Germany forges ahead with controversial legislation

First put forward 2006, the State Treaty on Gambling could become law as early as July and would see the number of operators that could offer their services to punters based in the affected states limited to 20.

In addition, the proposed legislation would impose a turnover tax of five percent and place limits on the amount that could be wagered rumoured to be around 1,000 euros per month while also prohibiting casino and poker games in addition to live betting.

By contrast, the northern German state of Schleswig-Holstein passed new online gambling-friendly legislation in September that will permit licensed operators to offer exchange and sportsbetting as well as poker and casino games with the exception of roulette, blackjack and baccarat.

Instead of joining with Germany’s remaining 15 states and amending the current governing State Treaty on Gambling, Schleswig-Holstein decided to submit draft regulations of its own for consideration by the European Union and these were subsequently ruled to be compliant.

The new legislation is due to come into force from January with licences valid from March and see Schleswig-Holstein implement a 20 percent gross profits tax rather than the 16.66 percent revenue tax favoured by its fellow states. In addition, the regulations place no limit on the number of operators awarded licences and states that all online products should be permitted while implementing a strict consumer protection mechanism.

According to a report from the Reuters news service, both Bwin.Party Digital Entertainment and Betfair have plans to apply for licences from Schleswig-Holstein with both seeing a rise in their share prices as a result.

“There appears to be no connection between the desire to provide German citizens with a regulated market and the actual text of the State Treaty on Gambling,” said Clive Hawkswood, CEO for the Remote Gambling Association (RGA), which represents some of the world’s largest remote gambling operators and software providers including 888 Holdings, IGT and Bwin.Party Digital Entertainment.

Hawkswood continued: “The Minister Presidents say on one hand that they want to encourage sportsbetting with regulated German operators but at the same time deny this to citizens who wish to partake of casino and poker games online”.

“It is clear that this will have little effect in reducing the large number of German citizens gambling with operators licensed in other jurisdictions and which offer casino and poker products. Policies to restrict consumers from accessing such sites have consistently been shown to be ineffective. As such, this policy will have limited practical impact”, he added.

“The European Commission has repeatedly stated that the draft State Treaty on Gambling falls foul of EU law and the latest version appears to make little headway in meeting the Commission's concerns. In fact, such an approach simply makes the Schleswig-Holstein proposal more attractive and creates a fragmented, confusing and undesirable situation for German consumers”, he concluded.