German state Schleswig-Holstein has issued the first online casino licenses authorizing operators to offer a wide variety of real money games, including poker. Twelve gaming operators, including bwin.party, Betfair, Bet365, Ladbrokes, and Poker Stars, have secured gaming licenses for a period of six years. The Scleswig-Holstein Ministry of the Interior has also stated that 18 casino and 24 sportsbook applications are currently under consideration.
Schleswig-Holstein becomes the first Länder to offer online casino licenses after it passed its own gaming regulation in 2011. Unlike the new Federal State Treaty, the Germany’s northernmost Länder passed more progress legislation that supported unrestricted licenses and online poker. Currently, Schleswig-Holstein has issued three sportsbook and 12 online casino licenses.
Although Schleswig-Holstein has created its own gaming regulations, Interior Minister Andreas Breitner reaffirmed the region’s intention to eventually conform with the existing Federal Interstate Gambling Treaty, which was signed by Germany’s other 15 states in July. The highly restrictive legislation is currently being challenged by gaming industry leaders and the European Union Commission. Breitner stated that the existing legislation in Schleswig-Holstein will be dissolved eventually to pave way for federal legislation. However, the exact timing and method for this legislative merger has yet to be determined.
The actions of Schleswig-Holstein further complicates the implementation of the Federal State Treaty and creates a discord in the regulatory model. Though the EU Commission approved the legislation, the current model contains stipulations that are restricted under the federal treaty.
“European law requires that the laws of member states are ‘coherent,’ i.e. consistent in application to companies inside and outside the country. A situation has now been created where the law will not even be coherent within Germany,” analyst Ivor Jones of Numis explained.
The controversial Federal Horse Racing and Lottery Act restricts operators from offering any real money products except for sports betting. The legislation also created a difficult situation for online gaming businesses as the sports betting revenues are subject to a 5% turnover tax. Operators have maintained that the German legislation is illegal under EU law and submitted a formal complaint. The European Union Commission has also questioned the the legislation’s compliance with EU competition laws and has ordered Germany to properly justify its ban on online poker.
Given the restrictive Federal State Treaty, major operators such as William Hill, Betfair, and 888 Holdings originally withdrew from the German market, citing conditions detrimental to the growth of business and competition. However, Betfair and 888 Holdings were named among the 12 companies to receive licenses in Schleswig-Holstein. These operators along with other licensees will be utilizing subsidiary companies to offer real money games to Schleswig-Holstein.