Germany Gambling Regulation

Gambling Legislation imageAs 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, as well. Unlike in most countries in the EU, 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 the only form of legal interactive gambling has remained sports betting. 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, around €10 billion came from land-based operations, including casinos, lotteries, and gaming machines, while the rest was from the growing online gambling sector. The size of the illegal gambling market (mostly online operations) was estimated to be between €4 and €22 billion by researchers.

Obviously, the illegal status of online casinos has not stopped Germans from visiting them and playing there on a regular basis. The regional inconsistencies and the popularity of unregulated offshore casino sites have urged governments to introduce a new legal framework that would cover the entire industry. In March 2020, lawmakers approved new regulations that should come into force 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, with the exception of Schleswig-Holstein. In reality, thousands of Germans prefer to play at illegal gambling sites, based in Malta, the Caribbean, or in 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 seem to be tolerating such semi-legal gambling sites.

The legal landscape has gone through dramatic changes in the past decade, with new rules being passed by one administration only to be overturned by the next local government. Until 2008, online gambling was unregulated throughout the country. 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 not on a federal but on a state level. Sports betting can be offered online, along with state lottery and bingo products, which are allowed in some states.

German Casinos
Bookmakers and Horse Racing Operations
Other Gambling Activities

Key Pieces of Legislation

The State Treaty on Gambling

Second Interstate Treaty

Third Interstate Treaty

The Special Case of Schleswig-Holstein

Gambling Reform: Third State Treaty on Gambling

The State Treaty on Gambling in Germany was the first federal law to deal with online casino gambling. All 16 states in the Federal Republic agreed upon it and the legislation came into force on January 1, 2008, practically prohibiting all online casinos and establishing a state monopoly on online betting.

The main purpose of this federal legislative framework was to prevent compulsive gambling and ensure the protection of minors and players. However, the Treaty was challenged by European authorities and on September 8, 2010, the European Court of Justice ruled that the state monopoly on sports betting under the original treaty violated European law.

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Regulatory Authority

casino licence imageThere is no single regulatory body responsible for the supervision of all gambling operations in Germany. The federal states have autonomy when it comes to regulating land-based casinos, betting shops, or 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. Of course, it is mainly responsible for ensuring that these operations are carried out in a safe and legal manner. Since the Ministry does not have specific expertise when it comes to online gambling and online casinos and poker rooms, in particular, it does not grant new licenses or issue various guidelines regarding responsible gambling policies, payments, etc.

The new reform expected to hit the German gambling market in mid-2021 will also lay the foundations 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 be based in Sachsen-Anhalt and it will probably outline further details of the new federal gambling legislation. However, until a consensus is found between the 16 states regarding the proposed federal law, this new regulatory body would not be able to carry out all its responsibilities.