Why Are There So Many Restrictions in Germany for Online Casinos?

It has been some time since German players couldn't legally play in online casinos or bet on sports. The German government wasn't eager to update its gambling legislation until recently. It chose to do so after seeing how prosperous the industry is in Europe and what a fantastic fiscal stimulus it could provide.

Then, with the latest Interstate Treaty on Gambling, all that was flipped on its head overnight. It offers licensing requirements, gambling marketing, and new taxation guidelines. The Glücksspielstaatsvertrag is considered one giant leap for the German casino market, with new licensing options available to third-parties. It launched in the summer, which initiated a rush of fresh online casinos, such as https://top-casinos.com.de/, on the market.

Is Online Gambling Legal in Germany?

Yes, it is. It took some time to get there, but the Interstate Treaty on Gambling finally legalized online gambling and sports betting. The following is what is covered under this :

• Lottery
• Online poker
• Online casino games
• Sports betting
• Horse betting
• Virtual slot machines

All gambling providers require a license to provide their services, and the Saxony-Anholt administration office whitelists online casino and sportsbook sites that are optimal. The licenses are issued for five years and must be renewed after that. A limited number of casinos were legalized in the first wave, and the 16 federal states decide if they want to legalize more casinos themselves.

Less Restrictive Than Before, but Cautionary

German gambling laws were very restrictive for decades. It was very clear that the sector required a modification. Online casino popularity did not skip Germany, and players attempted to play slots and casino games elsewhere. The great advantage of online casinos is that they're usually international and can offer their services to selected markets. But with the laws being restrictive and people being fined for online gambling, it was difficult for players for a while.

The reversal of fortunes finally arrived when the government finally decided to impose new regulations. It followed a ruling when German state leaders finally decided to enact new regulations for online poker and online gambling. It was the spark that triggered the grand transition coming with the Glücksspielstaatsvertrag. And, although the new regulatory environment was welcomed by players with open arms, it was obvious that there were many restrictive elements embedded in it.

What Are the Restrictive Factors?

All these restrictions are there for player protection and gambling addiction prevention. They have the players' best interests at heart, but they strictly restrict the market. These restrictive factors include spin-stake limits, sports betting stake limits, and very strict advertising laws. While the change was needed, players were soon looking for German online casinos without limit after the law went live.

With the Bundesliga being as popular as it is, punters are irked about in-play betting limitations. If you’re an Esports fan, no luck on extensive betting on exciting CS:GO matches. In-game bets online in Germany are limited to final result and next scorer, which only partly apply to Esports and other sports too. Obviously, these two markets are aimed at football punters, which is a shame since German punters love betting on other sports too.

The result of winnings is primarily based on luck

Should a provider provide these three elements, it is considered a 'game of chance' and can be issued a license. It does not come that easily, naturally. The authorities carefully examine the provider before they issue a license. The only problem is that this is an Interstate Treaty, and therefore various components of the licensing procedure are reviewed in separate states. The licensing law follows land-based gaming.

The new law of course needed a new regulator which provides the licenses. It was created and placed in Saxony-Anhalt. This authority is responsible for issuing licenses and implementing the laws. Only applicants operating and based in the EU and the European Economic Area are eligible to receive a license. Although the process takes time and includes a thorough review of the applicant's games and services due to the law's prohibitive nature.

Advertising Limitations

Casino PR is one of the primary methods it promotes itself. Ads appear on any site that associates itself with a casino, inviting gamers to join up and start playing. European countries are trying to counter that with a range of limiting steps. These can come in the form of a time limit on gambling ads, as in Germany. Simply put, gambling adverts in Germany are not allowed between 06:00 and 21:00. The purpose is to reduce the impact on young gamblers and prevent possible gambling addiction in the future.

Sports betting advertising is also restricted. It is possible to have sports betting advertising on a live broadcast in certain countries. It is not allowed by the Interstate Treaty, going so far as not to permit sports betting adds immediately prior to or following the event. Jersey sponsorships are permissible, yet players themselves are not allowed to endorse sports betting companies.

A Long Road Ahead

These alterations wrought by the Interstate Treaty have been years in coming. However, all was not as rosy as desired initially. It was difficult getting here, as the various German states had very differing thoughts regarding internet gambling. Some states such as Schleswig-Holstein have called for a liberalized marketplace and regulation, while certain other states have opposed it. There are 16 states in the German federation, so there were some dissident views to be anticipated. Schleswig-Holstein does eventually grant six-year licenses, with Bwin and Ladbrokes among the first to receive them. Others were issued, but after the initial licensing, the state decided it would stop issuing licenses. It passed all the legislation on the books and things are at a standstill as of now.

Taxation Rates and Laws

The type of taxes imposed on gambling operators by the government is in accordance with what they're 'selling'. The tax rates for land-based casinos (taxable gross revenue) vary from 20% to 80% per state. Additional impositions—such as progressive tax rates—can be imposed too depending on the casino's economic capacity. Rates for slot machine operators are determined by state legislation from 12% to 20%.

The Interstate Treaty also introduced new amendments to existing tax law for online poker, sports betting, and virtual slot machines. All wagers played are subject to a tax of 5.3%. Due to the fact that the contained tax is calculated out of the base, the actual taxation amounts to 5.03%. Despite the fact that the new taxing regime has been strongly criticized by most industry associations and gambling operators, the government is standing firm.

What's Next?

There are still plenty of problems to be worked out in the industry. $ years down the line and beyond, the focus will be on building a new exciting portfolio of permitted bet types for online sports bettors. Increasing the popularity for Esports betting is something that is more likely to occur sooner rather than later.