Germany is set to enact a new Interstate Treaty on Gambling that would reconfirm the prohibition of online gambling in all German states except one – Schleswig-Holstein. As the EU Commission reviews the treaty, research body MECN indicates online gaming in Germany will grow to €1.7bn by 2015, driven by poker and lotteries.
Before the new treaty comes into effect, lawmakers must determine whether online licensees in Schleswig-Holstein will be able to operate throughout the country. The German region passed its own gaming law in Sep 2011 that permits online poker and casino games. Three licenses have since been issued to Betfair, JAXX and state-owned Oddset.
There are many open issues that need to be resolved under the new treaty that will determine how the market will unfold. If approved by the EU Commission, the new law would ban online casinos and poker rooms in the country, leaving players to use offshore sites or turn to new sites located in Schleswig-Holstein that will cater to German customers.
Schleswig-Holstein, the county’s most northern state, was the only region not to sign the imposed treaty in Germany. Referred to as “ground-breaking” in the industry, the state’s break-away law was given the green-light by Brussels and enables an unlimited number of operators apply for a license, at a 20 percent tax rate.
Although Germany has historically been one of the most resistant jurisdictions towards online gambling, other states may look to adopt the model of Schleswig-Holstein in order to gain a share of the available profits.
New legislation would also effectively liberalise the German sports betting market, remove the state monopoly controlling the provision of gambling services and open the market to private companies. Ahead of this, MECN estimated that sports betting would grow to €1.5 billion in 2015, with retail operations leading the field.
Martin Oelbermann, co-author of the study, said, “Since the experience in France, liberalisation alone no longer automatically prompts applause…
…Aside from taxes, operators are also concerned about other regulations, such as advertising restrictions, online identification processes, IT systems.”
Germany’s existing nationwide treaty expired in March, but this did not end the political and industry discussions ahead of a clear market in Germany. Each area needs to be mapped out in detail by lawmakers before it is approved by the EU Commission and becomes law.
The subject of online gaming and whether the approved Schlewig-Holstein model can be applied to other German regions will be at the top of the agenda for online operators.
According to financial advisors Collins Stewart, Playtech generate approximately 10 percent of its sales in Germany, with Betfair and Sportingbet generating 5 percent and 4 percent respectively. It is reported that nearly 40 percent of bwin.party’s profit comes from Germany.