24 December, 2024 | JAN FEB 2025

Regulation in Germany: Let them work!

Dr Joerg Hofmann, Senior Partner at Melchers Law and regular Gambling Insider contributor, discusses the workings of the GGL in Germany. He asks: why shouldn’t the body be left alone to make its own independent decisions?

 In Germany, the proverbial “feather that breaks the balance” (tip the balance – the decisive factor) refers to a person or entity that ultimately determines the direction of decision-making processes. This can decide on “yes” or “no,” on “a lot” or “a little,” or on “pro” or “contra.” In the context of gaming regulation in Germany, its interpretation and application, there is such a “feather.” This, surprisingly for many (especially for observers from abroad) lies outside the competent authority. It is the Administrative Board of the Gemeinsame Glücksspielbehörde der Länder (GGL). To understand how and why decision-making processes in pivotal matters of German gambling regulation and supervision often occur outside of official structures and can thus be lengthy, one must take a look at the processes stipulated by the Interstate Treaty on Gambling and the participation structures of the federal states. The German Gambling Supervisory Authority (GGL) is a public law institution. It is owned and funded by the 16 German states.

It has two co-Chairs, currently and temporarily only one, namely Ronald Benter. The second position is currently vacant. Another body of the GGL is the Administrative Board. Each federal state sends a representative to this board. These are usually senior ministerial officials from the federal states’ ministries competent for gambling supervision.  The Interstate Treaty on Gambling grants the Administrative Boards significant decision-making power by stipulating: “The Administrative Board decides on binding decision guidelines for the Board of Directors in essential matters. It may decide on further decision-making guidelines and instructions in individual cases.” This means the Administrative Board has the authority to issue directives. It can provide the GGL with directional guidelines or even issue specific instructions. Examples include sample licences, guidelines for conducting legal proceedings or enforcement against illegal operators, interpretation of regulations, or simply specific instructions in individual administrative procedures.

This is intended to ensure the political influence of the federal states on the application of the Interstate Treaty on Gambling. What does this mean in concrete terms? Let’s take a typical (small) matter. At the end of 2024, the permits for deviating from the monthly deposit limit of players expired. The standard limit is €1,000 ($1,055). It could be increased to €10,000 in individual cases under certain conditions and up to €30,000 per player per month under further increased requirements. Without a new decision, the possibility of an increase would have lapsed on 31 December 2024. From 1 January 2025, all players would only have been able to deposit a maximum of €1,000 per month into their gambling account. This limit applies across operators and is monitored by the GGL through the LUGAS server system. Not least in the context of a partial evaluation of the Interstate Treaty on Gambling, there was consideration of fundamentally revising this regulation. It was unpredictable what a better alternative from the states’ perspective might look like.  As the end of the year approached, uncertainty grew as to whether and with what content a new regulation would be decided in time. Numerous licensed operators had finally submitted precautionary applications in October or November 2024, to extend the existing regulation by administrative act until further notice. It became apparent that the GGL could not make a decision without consulting the Administrative Board. The Board placed the issue on its agenda for the meeting on 21 November 2024. The result: No agreement could be reached on a new regulation. So it was decided to extend the existing practice by one year.

This process is symptomatic. Decision-making paths in important matters have been decentralised away from the GGL.

This significantly increases the duration of procedures: important decisions are delayed. Operators from abroad find it difficult to understand why the GGL, as a specialised authority with nationwide competence, cannot simply make the decision here. It possesses maximum expertise, knows the market, its operators and can assess how urgent the need for adjustments may be in individual matters.

This is due to the federal system. The states have established the GGL on a contractual basis. They all want to have a say. This involves political influence, which sidelines the developed competence of the authority if the political course does not fit. In the long run, this leads to a paralysis of the GGL’s ability to act.

In federal law, it is different. Based on federal legislation, authorities are established, whose actions are bound by law and order but are otherwise determined autonomously by the authority’s leadership in matters of substance. The greater independence given here creates faster and competence-oriented decision-making processes, which, unfortunately, the GGL can only dream of.

To improve the situation in terms of appropriate gambling policy, no change to the federal system is needed. The Administrative Board itself can step back and leave the business to the officials it has entrusted. Just let the guys do their job!

In the Magazine