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(Jamma) One year after the first amendment to the Interstate Gambling Treaty in Germany, the limited opening of the sports betting market is still struggling to take off. This confirms the concerns of leading European gaming companies and the European Commission about German regulation and its implementation.
The interstate treaty amending the previous gambling regulations came into force on July 1, 2012, announcing gambling reform in Germany after the European Court of Justice (ECJ) ruled that German regulation in 2010 violated European law. Under the terms of the treaty, the market is only open to 20 sports betting operators for a period of seven years. In doing so, the treaty aims to channel the black market into legal loops and combat gambling addiction.
The European Commission has repeatedly expressed its concerns about the German legislation, in particular in relation to the problematic limitation of suppliers and the lack of consideration of online poker and casino games in the Treaty. The Commission does not understand how limiting the total number of licenses could be an appropriate means of achieving the objectives set. Combined with the narrow boundaries imposed on the organization of sports betting, the limitation makes it extremely difficult to provide an attractive (online) sports betting offer in Germany.
The Commission's concerns now appear to be confirmed: a year after its entry into force, the new sports betting regulation has proved a failure. A year of the seven years foreseen for licensing has already passed without any sports betting provider being admitted to the market. The procedure chosen by the federal heads of state for issuing the 20 sports betting licenses does not meet European requirements: it has failed to provide candidates with clear, transparent and reliable information on the tender criteria to be used. This has led to numerous lawsuits by suppliers and several licensing deferments by the administration. It is not yet clear when exactly the licenses will be granted and authorities expect up to 80 proceedings, relating to both unsuccessful applicants and licensees. Furthermore, providers of online casino games and poker are not part of the limited market opening, despite the fact that this segment accounts for a large share of the sports betting market.
Maarten Haijer, EGBA Secretary General, said: “Many questions regarding sports betting remain unanswered in Germany, despite the fact that the tender process has been ongoing for months. Even if the allocation is successful, the result will be market regulation which will bring disadvantages for all involved – not only for suppliers and authorities, but also for the amateur and professional sports sectors and for the advertising sector, which are closely dependent on the betting providers”.
EGBA believes that the Commission's concerns can only be overcome if the regulatory approach is completely overhauled or the tender process is restarted. In any case, the German legislation constitutes a unique model in Europe. In other European countries, suppliers are admitted to the market on the basis of a comprehensive catalog of criteria. Furthermore, the betting licensing procedure practiced in Schleswig-Holstein since 2011 represents an example of successful regulation within Germany itself: there, licenses are granted only to suppliers who can demonstrate high reliability, quality, profitability and security criteria. These procedures have proven their success in practice and have not led to any of the delays or legal battles that have occurred in the rest of Germany.
“Germany is a prime example of how a political compromise that nobody wants to disregard can lead to bad procedure. – said Maarten Haijer – For our members who are active throughout Europe, the German approach is simply incomprehensible in the context of European legislation”.
In light of the procedural problems in licensing, the realization of the political objectives that had legitimized the adoption of the Interstate Treaty such as the need to channel the black market and combat gambling addiction fell into the background. The European Commission expects an intensive evaluation of the German regulation in the context of an investigation into the Interstate Treaty by 2014. The procedure used to issue licenses should be evaluated.
German consumers have the right to receive an efficient and regulated offer which satisfies the demand for digital entertainment and which saves the consumer from gambling online in Asia. To support proposed gambling policies and make its expertise available to national policy makers and other stakeholders, EGBA will very soon establish a branch office in Berlin to represent the online sector.
