Germany’s Gambling Dilemma: A State-Run Gamble?
For over a decade, the German Interstate Treaty on Gambling has been a source of contention, caught in a seemingly endless cycle of legal challenges and pressure from the EU Commission to align with European law. A unified solution seemed elusive.
At one point, Schleswig-Holstein even broke ranks, establishing its own regulations, only to have them repealed by the subsequent government. However, on July 1, 2021, a new Interstate Treaty on Gambling came into effect, seemingly putting an end to the disputes. For the first time, Germany opened its gambling market to foreign operators, granting licenses under strict legal guidelines.
Goal Missed?
A key objective of the law was to channel the black market into regulated avenues, encouraging German players to use legal offerings instead of unlicensed sites.
However, four years after the new treaty’s implementation, this goal remains unmet. Significant restrictions on online casino games hinder operators from competing fairly.
The law mandates an evaluation of the new regulations in 2026, with a treaty renewal scheduled for 2028. This requires the consensus of all 16 German states, which are already diverging in their approaches.
Bayern’s Bold Move
Bayern stands out as a prime example. While some states were moving away from their involvement in land-based casinos around 2020, Bayern is taking the opposite path, particularly in the online casino sector.
Historically, the state has hindered fair competition for private operators through regulations. Now, a similar situation is unfolding in the online casino realm. Licensed operators, overseen by the Joint Gambling Authority of the Länder and restricted in their online casino offerings, face new competition from the state itself.
Bayern launched its own state-run online casino last year, a first in Germany, despite years of warnings about gambling addiction and efforts to combat online offerings. This online casino is part of Lotto Bayern.
Entering the Market Instead of Issuing Licenses
Lotto Bayern justified this unusual step by claiming it aimed to provide an alternative to illegal online casinos. However, its conditions are similar to those previously in place in Schleswig-Holstein. Players can only use the state-run online casino if they reside in Bavaria.
Bayern exploited a clause in the German Interstate Treaty on Gambling to its advantage, allowing the establishment of state-run online casinos if the state does not issue its own online licenses. Bayern did not issue licenses, effectively monopolizing the market with its own online casino. This allows Bayern to generate additional revenue without facing competition. Critics argue that this approach may not comply with EU law and undermines Bayern’s credibility in player protection by acting as an online casino operator.
Will the Gambling Treaty Collapse?
Baden-Württemberg has followed Bayern’s lead, planning to allow only one legal online provider, its state lottery company.
Such moves undermine the objectives of the German Interstate Treaty on Gambling. With the evaluation in 2026 and the renewal in 2028 looming, the legal framework could collapse, leaving Germany in a state of legal uncertainty once again.
Austria Closes Borders
Meanwhile, the black market is not waiting for state decisions. In neighboring Austria, the new government plans to close the local market entirely, introducing network and payment blocks. However, these measures are easily circumvented and therefore ineffective.
Conclusion: Heated Discussions Ahead for Germany
Germany will face this discussion in 2026, when it must conduct the legally required evaluation and prepare a revision of the Interstate Treaty on Gambling. Given the independent actions of Bayern and Baden-Württemberg, this will be challenging, as the states have often disagreed on gambling issues.
In the future, responsible state premiers must strike a balance between player protection and fair competition. Gambling has become a leisure activity in Germany, with millions seeking fair competition under strict safeguards.
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