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German Gaming Laws A Work In Progress

Gaming laws across the planet are in a constant state of change as governments and private businesses hustle to grab revenues wherever they can. To help our readers keep up with these developments, CAP is taking a closer look at the current state of igaming in a number of key markets. This week we’re looking at Germany.

Germany, like a lot of other European countries, has been reluctant to legalize online gaming because it competes directly with their own gambling monopoly. But the European Union takes a hard line on trade barriers and that’s set up a long legal fight that’s finally coming to a conclusion.

iGaming Ban

Back in 2008, the German government instituted a nationwide ban on Internet gambling covering lotteries, table games and sports betting. Anti-iGaming legislation included provisions for ISPs to block certain sites and penalized banks handling gambling transactions. The motives behind the move were pretty straightforward, protecting the revenue streams from the government’s gaming monopoly. Only things didn’t work out quite the way the bureaucrats in Berlin planned.

Not only were state backed lotteries barred from advertising online, the European Union chided Germany for inhibiting free trade. If this sounds familiar, it’s because similar battles took place, or are still taking place, in Spain, Portugal and other Eurozone states.

Bwin vs. Germany

Internet gaming giant BwinParty sued Germany in European Union trade courts for millions of dollars in lost revenue, claiming the country was illegally protecting its monopoly. Bwin lost the early rounds in court but soldiered despite taking a hit in their stock prices.

In 2010, the German Supreme Court sided with Bwin, declaring the government efforts to protect lottery monopolies illegal. But Bwin’s victory was short lived as German officials slapped hefty taxes on gaming revenues generated in Deutschland. They also restricted the types of bets that could be placed and limited licensing to companies with land based casinos in Germany. Once again Bwin stock rode south.

Recommended reading: CAP’s Guide to Casino Affiliate Marketing in Germany

Schleswig-Holstein Rebellion

But not every German lander saw the wisdom of protecting lottery monopolies. In September of 2011, the parliament in Schleswig-Holstein voted by a narrow measure to allow online gaming. Their laws allowed most types of betting and taxed 20% tax on gross profits (which is a better deal for casinos).

Schleswig-Holstein’s plan was praised by the gaming industry as being more in tune with the rest of the EU. Domestic critics raised fears that the lander would become an electronic Las Vegas.

With or Without You

In December of 2011, the German government went ahead with a gaming treaty that stuck to their original plan, but did not include Schleswig-Holstein. The treaty calls for a 5 percent tax on bets and limits the country to only 20 gaming licenses.

As of this writing, it seems unlikely that the legal fight over German gaming has reached its conclusion. Don’t be surprised to see the German government engage in the type of bureaucratic foot dragging we’ve seen in places like Spain. When lottery sized amounts of revenue are at stake, there’s every incentive for European governments to fight gaming as hard as they can.

Do you think German gaming laws are unfair or do governments have a right to protect their financial interests at all costs? Let us know in our Online Gambling Laws and Regulation Forum.