Schleswig-Holstein stands out in new German gambling proposals

The news that the 16 German Lander (states) are to largely break up their monopoly on gambling in favour of a more open and EU-compliant approach has been followed by a press conference in Altenholz/Kiel at which major operators voiced their reaction.
It is fair to say that the majority of operators favoured the more progressive attitude of Schleswig-Holstein over other states that appear to want to retain some monopolistic elements, and that as a consequence, Schlewig-Holstein could prove to be the jurisdiction of choice when licensing commences.
It could reap the lion’s share of taxation revenues as a consequence, too.
“European gaming companies request regulations that are competitive and comply with EU law, and welcome the law drafted by Schleswig-Holstein’s government coalition,” a spokesman for the operators said Wednesday.
“The operators are awaiting only the implementation of the favoured state’s new online gambling regulations,” he added.
Schleswig-Holstein did not support the Minister Presidents‘ decision regarding the amended Gaming Treaty, and there will be a hearing in the Schleswig-Holstein Parliament this week regarding the Lander’s planned gaming law, which has already been notified to the European Commission.
Operators said that the S-H bill is a practical model, since on the one hand, it fulfils the European Court of Justice Guidelines, thereby creating justice and fairness; on the other hand, it gives reputable gaming companies the opportunity to offer German customers secure, attractive and market-driven products in accordance with conditions that conform to European Union law.
The existing grey market can thus be regulated, as well as securing tax revenues for sports and social projects, they claim.
Schleswig-Holstein’s bill is also groundbreaking with regard to European aspects, since positive experiences from other EU countries are meaningfully taken into consideration.
The state has opted for a regulatory approach that secures the state‘s lottery monopoly, but which would remain receptive to market realities in other gaming segments and simultaneously ensure a high level of consumer protection.
In contrast, the key issues paper for the continuation of the Gaming Treaty, agreed upon by the Minister Presidents on 6 April 2011, goes in the wrong direction, the operators aver. On the one hand, there are significant constitutional and European law concerns.
The European Court of Justice Guidelines, which dismissed the existing Gaming Treaty for being contrary to EU law, were not taken into account. The new Gaming Treaty would also fail for this reason.
“On the other hand, the model cannot be executed; it contains nothing except a de facto continuation of the sports betting monopoly,” the spokesman pointed out. “Massive advertising restrictions, a far-reaching ban on live betting, restrictive taxation, limits, as well as a ban on poker and casino games have little to do with societal reality and make it impossible for private companies to operate their businesses,” he added.
“The experiences from other EU countries and the experience from the past four years in Germany clearly show that this type of regulatory approach is doomed to failure. The intended channelling and regulation of existing markets will not be attained, even with the proposed Internet blocks which have not been enforceable to date.”
Schleswig-Holstein’s bill, on the other hand, creates conditions for a modern and appropriate regulation, he concluded.
“The leading European gaming companies acknowledge their social responsibility. They will fulfill all the licensing requirements and legal obligations, especially their tax liability. Only this will create the foundation of effective consumer protection and the protection of minors, as well as the prevention of compulsive gambling and manipulation in sports.”
Individual company representatives also voiced their support for the Schleswig-Holstein approach to regulation.
Jörg Wacker, of bwin.party digital said: “Schleswig-Holstein has blazed a new trail with its bill. This bill complies with EU law, corresponds to market reality and the Internet age. The implementation of the key issues proposed by the Minister Presidents last week would be as doomed to failure as the expiring monopoly model in Germany. Over 16 percent turnover tax on sports betting would not enable a competitive product to be placed in the market. Excluding poker and casino offers would enable the black market, as well as unregulated sports betting continue to exist in this segment. Thus, the Federal State’s objective of channelling, ensuring player protection and fighting manipulation would miss the mark.”
From Betfair, Dr. Peter Reinhardt, said: “Sound regulation of the gaming market should not be blind to market realities, if it wants to succeed. A legal offer in Germany has to be geared toward the consumer and his needs. Otherwise, we run the risk that a Euro 5 to 8 billion market will continue to bypass the government. The Schleswig-Holstein bill gives us the historic opportunity of implementing a model in Germany that is equally in the best interests of the consumer, the state and sport, as well as the gaming companies.”
Sven Stiel, a representative of online poker’s PokerStars commented: “Poker captivates people. Whether on ProSieben or SPORT1, in BILD or at DPA, poker has become a mass phenomenon and has arrived in German living rooms. However, not everyone is aware of this. Yet, numbers say more than a thousand words: 4,000,000 Germans play poker. The Minister Presidents want this market to remain unregulated, thus making every amateur player a criminal. Schleswig-Holstein has recognized German players’ needs and presented a realistic form of channelling. PokerStars will, as exemplified by Italy and France, be one of the first to apply for a license in Schleswig-Holstein and fully implement it. Player protection, jobs and channelling can be easily executed with the presented mode”
The representative for Jaxx-Mybet, Mathias Dahms, also favoured the more progressive approach, saying: “Schleswig-Holstein has taken a leadership role in future regulation and we would be very pleased if the other Federal States would take a closer look at the proposal from the North. The provincial government in Kiel has shown us a new way forward and now other States must follow, otherwise we will again have a virtual state monopoly. The model proposed by the remaining 15 Federal States, with its tough restrictions that make entrepreneurial success impossible, virtually seals off the German market. This type of law can only be enforced with the use of Internet blocks, blocking financial flows and detailed surveillance of citizens. Whether this can be implemented politically is questionable, particularly after the public discussions of the past few days. In addition, the intended channelling effect of converting the existing grey and black market offers into the regulated market is ad absurdum and changes nothing in the current situation.”
Speaking for William Hill plc, Neale Deeley, opined: “Regulations must be judged on what is actually achieved, not what is hoped for. The main aim must be to ensure that those German citizens who choose to bet online do so with operators who are licensed by the state. Any impediment to this, whether through product restrictions or unworkable tax regimes, will merely perpetuate the existence of unlicensed operators, thereby undermining consumer protection, and industry transparency and accountability. The proposed Schleswig-Holstein bill fully facilitates and promotes those objectives, and in addition will generate tax revenues and create employment opportunities across a wide range of business sectors.”
Dr. Norman Albers, who spoke for the German Bookmaker Association, observed: “There is no feasible alternative to the Schleswig-Holstein bill. It is balanced and pursues the same protection goals as the newly failed Gaming Treaty. The Federal States’ April 6 counter proposal subjects private bookmakers to antitrust laws without authorizing us to participate in sports betting. That would destroy traditional betting on horseracing in Germany.”
Norman Faber, President of the German Lottery Association commented: “Even the German Lottery Association, which represents the commercial lottery agencies, such as Faber and Tipp24, back the Schleswig-Holstein bill. The bill creates legal security for us, since the procurement of state-run lotteries are not subject to an unlawful EU, arbitrary “subject to permission“, without clear criteria, without legal claim. In addition, the Schleswig-Holstein bill does not plan an illegal cartel merger of state-run lottery companies, which would mean the end for private lottery agencies on the Internet.”

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