Gaming & Betting in Germany - Summer 2012 A guide to Germany's gambling law and current legal trends - Heuking Kühn Lüer Wojtek
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Gaming & Betting
in Germany
Summer 2012
A guide to Germany’s
gambling law and current
legal trends
provided by
The Task Force Gaming and
Betting Law of
Heuking Kühn Lüer Wojtek
Summer 2012
Dear Reader, Since September 2010 when the European Court of Justice declared the German Inter-State Treaty on Gambling as incompatible with the European Union law, the country has seen breath-taking political and legal changes. Instead of shaping one nation-wide set of rules opening the market for transfrontier European service provider on the one side and keeping an eye on the interests of the traditional state monopoly enterprises on the other side, the Federal States continued to defend historical patterns of legislation. However, to a certain degree competition is reopened. In this edition of our Guide we give you a legal update with an outlook for the next months – status of summer 2012. Germany is still and more than ever an attractive market with opportunities – challenges are there as well but we help you to circumvent them. Enjoy reading this Guide and come back to us with questions, criticism or proposals. Our team will be happy to assist in your next projects. Best regards, (Astrid Luedtke) (Michael Schmittmann)
Gaming in Germany: Flashback and Background German gambling law is traditionally characterized by a byzantine system of different regulations and responsibilities. Since 2008 games of chance not specifically regulated elsewhere fell under the scope of the Glücksspielstaatsvertrag (Inter-State Treaty on Gambling = GlüStV) – a regulation enacted on the level of the German States (Länder). This applied to lotteries, bets, online casinos and game of cards (poker). Lotteries (mostly) and sports bets were monopolized by state operators. Online games of chance were prohibited outright. Other games of chance were regulated on Federal level (horse racing bets, automated machines) or under a different Länder law regime (traditional casinos). In September 2010 the European Court of Justice found the legal core of the GlüStV – the sports bets and lottery monopoly – inapplicable, though the judgements were adopted only hesitantly by German courts. The GlüStV, which was slated to expire in 2012 anyway, came to its end after more than a year of almost weekly court decisions and rear guard actions which saw particularly the online ban develop into the German monopoly operators’ last line of defence against competition. Meanwhile, the Länder developed a successor Inter-State Treaty under heavy political hand wringing. Due to the total practical failure of the old Inter-State Treaty, at least a limited opening of the market to private operators in the sports bets sector was deemed to be unavoidable. Plans for a wider opening of the market were discussed but ultimately shelved as the Länder in the spring of 2011 opted for maintaining the lottery monopoly while introducing a system of limited licences for sports bets both in terms of the number of licensees as well as bets allowed (the “Glücksspieländerungsstaatsvertrag”, more commonly known as E15- Model). On the other hand, the now famous German State of Schleswig-Holstein took a different approach, basically opening the market for bets and online casino operators in its own Gambling Act. Currently, licensing in Schleswig-Holstein is in full swing despite the new government’s openly stated intentions to lift the Gambling Act as soon as possible. Thus, 2012 sees the fascinating and unprecedented drama of two different acts regulating cross border services within a single member state of the European Union.
Two different approaches: Concession model and full fledged
liberalization
After prolonged discussions the
Länder mostly opted for a regime of
limited market deregulation in the
sports bets sector while upholding
the lottery monopoly. The Inter-State
Treaty went into force on 1 July 2012
in 14 out of 16 German Länder.
Schleswig-Holstein (green) opted out
of the Inter-State Treaty System and
passed its own Gambling Act in
September 2011. The GlüG S.H.
establishes a licensing system for
bets, online casinos. The act went
into force on 1 January 2012.
Licences are being granted since 1
March 2012. 7 sports bets licences
have been issued so far. The new
government intends to join the Inter-
State Treaty. Licences will be
granted until the Gambling Act S.H.
is lifted.
North-Rhine Westphalia (red)
intends to join the new Inter-State
Treaty but still operates under the
old one as intra state law. A new act
implementing the Inter-State Treaty
should be passed in autumn 2012.
Source for the map: Portal der statistischen Ämter des Bundes und der
Länder (DeStatis); David Liuzzo.German gambling law under the new Inter-State Treaty:
Key facts for private providers
The new Inter-State Treaty’s scope is expanded. In order to strengthen the overall consistency of
Germany’s regulation, additional rules for horse racing bets and gaming machines are included in
the new Inter-State Treaty.
Not regulated by the Inter-State Treaty remain games of skill, games of chance with no monetary
stakes or games or non-public games of chance.
Traditional Casinos remain primarily regulated in the Länder’s casino acts with certain sections of
the new Inter-State Treaty being applicable.
