German Gambling Proposals Set Aside by UK Trade Body

Absence of consistent market-based regulation for the State Treaty on Gambling in Germany causes RGA disappointment

The latest German Treaty proposals have not met the expectations of the Remote Gambling Association, one of the most powerful trade associations in the online gambling industry in UK, especially regarding the competitiveness of German gambling market for private remote gambling operators and consumers.

The Association claims that too little has be done to properly regulate the market of remote gambling and that the state of Schleswig Holstein is the only EU-compatible and secure legal regulatory regime in Germany. Actually, earlier this year, the lander passed their own online gambling law which regulates all gambling products on a gross profits basis. And they got the European Commission approval for it.

The Minister Presidents of the German Lander (states) urged the adoption of a State Treaty, but the RGA questions the intention of the Lander to introduce a system that by July 2012 will:

* Limit the number of operator licenses;

* See the adoption of a wholly uncompetitive turnover tax regime; and

* An outright prohibition of casino and poker online games.

The Association points out a more measured and rational approach taken in other European Union Member States, such as Denmark and Spain, where the systems which regulate nearly all forms of remote gambling based on a much more viable gross profits taxation model will be introduced very soon.

Clive Hawkswood, chief executive of the RGA said that “there appears to be no connection between the desire to provide German citizens with a regulated market and the actual text of the State Treaty. The Minister Presidents say on one hand that they want to encourage sports betting with regulated German operators, but at the same time deny this to citizens who wish to partake of casino and poker games online."

“It is clear that this will have little effect in reducing the large number of German citizens gambling with operators licensed in other jurisdictions and which offer casino and poker products. Policies to restrict consumers from accessing such sites have consistently been shown to be ineffective. As such, this policy will have limited practical impact,” added Hawkswood.

According to the current draft, the State Treaty suggests a limit of 20 licences and a 5% tax on turnover (already failed in Member States like France); severe limits on betting amounts (e.g. suggested limit of Euro 1,000 a month); a prohibition on casino and poker games; and on live betting.

“The European Commission has repeatedly stated that the draft State Treaty falls foul of EU law, and the latest version appears to make little headway in meeting the Commission’s concerns. In fact, such an approach simply makes the Schleswig-Holstein proposal more attractive and creates a fragmented, confusing and undesirable situation for German consumers.” Hawkswood concluded.

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