End of 2012, Germany had opened sports betting licensing proceedings, giving sports betting providers the possibility to apply for one of 20 licenses to offer sports betting services in Germany. The licensing proceedings have been on hold for a long time due to legal issues and have been considered to breach EU law by the European Court of Justice in February 2016 (see here).

The Federal State of Hesse which was responsible for the German-wide sports betting proceedings has now decided to factually “re-open” the sports betting proceedings (please see German handout respectively here).

The new proceedings are limited to (i) a mere “toleration” of providing online sports betting (in contrast to a real license); not timely limited but likely to fade in case the real licensing proceedings should re-open, and (ii) the territory of Hesse. Thus, with a respective toleration, sport betting providers will generally only be “tolerated” to provide services in Hesse. However, there is relevant likelihood that the other Federal States will be bound at least to a certain extent to the Hesse decision. Furthermore, with a respective toleration, sports betting providers should generally be able to lawfully advertise their services in Germany. Thus, the respective request for toleration is a possibility to further legalize the sports betting activities in Germany – at first hand within the state of Hesse, but likely with secondary effect for the other states.

However, the efforts involved with a respective request for toleration are considerable. Inter alia,

  • Various concepts will have to be provided (e.g. an IT Security concept warranting for the requirements of ISO 27001:2015 and PCI-DSS 3.0, a payment concept, a social concept for player and youth protection)
  • Providers will have to become part of a player blocking system and have to implement solid identification verification systems
  • A proof of the providers’ reliability must be given (e.g. via provision of tax clearance certificates, certificates of good standing etc.)
  • The sports betting offers of the provider must be explained in detail
  • After the toleration has been granted, security must be provided in the amount of EUR 367.900 (via a bank guarantee)

In summary, a (very much) limited version of what would have been requested during the “initial” sports betting proceedings will also have to be provided during the toleration proceedings. Still, unlike the initial sports betting licensing proceedings, the toleration proceedings do not seem to require that the provider warrants it will not provide any other kind of unlicensed games of chance (such as online casino or poker) in Germany. Thus, the combination of online sports betting services with online casino and poker offerings does not seem to be an obstacle. In addition, there does not seem to be a limitation with respect to the number of tolerations to be granted, allowing for an unlimited number of applicants and respective tolerations.

Providers that want to take advantage of the toleration process have to be quick: applications with the requested documents will have to be submitted until 15 November 2016. Taylor Wessing’s e-gaming practice will be happy to guide you through the toleration process.