Regulatory options for the German online gambling market

The German online gambling market is regulated by a treaty among the federal states (‘Glücksspielstaatsvertrag’, GlüStV). The pending revision of the GlüStV has triggered political discussions because although the states aim for uniform regulation at the national level, they pursue diverging interests, and even where their interests are aligned, they disagree about the means by which these interests are best achieved.

The ongoing discussion about the application and enforcement of the current GlüStV with its experimental clause on the awarding of licenses to private sports betting operators has yielded a state of the market which over the past several years has led to frictions among the federal states and which does not do justice to the regulatory aims stipulated in §1 of the treaty. Even though the sports betting licenses have yet to be awarded, sports betting is currently indeed being offered both by the operators who have applied for a license and by other operators who do not have a valid license in Germany. These operators do not abide by the conditions that would accompany a license, such as maximum stakes per player and per month or the ban on live betting. The exception are taxes that would apply when holding a license and that are currently already paid by some operators, who applied for a license. Casino games and poker, i.e. types of games for which licenses and thus markets were never envisaged, are being offered freely in Germany and are being advertised specifically to German customers because, since the operators are located abroad, court decisions including cease and desist orders prove to be ineffective at preventing such gambling offers. Furthermore, the state monopoly on lotteries is being diluted in the online arena by unlicensed secondary lotteries.

It is against this background that the last few years have seen the publication of a range of scientific studies on the market potential of online gambling, on expected tax revenues if the market is liberalised, on problem gambling and the addictive potential of individual types of games, on the potential crime associated with gambling, such as money laundering or sports betting fraud, as well as on the compatibility of national gambling regulation with European law. In sum, these studies in particular highlight the conflict between various regulatory aims and the lack of an easy solution. This conflict is exacerbated by the fact that, due to the digital and international nature of the online gambling market, regulatory enforcement is a bigger problem than it is in a local, terrestrial market.

This conflict of goals exists not only in Germany, and consequently, intense political debates on this topic also take place in other European countries. Thus, the question arises how Germany’s neighbour countries deal with this conflict. How do they regulate online gambling? Which goals drive their considerations? How are the different types of games offered online? Are they banned? Or are state monopolies or licensing systems for private operators in place and, if so, what is their design? How is the law enforced with respect to unlicensed operators? What institutions are involved in the regulation, and what are their powers? Is there a central regulating authority? How does the cooperation and coordination among all concerned parties work? Which concrete measures are taken, and how successful are they?

A detailed analysis of the regulatory framework, its implementation and its socio-economic effects in each of seven neighbour countries will provide a valuable basis for the debate on regulatory reform in Germany. This is precisely the motivation for this research project, which is supported by the following federal states:

• Baden-Württemberg
• Hamburg
• Mecklenburg-Vorpommern
• Niedersachsen
• Nordrhein-Westfalen
• Saarland
• Sachsen
• Sachsen-Anhalt
• Thüringen

An interim report on the project was submitted on 29 August 2018. The final report will be published at the end of the project in December 2019.