Changes in German Gaming Legislation: Prospects and Prognoses

Online casinoLicensing
07 may 2020

1. Current Realities

2. The Expectations of Operators

3. Risks and Opportunities

  3.1. Limited License Validity Term

  3.2. Payment Restrictions

  3.3. The Unpreparedness of the State System for Changes

  3.4. Increasing Player Confidence

  3.5. Creation of Competitive Conditions

4. Conclusion

The German gambling market has always been attractive to local operators and foreign investors. It is no secret that the gaming industry of this country is under the full control of the government. In particular, there is a monopoly on lotteries and sports betting.

The online direction has long been in the shadow segment. However, recent changes in legislation should open up many perspectives for German operators working in the online space. The Online Casino Market team decided to analyse experts' forecasts regarding the development of the German gambling market.

Current Realities

Current realities of gambling laws

German businessmen and lawyers have been trying to achieve the legalization of online gambling for 15 years. This process was quite complicated. Nevertheless, local operators managed to influence the government and get some benefits for their activities.

The positive experience of some other European countries has always inspired German lawyers and entrepreneurs. For example, the governments of Austria and Luxembourg have redefined their views on the virtual industry. As a result, operators from these countries got the opportunity to conduct legal business on the Internet.

German businessmen have long been waiting for the legalization of virtual gaming. However, the current legislative changes have not satisfied all operators.

The main problems faced by representatives of the gaming industry are as follows:

  • the complexity of obtaining a license;
  • financial restrictions;
  • the absence of future industry development strategies;
  • the lack of control over the illegal market.

The Expectations of Operators

Operators from Germany have long been looking for vigorous action from the government. However, the results did not impress them. Despite this, a step forward was made. Even a large number of restrictions and the lack of a clear future strategy does not discourage many businessmen from wanting to start working in the legal field.

The main requirements of the operators were as follows:

Expectations

Prospects

Obtaining licenses

Almost all operators working in the virtual segment are representatives of the so-called grey market.

New changes in gambling legislation will allow businessmen to obtain licenses and conduct legal activities

Real money games

It is worth noting that some operators had the opportunity to get a permit to conduct online activities in 2017. However, the primary condition was the provision of free services. 

Businessmen studied the features of the local market, offering players social games.

Thanks to the adopted amendments, they will be able to offer real money games to their clients. At the same time, operators will face many financial constraints

Combating the underground business

Many entrepreneurs expected that the transition to the legal segment would contribute to the fight against underground projects. 

However, new laws do not imply the use of effective tools to counter representatives of the black gambling market

Player protection

One of the main prerequisites for the legalization of gambling in Germany was the insecurity of players. In addition, more and more underage gamers are registering on different gambling websites today.

Entrepreneurs expected to receive a ready-made solution from the government that would protect their customers. 

Nevertheless, the prospects for the development of gambling policy in this direction are rather blurred

Risks and Opportunities

Legal activities of operators: risks and opportunities

The legal activities of operators will be carried out following the provisions of the state treaty. It is worth noting that this law has many pitfalls and controversial issues.

Here are the main risks that may be faced by the operators:

Limited License Validity Term

The licensing process began in January 2020. Permits will be valid until June 2021. As a rule, collecting the documentation necessary for registering a business is a very lengthy process. Moreover, it requires considerable financial costs. The government warned businessmen that the legalization of the gambling business is only a temporary phenomenon, the so-called experiment.

The authorities want to make sure that the demand for gaming services confirms the need to legitimize the virtual gambling industry. It is not known whether licenses will be extended in the future. Many entrepreneurs are not ready to spend huge amounts on obtaining a permit. They prefer to stay in the shadow market.

Payment Restrictions

Businessmen are not sure about the profitability of legal virtual platforms. The fact is that according to the state treaty, each player has the right to spend no more than 1000 euros per month on games of chance. Besides, a limit has been set for financial transactions with virtual slot machines (no more than 1 euro per 1 spin).

Experts believe that such severe restrictions will impede the satisfaction of players' needs. As a result, gamers will seek alternative entertainment in the shadow and black markets. Moreover, some companies are seriously thinking about reorienting. They pay attention to new, accessible markets that do not have such strict restrictions.

This situation will not only affect the income of operators but also violate the government's plans to combat gambling addiction and the participation of minors in gaming activities.

The Unpreparedness of the State System for Changes

Besides the imperfection of the legislation, some other problems hinder the successful transition of operators to the legal market. The fact is that control over financial transactions involves the development of software and equipment.

The government will need quite a lot of time to create effective financial control instruments. This means that the process of a complete transition to a new, legal space may be delayed.

Despite the incompletion of the state treaty, the possibility to work in a new format will provide businessmen with such opportunities:

Increasing Player Confidence

Many gamblers do not trust gaming resources registered in other states. That is why they prefer to visit ground-based establishments. This situation is especially noticeable in the betting industry. At the same time, the legalization of online businesses will allow players to evaluate the new gambling format.

In turn, entrepreneurs should do everything possible to ensure optimal conditions for players. Loyalty programs, bonuses, free games, and other rewards will help operators gain the trust of a broad audience.

Creation of Competitive Conditions

The entry of new players into the gambling arena will be a further step in the evolution of the entire industry. Companies will be able to compete with each other on equal terms. As a result, businessmen will receive lots of possibilities to develop their business strategies. Moreover, players will get a greater selection of high-quality services.

Conclusion

Licensing of gambling projects in Germany

Opening up new opportunities for online operators of the German gambling market is undoubtedly a huge step forward. Nevertheless, do not forget that this process is a kind of experiment. 

Changes in legislation imply several rather stringent restrictions, the new conditions can be characterized as follows:

  • the possibility to provide legal gambling services;
  • the lack of clear perspectives for future development;
  • fairly strict financial conditions;
  • the absence of efficient regulatory instruments.

It can be concluded that the changes made to the German gambling legislation are quite controversial. At the same time, it can be argued that this state has a chance of a complete transition to the legal and secure online space.

Operators need to develop an effective business strategy that will allow them to work within the framework of the state treaty. It is necessary to enlist the support of real experts during this challenging process.

Online Casino Market has been working in the gambling field for many years. Our experts are ready to provide operators with counselling on legal and financial issues related to the licensing of gambling projects in Germany.

Besides, we will help you select the most relevant gambling content for your project. If you want to speed up the process of transition to the legal market as much as possible, you should buy a turnkey online casino from Online Casino Market.

This service includes the implementation of all the steps necessary for the registration of a company in the German market. It will allow you to save your money and time significantly.

If you want to find out more about this and other services, please contact our manager:

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Written by

Karen Fill

Gambling business expert at Online Casino Market

07 may 2020