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Legal and regulatory framework

iLegislation and jurisprudence

As explained in Section I.i, the basic legal framework for gambling in Germany is the Interstate Treaty of 2012, which was amended as of 1 January 2020 in the third attempt of the German states to create a uniform and EU-law-compliant gambling regulation.

The Interstate Treaty originally entered into force on 1 July 2012 following a legislative process that had to be initiated as a result of the CJEU finding that the state monopoly on sports betting that was provided for in the Interstate Treaty of 2008 contravened EU law.

The Interstate Treaty has been subject to criticism from the time it entered into force, and the failure of the sports betting licensing process, which was introduced by the Interstate Treaty and confirmed by national courts and most prominently by the CJEU in the Ince case to be unlawful, finally triggered the reforms that led to the Third Amendment of the Interstate Treaty. Since its entry into force on 1 January 2020, the regulator responsible for the licensing process for sports betting, the Regional Council of Darmstadt, has urged the industry to participate in the process notwithstanding a variety of open issues, including an open letter urging all operators to apply (see Section III).

In spring 2020, the German federal states agreed on the Fourth Amendment of the Interstate Treaty on Gambling, entering into force on 1 July 2021. Since 15 October 2020, a transitional regime has been implemented. The forthcoming legislation will broaden the extent of permissible sports betting and introduce licensing of 'virtual slot games', online poker and 'online casino games', although the latter is expected to remain subject to a state monopoly.

Alongside the Interstate Treaty, gambling law is regulated by other state legislation, for example, the Gambling Acts implementing the Interstate Treaty, Casino Acts and ordinances. For historic or general reasons, some federal laws also influence gambling, such as the Race Betting and Lottery Act, the Trade Regulation Act, the Criminal Code and the Fiscal Code.

iiThe regulator

The responsibility for regulating gambling is vested in regulators at state and municipal level. The responsibilities range from individual municipalities acting as regulators (e.g., in the land-based gaming hall sector) to the state ministries (or their subordinate authorities) that are responsible for bricks-and-mortar casinos, coordinating enforcement actions against suspected unlawful gambling operators or violations of the Interstate Treaty and the applicable state Gambling Acts. Further, some authorities have been appointed by all states to act with central responsibility for a certain sector. The Regional Council of Darmstadt in the state of Hesse is responsible for conducting the sports betting licensing process in Germany. The Interstate Treaty 2021 provides for a new joint authority to be established, which will be based in the state of Saxony-Anhalt. Once operational, the new supervisory authority will be responsible for the licensing virtual slot machine games and online poker. Until 31 December 2022, the responsibility for regulating sports betting licences remains with the gambling authority of Hesse, the Regional Council of Darmstadt.

iiiRemote and land-based gambling

The Interstate Treaty generally prohibits operating and brokering online gambling, with the exception of sports betting, horse-race betting and lotteries. Online casino games, virtual slot machine games and online poker are not licensable yet, but under the Interstate Treaty 2021 coming into force on 1 July 2021, a licensing process for 'virtual slot machines' and online poker is supposed to be introduced. Online casino will be subject to a state monopoly, whereas virtual slot machine gaming will be licensable but subject to substantial product restrictions, such as limits on stakes per spin and the minimum duration of each spin. In contrast to online gambling, land-based gambling is subject to a variety of licensing systems on state and municipal leval, including bricks-and-mortar casinos, gaming halls, betting shops and lottery agents.

ivLand-based gambling

Land-based gambling is only permissible in certain venues. Details will either be stipulated in the law, detailed in the application requirements or form part of the licence.

Casino games can only be operated in casinos. The operation of casinos in some states is reserved for the public authorities, while other states provide a limited number of licences for private operators. The number of casinos allowed per state will, however, always be limited and varies between the states. In Baden-Württemberg, for example, three land-based casinos are allowed, whereas in Mecklenburg-Western Pomerania six casino locations are provided for in the respective Casino Act.

The current Interstate Treaty no longer provides a maximum number of sports betting licences. It has yet to be determined how this change will impact the limitations on the number of permissible betting shops per operator that are set out in the current state Gambling Acts or other acts transposing the Interstate Treaty, which vary considerably depending on the state in question. The limitations on the number of permissible betting shops have been criticised for having been arbitrarily determined.

