An interim appeal court ruling on secondary provisions of the German Interstate Treaty on Gambling is “pretty mind blowing” in the way it extends restrictions on marketing beyond operators to third parties such as affiliates and broadcasters, a gambling lawyer has said.
This suggests that enforcement could be directed against affiliates and broadcasters, according to Michelle Hembury of MELCHERS law firm.
The interim ruling, if fully imposed, would also complicate arguments that advertising restrictions hinder channelisation by driving gamblers to the black market, she said.
To argue that marketing rules drive players to unlicensed websites, operators “will have to dig deeper to explain your desired outcome”, she said.
Hembury was speaking on a webinar sponsored by the German Online Gambling Association (DOCV) on Wednesday (July 5), addressing a far-reaching higher administrative court ruling.
Last month’s Saxony-Anhalt court ruling, which should get a full hearing next year, held that most gambling marketing restrictions are legal, while a total ban on advertising in public places such as train stations or public transport is probably “disproportionate”.
Most of the virtual slots licensees (which now number 39) have sued the Joint Gaming Authority of the Federal States (GGL) over the marketing restrictions, which include a ban on streamers and social media influencers, Hembury said.
Their concerns centre on issues such as lack of clarity on the definition of “influencer”, something the ruling did not address, said Hembury.
Instead the ruling seemed to extend the authority of the regulator to base marketing restrictions not just on the limits set in the treaty, but also on its goals: to protect minors and players in general, sports integrity and channelisation, Hembury said.
So restrictions on marketing set by the GGL could be based not just on the direct provisions of the treaty, but also the more general concept of player protection, she said.
Operators have tried to argue that tight restrictions on advertising mean players will drift to the black market, where they can be enticed by better bonuses, free spins and a lack of restrictions such as five-second delays between spins.
But the court said although a goal of the treaty is to channel players away from the black market, it is not necessarily to channel them to the licensed market, according to Hembury.
That means operators who want to argue against restrictions will need data to support their arguments, she said.
It also makes the regulator’s efforts to crack down on the black market that much more important.
In its first annual report, the GGL said it found 843 unlicensed German-language sites across 207 operators, with the majority licensed outside the European Union.
It estimates the unlicensed market at €300m to €500m compared with a licensed and taxed online gambling market of €1.3bn, an estimate challenged by a DOCV executive who cited an upcoming academic study putting slots channelisation at only 50 percent.
In any case, the treaty forbids advertising slots between 6am and 9pm on TV, radio and the internet.
This also applies to affiliates, which raises the technical issue of how affiliates are meant to stop advertising slots on the internet during the forbidden hours, Hembury said.
One loophole, according to Hembury, is that sponsorships are allowed, which opens the door for brand advertising through sponsorships even during the day.
A sponsorship excludes promotion of a specific product, and the sponsor should not be in control of the promotion, Hembury said.