Germany moves forward by presenting unloved framework to EU courts

Seeking to relaunch its gambling marketplace on 1 July 2021, Germany has submitted the revised framework of its Fourth Edition of the ‘State Treaty on Gambling’ to the European Union.

Despite numerous revisions, the framework has yet to be ratified by the nation’s 16 federal Länder (states).

The make-up of the treaty continues to be debated by regional MPs at the Bundestag federal council, in which 13 states must ratify the treaty by 31 March 2021 for Germany’s new gambling framework to be passed into law.

Should the mandate be ratified, Germany will establish its federal legislative framework for operating gambling services until 31 December 2028, when Länder will be allowed to revise or opt-out of the treaty.

Despite a clear pathway being formed towards market regulation, German gambling’s legislative progress has underwhelmed all industry stakeholders.

At present, licensed incumbents will face a €1,000 deposit limit combined with stringent restrictions applied across all online gambling verticals.

Sports betting incumbents will face a market with undefined in-play wagering restrictions, which has led trade bodies and stakeholders to question whether the State Treaty’s framework will be competitive against the black-market.

Despite a last-minute reprieve allowing online casino games, licensees will see slot games limited to a maximum €1 stake. Furthermore, tables games will be maintained under the domain of state-sanctioned monopolies.

Further to its punitive restrictions, the State Treaty has drafted a convoluted licensing structure, in which operator fees will be determined through projections of turnover combined with individual levies.

Should the State Treaty secure its approval, the chancery of the Länder of Saxony-Anhalt will begin its remit as the regulatory authority for federal gambling, opening a year-long licensing window for foreign and domestic incumbents.

Making its way to EU courts, State Treaty backers will hope that the amended framework secures a positive response from European commissioners reviewing the legislation.

Reviewing Bundesrat proposals last August, the European Commission rejected the treaty’s technical provisions attached to sports betting legislation as failing to meet EU market requirements.

Sanctioning a ‘blue letter’ warning, the EC cautioned German lawmakers on enforcing a termination of online casino services, combined with a player spending cap set at €1,000 and further limitations on in-play markets.

Leading the EU’s business regulatory supervision, the EC urged the Bundesrat to discontinue proceeding with developing its legislation – a call that would be rejected by the Länder of Nordrhein-Westfalen who underlined that no changes should be implemented despite EC objections.

10 months on from the EC’s notice, industry stakeholders now question whether Bundesrat really ever believed it could regulate a gambling marketplace under its State Treaty terms.

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