The new German gambling regulation, the State Treaty on Gambling 2021 (Glücksspielstaatsvertrag 2021 = GlüStV 2021), will bring substantial changes to the German gambling regulation. There will be new licensing options for online poker, virtual slots and online casino (table) games and current licensing options – e.g. for sports betting and for lotteries – will be extended. But the licences will also be subject to very detailed licensing restrictions and the enforcement against illegal gambling will be strengthened.

The German states have adopted a transitional regime that allows for a transition from unlicensed to licensed sports betting, virtual slots and online poker operation under the GlüStV 2021.

What many casino fans, who occasionally spin a few rounds of roulette or slots, do not know: Online Gambling in Deutschland (Germany) is actually illegal. The State Treaty on Gambling does provide for the granting of licenses for the sports betting segment. However, online casinos are not covered by this step towards legalization. Although gambling is illegal in mainland China, Macau is a gambling haven. 50% of Macau’s revenue is made up from gambling alone. In 2018 the city made almost $38 billion. The number of online gambling websites around the world suddenly ballooned from a handful to hundreds. By 1998, reports suggested online gambling revenues were upwards of $800 million. US LAWMAKERS START LOOKING. A year later, the US Senate made its first attempt to ban online gambling, introducing the Internet Gambling Prohibition Act.

This transitional regime will factually tolerate sports betting, online poker and virtual slots without a German licence. The transitional requirements for sports betting are less strict than those for virtual slots and online poker:

• The prerequisite for the toleration of virtual slots and online poker is that the operators comply with the technically feasible player protection requirements of the GlüStV 2021. Gambling services that do not comply with this transitional regime (e.g. online casino table games such as Roulette or Black Jack) need to be stopped. The – unreasonably short – deadline to comply is 15 October 2020.
• Operators who offer only sports betting (and no poker, virtual slots or online casino games) need to have applied for a German sports betting licence in the current licensing procedure even if issuing the licences is currently stopped by a court decision. But compliance with further requirements is expected only after the licence has been issued.

In addition to the transitional regime, the German gambling authorities have published guidelines that demonstrate which GlüStV 2021 requirements are deemed to be “technically feasible” at the moment and which need to be complied with by the virtual slots and online poker operators by 15 October 2020. The general requirements include:

• A registered office in the EU or EEA,
• A German website with necessary information in German,
• Exclusion of minors (under the age of 18) by means of identification and authentication based on the German youth protection requirements including verification of the player’s details,
• A (website) domain-related monthly deposit limit of 1000 EUR per player,
• A “panic button” that leads to a 24 hour exclusion,
• No advertising for unlicensed gambling including virtual slots and online poker.

There are also additional special requirements for virtual slots and online casino:

• Virtual slots may not be referred to as “casino” or “casino games” and auto-play is prohibited. A grace period is granted for the adoption of further requirements for virtual slots: The operators need to make sure that a virtual slots game lasts at least for 5 seconds and the stake is limited to 1 EUR per game by 15 December 2020.
• In online poker, the assignment of players to a virtual table must be random and only poker variants without a banker are allowed.

The agreement on the transitional regime mentions that the gambling authorities will take action against operators that do not comply with the transitional regime requirements after 15 October 2020. Non-compliance can not only lead to prohibition orders and payment blocking but also to the allegation of being “unreliable” which would mean that a licence could be denied in a future licensing procedure.

The new licensing procedures will not start before 1 July 20201. Although the notification of the GlüStV 2021 has already been completed, the (now slightly amended) draft of the new law still needs to be signed by the heads of the federal states. The signature should take place at their next meeting from 28 to 30 October 2020. Afterwards the GlüStV 2021 needs to be ratified by at least 13 of the 16 German states by 30 April 2021 in order to enter into force on 1 July 2021.

Transitional regime guidelines published – unofficial translation below:

The District Court of Munich recently refused to make a German man pay his Visa credit card bill, because the charges were made to fund his illegal gambling habit. The lawsuit was filed by Landesbank Berlin AG, which issued the man’s Visa credit account.

According to the German legal advisory site, Anwalt, the unidentified German man played at an unspecified internationally license online casino. Under German law, offshore online casinos are illegal.

Also under German law, the man should have been compelled to pay his credit card charges. Anwalt stated that he admitted to making the charges, but he argued that Landesbank Berlin should never have allowed him to do so.

Since online casino gambling is strictly forbidden in Germany, the man argued that the bank should have blocked his transactions.

Used MCC Code 7995

The German Federal Court of Justice’s case law stated that banks agreed to fulfill the obligations of cardholders to merchants, but they have no special obligations to fulfill the transaction if it is illegal.

The bank cannot plead ignorant, because the transaction used the Merchant Category Code (MCC) 7995, which denotes a gambling-specific charge. The bank also applied special fees for processing “lottery, betting, and casino sales”.

In short, Landesbank Berlin AG (pictured above) knew the charges were gambling-related.

German Banks and the Paradise Papers

German banks have come under scrutiny in recent years due to their facilitation of gambling payments. When the Paradise Papers were released in November 2017, it revealed that several of Germany’s top financial institutions were facilitating payments to international gambling operators.

The release of the documents from the legal firm Appleby, along with corporate services providers Estera and Asiaciti Trust, were particularly embarrassing to a number of big names worldwide: Queen Elizabeth II, Prince Charles, President of Colombia Juan Manuel Santos, U.S Secretary of Commerce Wilbur Ross, and AIG. The Paradise Papers’ release caused criminal investigations in Switzerland and Argentina. The evidence of the global elite’s unsavory financial dealings sparked a new wave of reforms in the European Union, while it caused political uproar in Turkey and Angola.

Online Gambling Banned In Germany

The Paradise Papers caused audits of financial institutions in India and South Korea. In Germany, the release of the papers by the International Consortium of Investigative Journalists caused scrutiny of Germany’s financial institutions’ payment processing, especially in illicit activities like online gambling.

German Gambler Could Face Fine

While one might be tempted to think the unidentified German gambler got away scot free, that might not be the case if German authorities decide to charge him with “participation in unlawful gambling“. Now that he has admitted to such an act in open court, he exposes him to certain legal backlash.

In 2015, a German man was forced to pay back €63,000 in gambling winnings on a Gibraltar-based site, because he had won the cash through illegal activities. In that case, the man not only lost his winnings, but a Munich court forced him to pay a €2,100 fine as restitution for his misdeeds.

Beyond that, being sued by the bank which issued your Visa credit card sounds like a good way to hurt one’s credit score. The bank is going to report the delinquent payments and might well cancel the card. If the player ran up a huge credit card debt, perhaps he had no other choice.

German Online Gambling Law

Germany’s online gambling laws have been a source of strife and ridicule for most of the past 10 years. The state and federal governments cannot come to an uniform set of policies regarding online gambling.

Is Online Gambling Illegal In Germany Now

Online sportsbooks continue to operate, but the European Union believes Germany protects its domestic gaming companies with one-sided statutes. A German court last year upheld its online casino ban, though many see the law upending EU international laws on fair commerce.

Is Online Gambling Allowed In Germany

Meanwhile, the northern state of Schleswig-Holstein continues to take an entirely different tack than most German states. One would expect Germany to eventually decide on a sensible online gambling law, but under German law, all 16 states have to agree to the same policy for that happen.