The Curious Case of Schleswig-Holstein – Online Gambling in Germany

The Curious Case of Schleswig-Holstein – Online Gambling in Germany

Anyone that keeps up with online gambling in various countries across Europe and beyond will know that the laws and regulations surrounding such activities are rarely cut and dried. At one end of the scale, we have the likes of Finland, where the government takes the approach that players are adults and can largely do as they please, and at the other we have perhaps the most famous case of all in the USA, where online gambling was essentially banned outright in the mid-2000s in a climate that is only recently thawing.

Many of the issues stem from the fact that legislation surrounding online gambling never seems to be a priority. Some countries, like the UK, stepped up and decided to take charge in a manner that suited almost all parties. As one of the most valuable gambling locations in the world, the practice was unlikely to ever be banned outright and many of the big-name operators there continue to be just as big today, just with increased oversight from the Gambling Commission.

Germany represents one of those cases where plans for legislation seem to have dropped to the bottom of the in-tray. Perhaps the most surprising aspect of this is the fact that the German gambling industry is worth over €10 billion, and that is the kind of number that every casino would like a piece of. Technically speaking, at least on a national level, online casinos cannot be physically located within Germany. This, naturally, leads players to offshore operators and everything becomes even more complex. Legally, players are free to visit these offshore sites and to create an account. However, from the moment that they place any bet on a game of chance, such as a slot machine, they are in breach of the law. We would argue that doing so does not constitute the crime of the century and the authorities would seem to agree. Nobody has ever been prosecuted for playing at an online casino and we would venture that they never will be.

According to Online Casino Deutschland, four of the best online casinos for German players currently are Lapalingo, Casumo, Omni Slots and 888 Casino. Lapalingo is operated by Rabbit Entertainment, which is licensed and located in Malta, and that is also the case for Casumo. These brands do not actively market to German players, outside of making the sites and the games available in the German language and so they clearly never have any case to answer.

The uncertainty surrounding gambling laws in Germany has had some impact on players. Both Novomatic and Gauselmann took the decision, in 2018 and 2017 respectively, to pull their games from online casinos. However, they are special cases as a significant percentage of revenues for both companies comes from land-based gambling in Germany. Crucially, those percentages far exceed the revenue derived from online German players and the decisions were clearly taken to protect their interests going forward – while the German government has little or no jurisdiction over Malta-based companies, they most certainly could hit Novomatic and Merkur where it hurts across their offline networks.

Even optimistically, German online gambling laws can be considered as being confused at best. However, in an unprecedented move, an individual state decided to take the bull by the horns. In 2011, the local government of Schleswig-Holstein decided that it was going to establish its own gambling laws. This was related to the Interstate Treaty on Gambling, which looked to impose strict restrictions on gambling operators in Germany – officially for the purposes of preventing addiction and fraud. Online gambling was barely mentioned in the treaty but, nevertheless, 15 of the 16 German states agreed to it. The one that did not sign up? Schleswig-Holstein.

The state went ahead and started to issue gambling licenses. Referring once more to Online Casino Deutschland, some of the most popular German casinos hold such a licence, particularly those that are focused exclusively on the German market. Bigger names, once more escaping the jurisdiction of the German government, continue to operate in the country under licenses from the likes of the Malta Gaming Authority.

Since the initial Schleswig-Holstein licenses were awarded, the government has changed leadership, with the new legislators signalling their intention to join the Interstate Treaty. The licenses expired at the end of 2018 following their prescribed six-year terms. As a result, GVC Holdings, which operates brands such as bwin, Ladbrokes and Eurobet, stopped accepting PayPal in Germany in preparation for the expiration of the licence. While the company did not clarify the reasoning in full, it has been speculated that it was an effort to avoid sanctions related to the regulatory situation surrounding wagering in Germany. PayPal was notoriously gambling averse in the early days, and while it is now a respected and widely accepted at casinos throughout Europe and beyond, we cannot imagine that the company would take kindly to its services being utilised in a manner that is even technically against the law.

As things stand, Schleswig-Holstein licenses have been largely phased out, and German players are encouraged to seek out MGA-licensed casinos that are based outside the country for their casino fix. German rules and regulations are still up in the air, not least because the majority of proposals that have been made so far have fallen foul of EU competition laws. There are plenty of options out there – resources such as Online Casino Deutschland are dedicated to reviewing and ranking the top casinos for German players. Those players will undoubtedly be happy to continue as they were for the time being, as a resolution and clarity do not seem to be on the imminent horizon.