With regard to gaming halls, the regulations do not stipulate a statutory limit on the number of available licences, but this sector is undergoing some major changes. The strict minimum distance requirements that gaming halls must adhere to (i.e., between gaming halls and between gaming halls and institutions such as schools or addiction centres) and the requirement that gaming halls may not be operated in the same building as land-based casinos or betting shops, effectively limit the number of available gaming hall venues in practice.

vRemote gambling

In principle, the Interstate Treaty imposes a general ban on online gambling. Exceptions only apply for licensed traditional lotteries, horse racing and sports betting. The Interstate Treaty does not provide for a licensing system for online gaming. This situation has been criticised by experts of the industry as well as the European Commission. In a pilot process initiated in 2015, the European Commission made clear that it considers the ban ineffective in achieving the goals set out by the Interstate Treaty. However, in December 2017, the European Commission announced that, as a general policy regarding the gambling sector, it would close all pending infringement procedures and complaints. In parallel, the Federal Administrative Court confirmed in a precedent judgment on 26 October 2017 that it considers the restrictions to online gambling under the Interstate Treaty to comply with EU and constitutional law.7 These developments weakened the legal position of operators of online gaming in Germany that used to rely on the freedom of services to justify operating in the unregulated market. Foreign licences are generally not recognised by German regulators and courts.

The Interstate Treaty 2021 is going to introduce licences for 'virtual slot machine games', online poker and 'online casino games'. 'Virtual slot machine games' are defined as replicas of terrestrial slot machine games. Limitations include the maximum €1 stake amount per spin and the five second minimum duration per spin. Among the restrictions specific to 'virtual slot machine games', the prohibition of jackpots (i.e., stakes or winnings may not be accumulated for the purpose of creating winnings for future games) and of autoplay functionality are to be mentioned. Online poker is also going to be restricted, including the prohibition of video poker, restrictions on the number of tables to be played at the same time (i.e., a maximum of four) and limitations on stakes and blinds. 'Online casino games' are defined as virtual replicas of bank–holder games and live broadcasts of a terrestrial banker game. These restrictions specifically address roulette, blackjack and baccarat and subject them to a state monopoly. Whether or not individual states will consider opting for issuing licences to private operators in this market remains to be seen.

viAncillary matters

As part of the licensing process, operators applying for a licence will have to prove that any equipment used has been approved in accordance with the applicable technical requirements and IT security standards. Certificates or other documents on their business-to-business (B2B) partners are usually expected by regulators. However, the provisions on the licensing proceedings under the Interstate Treaty 2021 do not stipulate a specific licensing process for gambling-related B2B services.

In relation to individuals acting in key positions, it has to be demonstrated in the licensing process that these persons are sufficiently qualified and have the necessary expertise to conduct the business reliably and responsibly. Typical requirements include criminal records, tax clearance certificates, CVs and evidence of professional expertise, including training certificates. Beyond those requirements, there is no specific licensing process (e.g., for personal licences) that employees of gambling operators would have to undergo.

viiFinancial payment mechanisms

According to the German Anti-Money-Laundering (AML) Act, before a transaction is carried out, it has to be verified that the payment account is set up in the name of the player and must be with a bank, payment institution or electronic money institution licensed in the EU. This was also reconfirmed in the Implementation Guidelines regarding the implementation of the German AML Act in the gambling sector (the Implementation Guidelines), which were published on 1 February 2019 and updated again in November 2020 by the highest gaming supervisory authorities of the German states. The use of anonymous payment methods is not permitted. The same requirements would apply for the use of cryptocurrencies, such as bitcoin; however, gambling regulators have not approved bitcoin as means of payment in a licensed environment yet. Considering that the Gambling Committee of German regulators (i.e., the regulatory body that makes key decisions on issuing licences and licence conditions) tends to take a more conservative approach and has not swiftly adapted to new trends in the online gambling sector as yet, it seems unlikely that this would be permitted in the near future.


The type of taxes imposed on gambling operators heavily depends on the gambling product in question and to what extent state legislation will be of relevance. The land-based casino sector acts as a good example in this context. Land-based casino operations are subject to gross gaming revenue-based taxation, where tax rates range between 20 per cent and 80 per cent depending on the respective federal state. Additional levies may be imposed or progressive tax rates that depend on the economic capability of the casino operator will be applied. Similarly affected by state legislation, slot machine operators are subject to municipal amusement taxes (tax rates vary from 12 to 20 per cent and the tax will be based on the gross income generated from the slot machines) that they have to pay in addition to regular corporate tax.

Other gambling offerings are subject to federal taxes. Any operator offering licensed or unlicensed sports (or horse race betting) to German customers, for example, is subject to a 5 per cent federal sports betting tax on stakes. Unregulated online gaming operators targeting German customers are subject to 19 per cent VAT. There had been some debate regarding the applicable tax base. The Federal Ministry of Finance, however, finally confirmed gross gaming revenue as the tax base in autumn 2017. In March 2013, a new bill amending federal tax laws to introduce taxation of stakes in 'virtual slot machine games' and online poker at a rate of 5.3 per cent has been published. Governments of the federal states intend to initiate the legislative procedure at federal level so as to enact the tax with effect from 1 July 2021. This approach has been harshly criticised by the industry bodies, as it renders operating these games commercially challenging and contravenes the objective of the Interstate Treaty 2021 to channel players from the unregulated online gaming market into the licensing regime under the Interstate Treaty 2021.