German Casino Regulation Called Cumbersome Compromise

October 26, 2021
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The planned German state-by-state licensing system for online casino games is a “patchwork quilt with no chance of a functioning legal market”, an online gambling executive has said.

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The planned German state-by-state licensing system for online casino games is a “patchwork quilt with no chance of a functioning legal market”, an online gambling executive has said.

The licensing system for online blackjack, roulette and baccarat should be nationwide, like the one for sports betting and online slots and poker, said Dirk Quermann, president of the German Online Casino Association (DOCV).

Instead, the current system will probably deliver more than half the 16 states to state-owned monopolies, he said.

Regulations for online casino mirror those of land-based, although the restrictions make no sense in cyberspace, Quermann argued.

For example, a five-minute mandatory wait in switching between online gambling operators emulates a 500-metre gap between slots arcades in many states for no logical reason, he said.

“You have to walk five minutes to the next spielhall (arcade), online you have to wait five minutes,” said Quermann, who is also chief executive of Merkur Media, part of the Gauselmann Group.

Mathias Dahms of the German Sports Betting Association (DSWV) joked that a mandatory gap in switching between sports betting and online casino was like requiring an interval between drinking red wine and white wine.

Both men were speaking at the Gaming in Germany conference in Berlin on Monday.

The good news is that online casino is no longer banned, that there will be a central regulator and that there is a national self-exclusion register being developed, Quermann said. It is also positive that online slots and poker have national licensing, he said.

Officials from Hamburg and Schleswig-Holstein appointed to run the regulator are experienced and “we can talk with them”, he said.

But flaws include required mechanics such as the mandatory delays, €1 maximum stakes and five-second slots spins. These “deep interventions” make games so unattractive that many players will turn to unlicensed operators, the DOCV executive claimed.

Quermann predicted that online casino channelisation, or the percentage of German players that stay within the regulated market, would be “way under 50 percent” due to such factors, plus high tax rates.

Sports betting might fare better, as Dahms predicted a 65 percent to 80 percent channelisation rate.

Dahms said that licensing, flawed in the industry’s eyes as it might be, means that Germany will no longer be a grey market for gambling. It is now a black-and-white market: if you are not licensed, you are clearly illegal.

Both trade associations are pressing for regulators to set a cut-off date by which time gambling companies would either need to have received a licence, applied for one or shut down completely.

So far, North Rhine-Westphalia and Schleswig-Holstein have declared their intent to hold licensing programmes for online table games and Rhineland-Palatinate may join them, Quermann said during a break in proceedings.

Bavaria, Brandenburg and Saxony say they plan to set up monopoly providers and others will likely follow, the two trade groups said.

In fact, several eastern states are planning to join together behind a single state monopoly provider, probably run by Saxony, Quermann said.

Several options for change would be desirable, according to Quermann.

The treaty could be completely reworked, although that is a process that would take three to five years.

It could be reworked paragraph by paragraph or the system could be revised to a new framework without details, with the regulator able to fill in the specifics as needed, he said.

One academic tried to remind industry executives that the situation could have been worse.

Tilman Becker, former director of the Gambling Research Center at the University of Hohenheim, said that the state treaty was the result of political compromises between the Social Democrats and Christian Democrats.

Without some of the features that industry finds burdensome, such as the central databases meant to manage the mandatory waiting system, “there would have been no interstate gambling treaty”, he said.

The idea emerged from a North Rhine-Westphalia regulator who “thought it was a very good solution: it solved his political problem, not a responsible gambling problem”, Becker said.

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