Germany is one of the European markets where gambling is legalized. However, like is any other jurisdiction, there are nuances regarding rules, license restrictions, liability, etc. the following article is a brief overview of the most important items of gambling industry regulation is Germany.
Gambling regulating bodies
The German gambling market offers the following legal gaming products: casino gaming (table games, slot machines), bingo, poker, betting (sports/horse race betting, fantasy betting), lotteries and social/skill games.
Internet casino gaming is illegal in Germany according to the Interstate Treaty on Gambling. Land-based establishments are regulated by the Ministry of the Interior of the respective state. Online poker is also prohibited while its land-based version is allowed in the majority of German states and its operation is also regulated by the Ministry of the Interior of the respective state.
From all types of betting only sports wagering is allowed in the online version in Germany. The Regional Council of Darmstadt is responsible for issuing licenses for sports betting operation. Regarding fantasy betting, there is no specific body responsible for it. Everything depends on the game mechanics.
Lotteries and bingo (which is considered a lottery product) are supervised by the Ministries of the Interior in respective states.
Neither skill nor social games are regarded as games of chance. Therefore, there is no specific regulation for them.
The Interstate Treaty as of July 2012, outlines the main aims of gambling regulation as well as ensures state monopoly on sports betting license issuance (not more than 20), lotteries organization and online casino gaming banning.
Licensing terms and restrictions
The type and availability of a license depend on the gambling product. Private operators are able to receive permits on the following types of products:
- Casino games and poker (licenses for land-based casino operation);
- Sports wagering (licenses for online and land-based sports betting operation in Germany, however, to date no permit could be given due to the fact that licensing process was regarded as designed and conducted in an unlawful way);
- Slots (permit for land-based gaming machines in bars, restaurants and gaming halls);
- Lotteries (permit for brokerage and sale of online/land-based state lottery products; license for small/charitable lotteries operation);
Germany has not got any unified structure for licensing. The only definite rule is – online casinos are prohibited. Each process of applying for a gambling permit depends on the type of license. Operators will have to demonstrate their desire to provide transparent and safe services as well as to comply with all the necessary rules.
Any permit has to comply with the outlined requirements during the whole term of the license validity. In another case, this permit can be annulled.
Read more: GDPR Application Rules
The size of the tax depends on the rules of the federal state and the type of product. For instance, land-based casino companies are to pay taxes only on their GGR or a combination of GGR and profit taxes. Depending on the state, taxes can vary a lot – from twenty up to eighty per cent.
Sports or horse race betting operators are to pay a tax on stakes amounting to five per cent. Gaming machine operators pay an amusement tax of 12-20 per cent.
Gambling companies must present their social concept to show their social responsibility and in which way they will protect players and minors.
Cryptocurrencies are not subject to gambling regulation in Germany, they are regulated by the banking system.
If the company operates in Germany, it is not important whether its office is located inside or outside the country. The Interstate Treaty bans the operation of both online games and online gambling advertising.
Gaming machines (slots) can be located only in brick-and-mortar bars, restaurants, and gambling establishments. Currently, online slots are allowed only under the Schleswig-Holstein license.
Compliance with regulations and liability
Operators are liable for violations of gambling regulations. Moreover, in certain cases, their liability may become more extensive. Fines for illegal operation range between €10.000 to €50.000.
According to the Gambling Acts of the individual German states, unauthorized gambling and advertising activity can be regarded as an administrative crime with a fine up to half a million euros.
It should be also mentioned that German law is to a certain extent impacted by the EU regulation.
Read more: Gambling Legislation in European Countries
Currently, the Interstate Treaty on Gambling regulates betting and gaming operations in the country. However, due to several recent national court decisions the incompatibility of sports betting licensing process with the EU legislation, German states were forced to reform the Treaty. The first amendment was planned to be introduced in 2017, but three of states did not agree to ratify the document. On the contrary, they called for comprehensive reform and the implementation of licensing opportunities for online gaming operators. In case no common ground is found and none of the German states comes up with an individual solution, the current legal framework is likely to continue until 2021.
As mentioned earlier, the German government decided to introduce updated rules regarding bookmaking companies’ operation in the country.
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