Most States in Germany have a government monopoly over gambling and eGaming. This means (subject to certain exceptions) that only they are allowed to provide eGaming services to the general public. The legality of these restrictions has long been disputed and despite liberalisation of German gambling laws in 2012, the debate continues.
Permitted gambling services
Private providers are allowed to broker the lottery services of the State monopolies, both on and offline, and horse betting services can also be offered within certain limits. Private providers can, theoretically, apply for one of 20 online sports betting licences to allow them to provide online sports bets to German players but the licensing process, which began in 2012, has still not been completed.
Legality of the German regime
A number of courts have taken the view that German gambling law is in conflict with EU law as it restricts the right of European providers to offer services to German players. While there has been no definitive ruling on the subject, the arguments are strong enough for a number of private providers to take a chance and offer services in Germany despite the official prohibition on supplying eGaming services there.
Regardless of whether eGaming services are provided lawfully or unlawfully in Germany, taxes will generally have to be paid by all German and foreign gambling operators. For online casino and online poker services, general VAT law applies and the gross gaming revenue (the amount wagered by players less the winnings paid out) is taxed at 19%. Sports bets are taxed at the (much higher) rate of 5% of the stake and lotteries are taxed at 20% of the stake.
Privacy requirements for eGaming operators in Germany
Germany has one of the strictest privacy laws in Europe. This does not usually prevent eGaming operators collecting and using player data for the purpose of providing their services. This means collection of a player's name, address, email address, games played, billing details etc. is generally permitted provided they are deleted once no longer required. The rules for marketing emails are, however, subject to much stricter requirements.
As a general rule, marketing emails are only permitted after the recipient has given unambiguous consent to receiving them. In order for consent to be valid, the prospective recipient must be fully informed about the nature and quantities of emails which will be sent.
The position under German law is different to those in other EU countries. Whereas ticking a box on a website to indicate consent is sufficient in most EU jurisdictions, in Germany, a 'double opt-in' is required for consent to be enforceable. This means that after having received the initial opt-in, the provider must send out an (advert free) confirmation email to the user who must then indicate a second consent by clicking on a link in the email.
The only exception to this requirement is where there is already a contractual relationship between the eGaming operator and the user, in which case, it is sufficient to give the user prior notice that marketing emails will be sent, together with information about how to opt out.
Failure to comply with the requirements in relation to marketing emails is likely to breach both German data protection law and German unfair competition law and may result in action, not only by data protection authorities, but also by competitors of the eGaming operator and by consumer protection agencies.