few weeks. Another four to six licenses are apparently also in the pipeline and are likely to be issued later. Seventeen operators have applied for an online casino gaming license.

What the future ultimately holds for the German state of SH one cannot say. But, the further the authorities tread on the liberal path, the more difficult it will be to retract the steps. However the rest of the German states are clearly going the other way. There had been an ongoing debate on a new Interstate Treaty on gambling to replace the one that expired last year. The states have been trying to carry on as before by paying mere lip service to the growing EU concerns. A few proposals actually sent to the EU have not found acceptability.

It has now been reported that thirteen states have come to an agreement. This is the minimum threshold required to give effect to the new treaty. This situation was reached last week when Thuringia and Mecklenburg-Vorpommern climbed on board. It seems the four-year new treaty will come into play from July 1 2012. The new treaty is only slightly less restrictive than the earlier one. It allows for 20 private sports betting licenses priced at about €50 million each, and levies a turnover tax of 5%. Online casino gambling remains out of bounds for private operators.

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