As the largest economy in Europe and the fourth-largest by nominal GDP in the world, Germany has the potential to become one of the biggest players in the global gambling industry. Unlike most EU countries, the German gambling market is not strictly regulated, although until very recently almost all forms of online gambling were considered illegal. The division of the country into 16 states, which have the authority to regulate gambling as they see fit, further complicates the matter.
The Federal Republic has outlawed online casinos, and sports betting has remained the only form of legal interactive gambling. The only exception is the State of Schleswig-Holstein, which allows online casino games and has issued multiple licenses to local and foreign operators in the past decade. Despite this almost universal ban on online gambling, Germany has the third-largest gambling industry in Europe after Italy and the United Kingdom.
In 2018, the Gross Gaming Revenue reached €14.2 billion, according to The Handelsblatt Research Institute. Of this total, around €10 billion came from land-based operations, including casinos, lotteries, and gaming machines, while the rest came from the growing online gambling sector. Researchers estimated the size of the illegal gambling market, mostly online operations, to be between €4 billion and €22 billion.
The illegal status of online casinos has not stopped Germans from visiting them regularly. The regional inconsistencies and the popularity of unregulated offshore casino sites have prompted the government to introduce a new legal framework that would cover the entire industry. In March 2020, lawmakers approved new regulations that are set to take effect in the summer of 2021, legalizing online casinos and poker for the first time in Germany.
Gambling Legislation in Germany
Most forms of gambling are currently allowed in Germany, with land-based casinos, betting shops, bingo, and lotteries falling under state regulation. As mentioned above, online casinos are almost universally banned in Germany, except in Schleswig-Holstein. In reality, thousands of Germans prefer to play at illegal gambling sites based in Malta, the Caribbean, or Gibraltar. Most of the unregulated activity, however, comes from operators licensed in other EU states, many of whom accept German players. At the same time, German authorities appear to tolerate these semi-legal gambling sites.
The legal landscape has changed dramatically over the past decade, with new rules passed by one administration only to be overturned by the next. Until 2008, online gambling was unregulated nationwide. This changed with the State Treaty on Gambling, also known as the Interstate Treaty, which prohibited online casinos in all 16 states. Meanwhile, land-based casino operations are regulated at the state level rather than the federal level. Sports betting can be offered online, and state lottery and bingo products are allowed in some states.
German Casinos
Bookmakers and Horse Racing Operations
Other Gambling ActivitiesRegulatory Authority
There is no single regulatory body responsible for supervising all gambling operations in Germany. The federal states have autonomy when it comes to regulating land-based casinos, betting shops, and other legal betting and gambling operations. Online sportsbooks need to apply for a license from the Regional Council in Darmstadt, in the State of Hesse.
In Schleswig-Holstein, the only state where online casinos are currently legal, the Ministry of the Interior acts as the main regulatory body for this form of gambling. It is primarily responsible for ensuring that these operations are carried out in a safe and legal manner. Since the Ministry lacks specific expertise in online gambling, particularly online casinos and poker rooms, it does not grant new licenses or issue guidelines regarding responsible gambling policies, payments, and similar matters.
The reform expected to take effect in the German gambling market in mid-2021 will also lay the foundation for a national regulator. The new authority will be based in Sachsen-Anhalt, and it will probably outline further details of the new federal gambling legislation.
The new authority, the Joint Gambling Authority of the Federal States, will also be based in Sachsen-Anhalt and is expected to clarify further details of the federal gambling legislation. However, until the 16 states reach a consensus on the proposed federal law, this new regulatory body will not be able to carry out all of its responsibilities.