Different pieces of legislation have been written, but agreement between the 16 Federal States which make up Germany has been a hot topic for discussion for more than a decade. Years of regulatory and legal uncertainty have characterised the way in which online gambling has developed in Germany, with licences from Malta (predominantly), as well as Gibraltar and Curaçao being the preferred choice for online gaming operators targeting the German players.
In 2012, the German States passed what is known as the InterState Treaty on Gambling (ITG), aimed at opening up sports betting across all Germany in a regulated manner for the first time. Even though gambling operators were targeting German players through the licences of other EU member States, Germany (similar to practically all other EU States), wanted to regulate on a national level. However, cracks in this Treaty began to emerge very soon, with a number of challenges at a European Court of Justice (ECJ) level being filed over the years by other EU member States, arguing the German legislative proposals were not compliant to the EU Treaty, as well as gambling operators arguing the Treaty was favouring State monopolies.
This was an ongoing legal battle for a number of years, and operators targeting the German market were often left in limbo, with huge uncertainty surrounding the legality or otherwise of the German market for sports betting, and more so for online casino and online poker. Notwithstanding, the German market kept experiencing exponential growth, year on year, making Germany the biggest, and practically the last remaining grey (or black) market across the EU.
But this uncertainty seems to be nearing its end, as the German federal States have finally agreed that proper regulation across all the German States, (putting aside the diverging interests between the same States), is the only way forward! This led to Germany targeting the 1st of July 2021, to enact its new gambling regulations, a day by which only operators in possession of a German licence will be allowed to operate in Germany to offer sports betting, online lottery, online casino and/or online poker.
In the meantime, as from 1st January 2021, online casinos and online poker will also be temporary allowed in Germany for the first time, after being considered largely illegal (bar from Schleswig-Holstein), prior to this date. This will form part of a temporary measure, paving the way for the full authorisation, through Germany’s 4th State Treaty, the Glücksspielneuregulierungstaatsvertrag (GlüNeuRStv), on 1st July, 2021.
Even though Germany has formally agreed and notified its 4th State Treaty (Interstate Treaty 2021) to the European Commission, a lot of uncertainties remain, with a number of operators still unclear on the best way to approach the German market.
This said, what seems to be clear to everyone this time round, is that from 1st July, 2021 onwards, only licences issued by the German authorities will be permitted to target German players. Such licences will need to be compliant with the laws and regulations of Germany, putting an end to EU’s largest and longest standing grey market (Germany’s population in 2020 stands at 83.7 million). In the meantime, up until the new regulations are in place, a toleration regime, aimed at sparing future licencees from any enforcement action, is currently in place.
In Germany sports betting, online lottery, casino and also poker will all be permitted, but combing their marketing and commercial uses will not be permitted. A spend limit of €1,000 per player per month will be applicable across all licensed websites, with slots being subjected to a €1 per spin stake limit, and no autoplay function and also no jackpots will be allowed.
Information on the official licensing framework, which will be adopted by the 16 federal states is still not available, but German authorities have pledged to have it ready in time before the July deadline. In the meantime, applying for a German licence is still based on the 3rd Treaty, hence technically only online sports betting is allowed, with the possibility to offer casino and poker remaining prohibited in Germany, whilst being considered a grey area for other EU member States.
Under the 3rd Treaty, which came into force on the 2nd January, 2020, the Regional Council of Darmstadt, based in the State of Hesse is responsible for processing licences, even though indications are that a new regulatory authority, established through the GlüNeuRStV, will be based in Sachsen-Anhalt once the 4th State Treaty is ratified and becomes law.
For the time being it is only possible to obtain a licence to organize sports betting remotely and/or land-based, through a formal submission of an application in German. Applications which are not in the German language must be translated and submitted in German. This also applies for any other official document which must be formally submitted after going through a certified translation.
German authorities require operators to appoint a German representative if a company is not based in Germany. He/She will be the main point of contact with the German authorities. As to banking solutions, operators would need to use either a German bank or any other EU/EEA banking institution, although a number of restrictions apply.
Germany – Administrative & Licence Fees Similar to the new German regulations, when it comes to Administrative & Licence Fees, the situation in Germany is still under constant development and much will depend on the way the new bill (based on the 4th amendment of the State Treaty) will be adopted by the 16 Germans States (Länders).
With the current situation (i.e. until the new bill comes into force), mapping out the tax dues and fees to operate in Germany can be an arduous task, since some of the fees vary depending on the State.
As to online casino, even though up until the new bill is issued in July 2021, online casino is not licensable in Germany, operators targeting the German market with another licence, be it an EU licence or otherwise, are subject to pay VAT at 19%. VAT for online casino is considered to fall under the category of electronically supplied services, and is based on Gross Gaming Revenue (GGR – stakes less wins).
For operators providing sports betting (in Germany betting on events which are not sports related is not permissible), a flat rate of 5% federal tax on stakes is applicable. All sports betting shops are subject to the federal tax, whether they are licensed in Germany or otherwise. In addition to this, sports betting outlets may also be subjected to a local or federal state, based betting shop tax which can vary from one municipality to the other, and can go up to an additional 3% on stakes.
The Interstate Treaty 2021 is set to review the different taxes paid in the different German States, but it is not yet clear whether individual States will be allowed to charge additional taxes within their municipalities. As to obtaining a licence, whereas the new bill is aimed at addressing the so-called cross-border issue within the German states, where currently no cross-border access for online gambling services offered in a particular state exists, it is still not clear whether the individual states will be allowed to impose different restrictions within their state. Indications in the proposed Treaty suggest federal states will be allowed to do this and have separate and specific laws, but it is yet to be seen whether this will be the case in the finalised bill.
Same applies for fees and taxes, which are expected to go up following the ratification of the new bill. It is not yet clear whether licence fees/contributions will be determined on GGR or stakes, with some suggesting that operators generating a turnover of up to €40m will be required to pay 2% on stakes plus an annual licence fee, as illustrated below:
Proposed Licensing fees for the online gaming as per GlüNeuRStV.
These are subject to change or confirmation once the new bill is agreed and ratified by the federal states:
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