Online casino and poker games remain prohibited. “Offline” Poker, Blackjack or comparable games
remain banned as well as outside casinos.
The sports bets market is opened but in a still very restrictive way. The number of licences for
private operators is limited to 20.
The Inter-State treaty is slated to expire at the end of 2021. The licensing system for sports bets is
introduced as experimental clause and limited in time until July 2019. Concessions are granted in
an EU-wide tender organised by the State of Hesse. A new inter-state Gambling Commission
(Glücksspielkollegium) is established as regulator.
In order to complement the new Inter-State Treaty, the ”Rennwett- und Lotteriegesetz” (Horse
Racing Bets and Lotteries Act of 1922) is amended for the first time establishing a general tax of 5%
of the total turnover for bets across. The tax is also applicable to non-licensed and/or EU based
companies with turnover in Germany.Overview (I): Games of chance under the new regime
Horse racing
bets (see also
RWLG)
Bets Sports bets Online/
(20 licences) offline
Other bets
banned
Lotteries Private
(partly state brokers Online/
monopoly) permitted offline
Customers in Germany
Online Casino
Games Banned
(incl. Poker)
Offline public
games of
chance Banned
- Poker, Black-
jack etc.
Gaming
Machines and Offline
Arcade Halls
Only in some
Casinos Länder Offline
licences
availableOverview (II): Sports bets and casino games
Under the so-called “Experimental Clause” of sec. 10a of the New Inter-State Treaty, up to 20
licences may be granted to private operators. The number of licences was deliberately chosen to
reflect the actual market conditions and to channel the relevant operators into the legalised market.
Concessions are granted both online as well as for offline distribution.
Licensing procedure and requirements are detailed in sec. 4a-e of the new Inter-State Treaty.
Licences will be granted after a Europe wide tender which started early August 2012. Applicants
have to submit inter alia:
Information on corporate background, ownership and control
Security Concept (IT security, prevention of fraud)
Social Concept (prevention of addiction, ensuring exclusion of minors)
Business Plan
A bank guarantee of EUR 5m-25m
Further implementing orders detailing the general criteria mentioned in the New Inter-State Treaty
(e.g. the technical regulation) have not yet been published.
The proposals have to be submitted by 12 September 2012. The public procurement notice was
published in the Supplement to the Official Journal of the European Union dedicated to European
public procurement on 8 August 2012. The proposals have to include information on the applicant’s
company structure, personnel and background. Forms for the application can be requested under
sportwettenkonzessionen@cbh.de.
The regulative regime for sports bets is restrictive. Stakes per customer are limited to EUR 1000 per
month, though exemptions are possible. Live (In-play) bets are allowed, but all bets are restricted to
results. Bets on individual actions (e.g. next corner kick etc.) are not allowed.
Online-Casino-Games (including Poker, Blackjack etc.) remain prohibited and non-licensable.
Operators who provide these games in addition to sports bets may have to make their sites
unavailable to German customers: The overall legality of operations is one of the licensing
requirements.Overview (III): New rules on Taxation
At the end of June 2012, Germany introduced a new “Act on the Taxation of Sports Bets” amending
the time-honoured Horse Racing Bets and Lotteries Act (RWLG) of 1922.
Tax duty is expanded to a tax on all sports bets if the customer placing the bet is situated inside
Germany (including Schleswig-Holstein). Both licensed as well as unlicensed operators are obliged
to pay the tax.
The tax amounts to 5% of turnover with a bet and is due basically every month. Operators are
obliged to register with the competent German tax authority. The tax does not apply to Online-
Casino Games. With regard to sports bets, the new Federal tax supersedes the 20% net gross
profit tax of the Gambling Act Schleswig-Holstein which remains applicable for casino games.
Current tax duties pursuant to RWLG and Gambling Act S.H.
Lotteries
Sports
RWLG
(5% t/over)
Bets Horse
Racing
Other
S.H.
Casino 20% NGP
GamesAdvertisement
Advertisement is regulated primarily in sec. 5 new Inter-State Treaty. Overall, previous restrictions
are lessened. Advertisement no longer has to be restricted to pure information purposes. The
Länder plan to further detail the restrictions in a special advertisement guideline which was
circulated as draft on 21 August 2012. Comments on the draft are accepted by the Ministry of the
Interior of North-Rhine Westphalia.
Advertisement for sports bets just before or during a live broadcast remains prohibited and is not
licensable. This wording would still allow advertisement for the respective gaming companies
without mentioning a specific product.
Perimeter advertising and advertising on jerseys is now possible.
