New regulations in Germany could heavily impact gambling

While the market in sports betting and online gambling has expended world-wide, legal uncertainty in Germany has had a dampening effect.

Published: December 8, 2020, 12:09 pm

    The betting and gambling industry continues to grow at a fast pace, and thus it is no surprise that the industry is expected to reach a value of over $127 billion by 2027. New jurisdictions, along with new forms of gambling, such as online gambling and sports betting, are expected to be the main drivers behind this growth. Thus, it can be interesting to see some of the markets where gambling has been growing over the last few years, since those are the ones where companies should focus on. The pandemic has had an impact in this regard as well, since many people turned to online gambling due to the various lockdowns globally which meant that physical casinos were shut. For example, Thailand and Colombia were the countries which saw a high increase in the interest in sports betting, as seen by the rise in the number of internet searches for sports betting this year. It is also interesting that while sports betting is illegal in Thailand, it was only recently made legal in Colombia. In terms of online casinos, Ukraine had the highest searches, and this is again linked to the fact that both online gambling and land-based casinos were legalized in the country last year. Thus, it can be seen as to how regulations and laws can have a big impact in terms of what people look for online, other than the obvious direct effect on the industry.

    With respect to this, it is important to take a look at the situation in Germany. The country has been in limbo for years regarding laws on online gambling and sports betting – in 2012, the 16 states in Germany passed an Interstate Treaty on Gambling, with a view to open up sports betting and make it a regulated market. However, no legal sports betting licenses have been issued since then, due to legal and political uncertainty. However, there finally seems to have been progress, with the states agreeing that having a regulated market is much better than a large black market, which led to a breakthrough regarding a new gambling law. This law is expected to come into force around July 2021, which will allow online casinos, online slots, online poker, as well as sports betting, to be conducted legally in Germany. It will also allow an unlimited number of sports betting providers to be registered, while online casino providers will be limited. At the same time, the state lotteries will continue to operate under the new regulation.

    However, this has not removed all the uncertainty. In April this year, the Darmstadt Administrative Court stopped the process of awarding sports betting licenses, due to a successful legal challenge by the Austrian sports betting company Vierklee. At the time of this ruling, 30 operators had applied for a license, with a further 20 expressing their intent to apply. If successful, this would have meant that 99% of German sports betting activity would have moved to the legal market. Various political issues and disagreements between the Conservatives and the Social Democrats have led to this stage, but it is important to note that restrictive regulations will not have a restorative effect on the industry – it will be the opposite. Some of the rules proposed in Germany, such as limited in-play markets for sports betting, banning live streaming on sports betting websites, and no advertising for online gambling online and on the radio between 6 am and 9 pm, could create a poor experience for customers, while also not being effective in hitting its aim, which is to protect players. Thus, it is hoped that the various parties can come to agreement by July 2021, to allow the German gambling market to finally come out of the shadows and into the mainstream.

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