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EC Objects To German Law, EGBA States Why

According to reports, the European Commission has objected to a new German law that would place restrictions on foreign gambling companies and provide advantages to its state gambling interests.

Earlier this week the European Gambling and Betting Association, a trade body issued an opinion on the drafted law, and confirmed that the European Commission believes that the law is in violation of EU law. According to the report, if substantial changes are not put into the law, Germany may face stiff penalties including heavy fines and referral to the European Court of Justice.

The German Law, which is titled "German State Gambling Treaty" was proposed after other European Union Court rulings stated that Germany's current State Treaty does not work within EU laws. The current treaty expires at the end of the year and the new treaty is meant to follow beginning in January. Currently lotteries and sports betting is under regional control, while casino and slot machine business is overseen by the federal government.

In 2009 Germany saw gross online wagering revenue of around €1 billion and is said to see an annual rate of growth of about 30%.

EGBA Secretary General Sigrid Ligné was also critical of the German law, stating "The draft German treaty has many provisions which are in conflict with EU law. But worse: it is clear that, taken together and especially including a prohibitive tax on wagers from which the incumbent state monopoly is exempt, these provisions effectively slam the door in the face of EU operators from other member states and will in fact extend the monopoly for offline to online games. The Commission must act quickly to stop this test case for its stated aim of a common EU framework for this sector."

Points of contention in the treaty include:

  • The total number of sports betting licenses is limited, while state sponsored sports betting does not have the need to apply for a license.
  • A high 16.67% tax rate for online operators.
  • Bundling online and offline licenses together, putting online casinos at a disadvantage when applying for a license.
  • Privately owned land based casinos are limited in licenses, but state owned operators aren't limited in licenses.
  • Certain games can only be offered online if the operators are involved in a land based venture in Germany.
  • Marketing restrictions put on private companies that are not in place of state sponsored operators.
  • Licensing fees are meant to favor applicants with land based operations
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