Germany dreams of meaningful change in upcoming legal review

Germany’s often-criticised online gambling rules are up for review this year, with the regulated industry hoping that a report due by the end of 2026 will recommend serious upgrades.

Now over five years since the launch of fresh online gambling regulations defined by the Interstate Treaty, Germany is taking a long hard look at whether anything needs to change.

The country’s Federal states are mandated by law to produce a report before the end of this year that will lay out areas in need of reform that could then form the basis of a new treaty.

The industry is being advised to prepare itself to make its feelings known.

“Operators should monitor the evaluation process and prepare evidence-based positions on the effectiveness and proportionality of the current rules,” advise lawyers from Taylor Wessing in Germany.

Many in the industry would argue that the entire system needs to be ripped up and replaced, with what they characterise as restrictive rules that make it harder to compete against the black market.

Offshore concerns

Estimates of how much online gambling is channeled into the regulated market vary wildly.

National gambling regulator the GGL says that around 77% of money is wagered in the legal market. That is far higher than some other industry-funded estimates, which hover around 50%.

However the regulator argues that its survey, carried out by non-profit Blockchain Research Lab, is a more accurate assessment of how gambling cash is being spent.

Nevertheless the fact that a healthy chunk of gambling happening offshore is still concerning for officials and leaves Germany lagging behind most other nations in Europe.

Recent high profile disclosures by law enforcement have also strengthened the industry’s case that more needs to be done to protect and nurture the regulated sector.

Investigations by police in Frankfurt found that €5.86bn has been processed through illegal operators between July 2021 and the end of 2023.

“This successful investigation clearly demonstrates the scale that the illegal gambling market has now reached. We strongly welcome the fact that law enforcement agencies are taking decisive action in this area,” said the President of trade group DSWV, Mathias Dahms.

What needs to change?

From an industry perspective, several key issues continue to weigh on Germany’s regulated market.

These include the ambitious LUGAS system, which links every licensed operator together and manages the default €1,000 per year deposit limit.

The system also prevents users from being logged in to more than one operator at a time.

Another frequent source of concern has been the length of time it takes new content to be approved.

Under the rules of the treaty, the GGL has to assess every new game each time an operator adds it to their portfolio, even if they’ve seen it several times before in other assessments.

Rates of approvals have increased since the market launched, but there are high hopes that the process will be significantly streamlined as part of a new treaty.

Another major area of concern for online slots operators is the low limit set on maximum bets, but recent changes in this area have preempted the review.

Until July this year, there was a hard limit of €1 for all customers, but over the summer the GGL made a surprise announcement that they were raising the cap.

The regulator is in the midst of a trial during which players aged over 21 can bet a maxim of €3 per spin. If these players display no signs of problem gambling during a 90-day period, that limit can be raised to €5.

The trial is set to run until December 31, 2027 and operators must apply to the GGL to take part.

The lack of provision of online table games is also a concern likely to be pushed by the industry as it lobbies for changes.

Currently only online slots are licensed at the national level, whereas each individual German state can choose whether or not to licence online table game operations itself.

Only a handful of states have chosen to do so and some of those have only approved their state lottery providers to offer these kinds of games.

Player refunds

There’s also the matter of player refunds, which continue to exert a lagging effect on the industry.

Numerous operators active during Germany’s grey market years, many of whom now posses licences, have been ordered to repay all losses to gamblers from that era.

The industry’s resistance to these court decisions has culminated in a series of cases before the Court of Justice of the European Union (CJEU).

So far these rulings have largely gone against the online industry, with one particularly pivotal final decision still to come.

Case C-530/24, also known as the Tipco Case, will decide whether or not sports betting offered online during the period before 2021 can be forced to pay out.

The early view of the Advocate General (AG), who advises the judges on their final ruling via a public opinion, suggests the pro-player will continue.

According to AG Emiliou, even if a deficient licence application process prevented an operator from obtaining a licence, they would still be required to issue refunds.

A final verdict is yet to be announced, but with many licences also up for renewal in 2027, an adverse finding could see some operators looking for the exit before they find themselves stuck with a bill for millions of euros in repayments.

“The next licensing cycle from 2027 for licenses that are due to expire, the outcome of the [Interstate Treaty] evaluation and the pending judgment in C-530/24 will be key drivers of regulatory risk and market strategy,” going forward, said the team at Taylor Wessing.