No Applause for german gambling regulations

Secretary-General of European Gaming and Betting Association (EGBA) Maarten Haijer has criticized Germany’s planned online gaming regulations, arguing they will not be sufficient to attract players to the regulated market over unlicensed sites.

At present, web-based wagering and gambling club games may just be offered in the province of Schleswig-Holstein, yet Germany’s new fourth State Treaty, the Glücksspielneuregulierungstaatsvertrag, is set to open up the online market to all products and verticals.

Enactment at the national level to present internet betting guidelines was first affirmed by German heads of state in March this year. Under the arranged timetable, the legitimization of online poker and gambling club is relied upon to come into power on 1 July 2021. The draft guidelines were submitted to the European Commission in May.

According to new market projections from consulting and research provider Goldmedia, this could see German gambling revenue reach €3.3bn by 2024.

However, Haijer warned that the newly regulated industry will have to win players over from unlicensed sites.

“The starting position of Germany is so bad that, in 2017, the Düsseldorf Institute for Competition Economics (DICE) predicted that the country had a channeling rate of only 1.8% – meaning 1.8% of online gambling activity in Germany took place on websites which are licensed in Germany – compared to 95% in the UK and 90% in Denmark,” Haijer said.

“The new policy can only be effective if it ensures that gambling websites licensed in Germany are more attractive than those outside it – so customers will play on these websites rather than unlicensed ones. This requires the new policy to meet the customer’s needs by ensuring there is sufficient choice in the market – including brands, products, and best offerings.”

Haijer said the measures contained in the Glücksspielneuregulierungstaatsvertrag do not meet this goal. Rather, he argued, the level of regulation involved is likely too tight to convince players to bet on licensed sites.

Restrictions for online casinos under the administrative system incorporate a most extreme stake breaking point of €1 per spin on the slot, a compulsory deposit cutoff of €1,000 over all administrators, no publicizing for online betting between 6 am and 9 pm, and a prohibition on live betting as well.

“The policy measures currently on the table are highly questionable,” Haijer continued. “They are overly prescriptive and introduce restrictions which are not evidence-led.

“The combined effects of the proposed restrictions on player accounts (deposit and time restrictions), on products (e.g. the ban on online casino is not fully lifted) and on bet types (e.g. live betting will be banned), jeopardizes the task of achieving a high channeling rate and sets the scene for continued political and legal challenges.”

Haijer said the most concerning issue of all, however, was the decision to allow each of Germany’s 16 federal states to offer their own regulations for online casino games, a solution he said would create an inconsistent regulatory environment.

“The biggest threat to the success of the new policy remains the piecemeal approach towards the regulation of online casino,” Haijer said. “The decision to leave this to the states will not only create mini-casino markets, with varying degrees of channeling, but it will also lead to gambling regulations which are inconsistent.

The EGBA secretary-general said the historical backdrop of controlled betting in Europe demonstrated that there ought to be three “fixings” in a fruitful administrative system. To begin with, he said the controlled market must offer a good choice to players settling on a decision among regulated and unlicensed contributions.

“Gambling is human behavior and players will shop around, for their favorite brands, products, or the most competitive betting odds or bonuses,” Haijer said. “Even more so in an online environment, where choice is freely available regardless of whether the website is part of a regulated market or not.”

Second, he said the government should create a “proper regulatory framework” including an “a licensing procedure that is clear, transparent and predictable”. This, Haijer said, would ensure that operators want to obtain a license.

Third, Haijer said that companies need to be able to be profitable in the regulated market.

“If the tax and regulatory burdens are too high, companies will not enter or stay in the market, particularly when there are already other restrictions in place which will reduce their revenues,” Haijer said. “More companies in the market mean more choice for the consumer and more tax revenues for the state.”

Having been submitted to the EC in May, the legislation is subject to a standstill period, that expires in on 19 August.