Issue link: https://maltatoday.uberflip.com/i/1097443
28.03.19 12 OPINION George Mangion George M. Mangion is a senior partner of PKF Malta, an audit and consultancy firm | gmm@pkfmalta.com O ne thing I can tell readers is that online gambling is popular in Germany. More importantly, not a single German has ever got in trouble by placing a bet over the internet. Having said that, Germany is one of those places where it's defi nitely illegal to host a gaming site, but the legality of just placing bets online is uncl ear. Legal bat- tles in Germany mostly revolve around the right of operators to off er their ser- vices to the public. e diffi culty in discussing the German market is that the laws have experienced a great deal of turbulence in recent times. Adding to the confusion is the ability of each state to regulate gambling how it sees fi t. Many will tell you that Germany has a mix of wide-reaching national laws regulated by more limited state laws. Up until 2008, online gambling was unregulated in Germany. As can be ex- pected, the laws previous to 2008, didn't address the internet in any way. ings changed when the Interstate Treaty on Gambling was passed in 2008. is ef- fectively banned all forms of online gam- bling other than sports betting and horse racing off ered by state-owned monopo- lies. As can be seen in this article, some forms of betting are allowed in some states while most others are banned. It was more than six years ago that I travelled to the German state of Schle- swig-Holstein where at an impromptu organised conference, I enjoyed listen- ing to a debate by experts on the topic of online licenses that were planned to be issued on an exclusive basis in this northern state. Looking back with nostalgia, one lauds the legislative adventure pioneered by Schleswig-Holstein which led to the issue of a limited number of gaming li- censes. ese licenses are still valid but they are limited in scope to the territory of Schleswig Holstein and were due to expire in 2018. From January 2012 until February 2013, the state of Schleswig-Holstein pursued its own gambling policy, which included granting online casino and sports bet- ting licences at the same time, omitting to join the complete ban instituted by the other 15 states in the Interstate Trea- ty. No doubt, this unilateral move creat- ed an anomaly and it was in March 2017 when there was a collective drive by all leaders of Germany's 16 Länder to regu- larise the situation. ey voted to approve a new Interstate Treaty on Gambling. is had to take ef- fect on 1st January 2018. In essence, the Interstate Treaty generally prohibits the operation and brokerage of online games of chance. e only exceptions concern sports betting, horse race betting and state lotteries. Online casinos therefore are not cur- rently licensable. Such restrictions were challenged under the EU law and test cases have instituted more pressure on Germany to relax its online prohibition. Slowly, this led to reforms that were in- itiated by the 16 Lander at the end of 2016. Unfortunately, these are referred to as minimalist reforms since they only concern sports betting. But an over-arching condition of the Interstate legislation required the unani- mous approval of each state's legislature. e fl y in the ointment was that legisla- tors in Schleswig-Holstein voted to opt out of the treaty. In a curious twist of leg- islative history, Schleswig-Holstein had announced its intention to team with the state governments in North Rhine-West- phalia, Rhineland-Palatinate and Hesse on a new regulatory scheme based on its own original licensing regime. It hoped the rest of the states would eventually join. Sadly, the horse was taken to the water but refused to drink. All this in a coun- try with the largest economy in the EU family and it is not a surprise how online prohibition has consistently led to the industry's growing impatience with the country's 16 states in their failure to put together a cohesive strategy. In fact, only three years ago, the EU ruled that Germany cannot continue to penalise or restrict unlicensed foreign operators, because it made it impossible for them to acquire licenses. e only ex- emption was Schleswig-Holstein, which as stated above, has challenged the rest and allowed for online casino licences to be issued. e good news for gaming operators that went through the trouble of get- ting licensed in 2012/3, this empowered them to operate under a six-year license. ese included real money casino games and poker to players within the state of Schleswig-Holstein until end 2018. As things stand now, online gambling is largely outlawed across Germany with the exception of the two dozen or so op- erators who signed licenses to operate in Schleswig-Holstein. ere are no other legal gaming sites in the 15 Landers and there's no way to obtain a valid license to off er games. Recently talks started to pave the way for an interim solution. is agreement opens the way for the state of Hesse to start accepting applications for sports betting licences. e state of Schle- swig-Holstein which had previously bro- ken away from the inter-state treaty to set up its own online gambling licensing system which expired last year, will grant a short extension to its 23 licence hold- ers till June 2021. Quoting Steinkrauss (managing direc- tor of Merkur Sportwetten): "A new li- censing process will take place with per- mits beginning in 2020 without a limit on the number, but would only be valid until June 2021, which is a quite unrea- sonably short time-frame." He said that the agreement was no more than "an interim plaster rather than a long-term solution". e unhappy situation for foreign op- erators is that the status quo will prevail in Germany for the foreseeable future. Does this mean German-facing sports betting operators holding licenses in other European Union jurisdictions can continue to serve their German punters provided they pay attention to anti-money laundering responsibilities and don't violate advertising restric- tions. One cannot but mention the deleteri- ous eff ect in the media by the publish- ing of the so-called "Panama Papers" in November 2017. Newspapers comment- ed on the role of various large German banks which were involved in payment transactions for private gambling oper- ators. e pay-out of winnings arising from supposedly unlawful gambling could be regarded as money laundry resulting out of aiding and abetting the illegal organi- sation of gambling. is has added more pressure on state regulators to tighten the screws on casino operators especial- ly where AML rules are concerned. No doubt, it will further strengthen their resolve to maintain the status quo on the uncertain licensing regime pre- vailing in Germany. Online gaming in Germany - a legal minefield Only three years ago, the EU ruled that Germany cannot continue to penalise or restrict unlicensed foreign operators, because it made it impossible for them to acquire licenses