Germany: The online state of play

2020 was an important year for online gambling regulation in Germany. In March, the 16 federal states agreed a new State Gambling Treaty (Glucksspielstaatsvertrag 2021 - GluStV 2021 for short), which will regulate countrywide online gambling from 1 July, 2021. In the fall, the first online sports betting licences under the current version of the State Gambling Treaty were issued. Finally, the German states introduced a transitional regime that allows reliable operators to offer gambling services, including virtual slots and online poker, without a licence pending the entry into force of the GluStV 2021.

GluStV 2021: Attention shifts to state parliaments

Before the GluStV 2021 can enter into force, the treaty must be ratified by at least 13 of Germany's 16 state parliaments. Debates on ratification have already kicked off in several states. Predictably, proponents of the GluStV 2021 believe a well-regulated and attractive market offers the best way to protect players, while opponents decry the risks that come with further liberalising a potentially harmful product. However, as the GluStV 2021 is already the result of a political compromise, ratification of the treaty by enough states should ordinarily not be a problem. Still, the possibility of unexpected political obstacles cannot be fully ruled out.

Legal certainty and the transitional regime

According to German legislation, all gambling services offered in the country must be licensed. Online sports betting operators who have been issued a license are thus on legally solid ground when offering sports betting services. For operators that also offer virtual slots and poker, the situation is more complex. Compliance with the transitional regime only protects against administrative sanctions. The transitional regime does not supersede the formal requirement that gambling offerings be licensed to be legal.

This means that, formally speaking, compliant operators are not protected from criminal or civil liability. In recent months, several disgruntled players have successfully reclaimed gambling losses in court, arguing that their contracts with operators (and even associated payment service providers) are unlawful and, therefore, void. It is unclear if, and to what extent, compliance with the transitional regime will offer protection against such claims. It should in any case be noted that non-compliance with the transitional regime means operators can be deemed not reliable, which will likely preclude these operators from being licensed in the future.

After the transitional regime

The transitional regime is set to expire with the entry into force of the GluStV 2021 on 1 July. From this date, all online operators that are active in Germany are expected to be fully licensed. This should, in theory, solve the legal uncertainties described above. Unfortunately, the new licensing authority, which will be established in the state of Saxony-Anhalt, does not yet exist. Furthermore, it's unclear whether the new licensing authority will, in fact, be ready to process license applications from 1 July onward. And even if the licensing authority will be up and running in time, the actual licence application process may take several months more.

At this point, we could end up, from July, with a licensing system without licences and even without a functioning licensing authority. Absent any further political action, providers of virtual slots or online poker are thus likely to remain in legal limbo for several months after the entry into force of the GluStV 2021, with all the uncertainty and restrictions this entails.

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