Advertisement under the new Inter-State Treaty
Gaming Licensed Adults Non-
company operator misleading
Unlicensed Minors/ Misleading
operator addicts (Guidelines)
Offline
Customer Special
licence for
TV/Internet
required:
Internet
- Sports TV
- Horse
Racing
- LotteriesCombating the black market1
Enforcement of the new Inter-State Treaty System
Private Public Criminal Tax
enforcement enforcement enforcement enforcement
- Competitors - Gambling - State - Tax Fraud
Authorities Attorney Investigation
Civil Court
Cease-and- Cease-and- Administrative Interruption of Provision and Imposing tax
Desist-Orders Desist-Orders penalties payment illegal duties; tax
-Operators -Operators (up to EUR transactions advertising as fraud as
-Media -Media 500k) criminal criminal
offence offence
Enforcement Enforcement
fines fines
Gambling companies outside Germany and their executives, representatives
The number of licences available under the new GlüStV was chosen to draw the relevant market
participants into the licensing regime. Unlike in the past, German gambling authorities are likely to
coordinate enforcement actions through a single authority. Both the competent gambling authority
as well as the state owned monopoly operators are expected to aggressively enforce the new Inter-
State Treaty starting in autumn 2012.
Further, expanded taxation duties under the RWLG will let tax authorities focus on gambling
companies. The Federal Ministry of Finance already announced that it is stepping up its combating
of money laundering in the gambling sector.
1
In colour potential risks of enforcement. Red = high risks, yellow = medium risks, green = at the moment relatively
low risk.For further advice please contact:
Astrid Luedtke
Head of Task Force Gaming and Betting Law
Certified Specialist Lawyer in Intellectual Property Law
Regulatory, Unfair Competition, IT
Georg-Glock-Straße 4
40474 Düsseldorf
GERMANY
Phone +49 211 600 55-166
E-mail a.luedtke@heuking.de
Michael Schmittmann
Head of the Firm’s Practice Group IP, Media & Technology
Regulatory, EU, Business Structure, Transactions
Georg-Glock-Straße 4
40474 Düsseldorf
GERMANY
Phone +49 211 600 55-165
E-mail m.schmittmann@heuking.de
Marc Oliver Brock
Regulatory, Competition, Litigation (administrative law)
Georg-Glock-Straße 4
40474 Düsseldorf
GERMANY
Phone +49 211 600 55-168
E-mail o.brock@heuking.deProf. Dr. Rainer Jacobs
Unfair Competition, IP, Litigation (civil law)
Georg-Glock-Straße 4
40474 Düsseldorf
GERMANY
Phone +49 211 600 55-564
E-mail r.jacobs@heuking.de
Dr. Georg Jacobs, LL.M.
Unfair Competition, IP, Litigation (civil law)
Georg-Glock-Straße 4
40474 Düsseldorf
GERMANY
Phone +49 211 600 55-275
E-mail g.jacobs@heuking.de
Wolfram Meven
International and national Tax Law
Georg-Glock-Straße 4
40474 Düsseldorf
GERMANY
Phone +49 211 600 55-212
E-mail w.meven@heuking.de
Simon Hirsbrunner
EU, Competition Law
Avenue Louise 326
1050 Brussels
BELGIUM
Phone +32 2 646 20-00
E-mail s.hirsbrunner@heuking.deAbout Heuking Kühn Lüer Wojtek More than 250 specialized lawyers, tax advisors and notaries at Heuking Kühn Lüer Wojtek provide counseling services across nine offices, making it one of the large German commercial law firms. National and international clients include medium-sized and large companies from manufacturing, trade and the service industries as well as associations, public corporations and discerning private clients. Juve, German Commercial Law Firm 2012, writes about us: “This recommended firm in media has had a strong focus on media regulation and contract law but has recently become more active in copyrights….. Advice on gambling law has also grown in importance for the practice; Heuking is often consulted by companies from outside Germany due to its expertise gained through advising such clients as Jaxx and Sportingbet.” Professor Dr. Rainer Jacobs is chairperson of GiG e.V. GiG is an association of private gambling operators acknowledged by the Federal Court of Justice which enforces its members´ interests in the field of unfair competition law. Michael Schmittmann is publisher of the series for European Gambling law, Verlag Medien und Recht, Vienna/Munich since 2011 and organizer of the annual “Düsseldorf Symposium on Gambling Law”. This overview does not contain legal advice. The information included has been carefully researched. However, it only reflects excerpts of case-law and legal/political development and cannot replace individual legal advice taking into account the particularities of the individual case.
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