Schleswig-Holstein Gambling Law Approved

Schleswig-Holstein’s draft gambling law has been given the green light by the European Commission (EU). Germany’s northernmost state will begin processing its online gambling licenses this summer.

The Commission’s approval is a “step in the right direction” a Betfair spokesman said. bwin.party’s co-chief executive Norbert Teufelberger notified his publication that the newly amalgamated internet casinos are going to apply for a license too. Director of corporate communications, John Shepherd said: “We’re still pretty much in the same position. We would apply for a licence, if the Schleswig-Holstein law is approved.”

“Betfair congratulated the European Commission’s decision to approve the Schleswig-Holstein draft gambling law, paving the way in the political process to modernise gambling legislation in Germany. Betfair will apply for a licence in Schleswig-Holstein should the draft gambling law be approved by the Schleswig-Holstein parliament.”

A three month standstill period is given to peruse the draft law; the EC only raised one point of significance to egaming for the Land’s lawmakers to address before internet gambling is legalised into law, namely that the major banks acting on behalf of the operators would be required to give guarantees, and not minor financial institutions.

For a second reading and final vote the bill returns to the Schleswig-Holstein parliament, it could happen by the end of June ahead of the summer break, or when lawmakers return in September.

bwin.party’s Shepherd said: “The EU notification process for Schleswig-Holstein’s proposed law for gambling online pleases us. Only two inconsequential issues still needs to be discussed, we see the EU’s findings as a clear signal to the other 15 Federal States that Schleswig-Holstein is progressing when it comes to egaming.”

Betfair said that in contrast to the draft State Treaty of the 15 other German Lander the Schleswig-Holstein bill has a “more realistic approach” to legalize the industry, including tried and tested egaming regulations from other European jurisdictions. A 20% gross profits tax is levied by the German state, permitting all products, an unrestricted number of licences and to impose stricter player protection and regulation.

The ruling conservative-liberal coalition in Schleswig-Holstein said in an official statement that following its approval the EC could scuttle the federal draft State Treaty submitted by the 15 other Lander in April 2011.

bwin.party’s shares dropped by 16% in mid-April, since a large proportion of Germany’s states wished-for a restrictive opening for sports betting based on an impractical 16.66% turnover tax. Subsequent this tax rate the market voiced its concerns to the German proposals of a five-year “trial period” for seven sports betting licences in Germany in tandem with a 16.66% turnover tax. In 2010 roughly 23% of the group’s revenue came from Germany. 

A day after these proposals were publicized Teufelberger slammed it, he said, it “the chances of it failing is exactly the same as Germany’s age-old monopoly model”. A week after the company merged and opened for trading he added the 16% proposed tax rate on the stakes placed in sports betting would “make it very difficult to offer consumers a reasonable product”.

“In addition, poker and casino products are not included in the licensing model; in effect it will cause consumers to play at black market casinos. In other words the proposed model has failed before it’s even begun to safeguard players and to weed-out all fraudulent activities.”

It estimated that Germany’s regulated gaming market under the proposed State Treaty will only yield 7%. Wulf Hambach, who’s an expert on German gaming law of lawyers Hambach & Hambach, predicted the split between the 16 Länder simply means that Germany’s egaming market would be regulated on a state-by-state basis-the net result is “a domino effect”.