German Regulator's Tough Licensing Stance May Create Operator Dilemma

June 1, 2022
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The new German regulator has confirmed it is taking a strict stance on enforcing online slots and poker licensing when it assumes authority on July 1, a position that could open those awaiting news on their application to enforcement.

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The new German regulator has confirmed it is taking a strict stance on enforcing online slots and poker licensing when it assumes authority on July 1, a position that could open those awaiting news on their application to enforcement.

The statement deepens the uncertainty surrounding online gambling companies that may have submitted applications months ago but are still awaiting licence approval.

Germany’s top online casino trade group said it believes companies that submitted applications soon after the July 1 opening of licensing last year are probably on solid ground, but one gambling attorney warns that anyone without a licence is still “strictly speaking, illegal under German law”.

There is so far only one virtual slots licensee on Germany's so-called white list, the list of approved licensees updated monthly: Mernov, based in Gauselmann offices in Espelkamp.

All other applicants for virtual slots and poker licences have so far been left guessing as to whether they will be at risk of penalties from July 1, when the Joint Gaming Authority for the Federal States (GGL) gains website and payments blocking power.

Companies have been operating since October 2020 on a transitional agreement that promised toleration of unlicensed status if companies met strict rules required with licensing, such as €1 slots stakes.

A statement from the GGL appears to leave not much wiggle room.

“Providers who are not on the white list can expect regulatory action”, a spokeswoman told VIXIO GamblingCompliance. “There will be no condoning of online gambling operators that are not white-listed”.

The German Online Casino Association (DOCV), however, said it is not uncomfortable with the seemingly harsh stand.

In talks with the GGL’s board, members made it clear that they considered the toleration agreement finished with the granting of the first licence, said DOCV president Dirk Quermann.

But if an operator had already submitted a complete application some time ago and did not yet have a permit through no fault of their own, “it would be taken into account positively in the enforcement process”, Quermann said.

The trade group had recommended that its members submit a complete application as soon as possible after the opening of the licensing period on July 1, 2021, he said.

“We already advised all members and market participants last year to submit a complete application promptly after July 1, 2021, and to cooperate with the administrative office”, Quermann said. “The companies that have followed this advice will thus not face any great hardship for some time after July 1, 2022.”

But lawyer Martin Arendts said he thought the GGL’s strict stance “might indeed be a problem”.

More than 90 percent of current online sports betting licensees have applied for the virtual arcades, or slots, licences, he said.

In Germany, there is no clear cooling-off period as there is in the Netherlands, Arendts said, referring to the Dutch practice of forcing online gambling applicants to shut operations until they receive a licence.

But there is also no clear toleration period for those who have applied and are waiting to see if they will get a licence, he said.

“I expect that GGL will flex its muscles and become active, maybe not at the beginning of July, but certainly in the long run,” Arendts said.

“Operators which are offering virtual arcade games, poker or virtual table games might also experience troubles in the ongoing licensing procedure, or might even get their sports betting license revoked,” he said.

“It is quite likely that GGL will argue that they are not ‘fit and proper," Arendts said.

So any operator still offering virtual online games before they officially obtain a licence “should definitely get a written assurance that the licensing authority tolerates this,” he said. “Otherwise, I would recommend (to them) to stop offering such games”.

Since last July, Saxony-Anhalt’s administrative office has been reviewing applications, under the oversight of the Gambling Committee, which has members from all 16 states.

The 60-odd applicants waiting for word from that office in the transitional period are not the only ones facing delays.

Mernov, the lone successful applicant so far, had planned to launch its brands, jackpotpiraten.de and bingbong.de on July 1.

But the launch will be delayed for about a week from that date as the company is still waiting for approval for individual game titles, said managing director Florian Werner.

“We hope to have many players at the start, as we are currently the only legal provider in Germany — for a short time we will have a kind of monopoly position”, he said. “However, we will only slowly ramp up our marketing campaigns to first collect and evaluate user feedback”.

At the iGaming Germany conference last week, panellists predicted a wave of lawsuits against the GGL if it seeks to punish those who have not received notification of their application in a process that began 11 months ago.

Hesse’s Darmstadt Regional Council has already been hit with more than 100 lawsuits over restrictions in sports betting licences, including €1,000 deposit limits.

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