Germany

Historically, regulation of gambling was controlled locally by each German Member State autonomously; however, that has changed in recent years.

In 2006, the 16 prime ministers of the German Member States passed a draft of a new Interstate Treaty on Gambling calling for a complete ban of online gaming. With this treaty German officials attempted to ban Internet gambling activity by blocking access to foreign online gambling websites via ISPs and by prohibiting processing of online gambling-related payments by German banks. The European Commission (EC) responded to the French government declaring the ban to be inconsistent with EC community law.

On 1 January 2008, Germany passed the Interstate Treaty, affecting all 16 German states. This treaty addressed gambling addiction, limits on marketing efforts, especially to those under 18 years of age, illegal gambling, and most importantly banning of online gaming excepting horse race betting.

In 2009, Internet gaming operators Happybet, Sportwetten, Digibet, and Gibraltar-based Carmen Media sued for the right to offer bets over the Internet to German residents. In August 2010, the European Court of Justice (ECJ) ruled that regulations currently used to maintain German gambling monopolies were in violation of European law.

As in previous rulings, the ECJ acknowledged that member states are likely to overcome the risks associated with online gaming more effectively than private operators, but the German rules were applied inconsistently and do not limit games of chance in a consistent and systematic manner.

Germany announced in April 2011 that it was going to award seven nationwide concessions for sports betting companies beginning in 2012. Casino-style gambling would still be restricted, however. While this move would open the market to competition, it would come with a high tax rate of 16.67% on betting turnover. The proposal would also ban in-game wagers and only allow casino games to be offered by operators that already have a land-based license.

In September 2011, Germany’s Federal Court of Justice, the highest civil court, upheld a ban that prohibits private-sector companies from operating online gambling sites although negotiations to award seven nationwide licenses for sports betting companies are ongoing.

There was a hope that when Germany's current state treaty on gambling expired on January 1, 2012, its online gambling market would be liberalized, at least in some sectors, to bring it more in line with other EU countries that have embraced legalized and regulated online gambling.

By late 2011, the German Lander announced it developed a workable gaming law. The proposal includes a limit of 20 licenses; a 5% tax on every wager; severe limits on betting amounts rumored to be approximately €1,000 per month; and a prohibition of casino and poker games as well as live betting. The European Commission still feels the German State Treaty on Gambling makes little headway in meeting their concerns. The European Gaming and Betting Association states the State Treaty is illegal under EU law and has submitted a formal complaint to the European Commission. The German Monopolies Commission is also critical of the State Treaty citing it breaches EU law; fails to deter unlawful gambling; fails to comply with German Constitutional Law; and the decision to tax wagers rather than profits is impractical.

In July 2012, 15 of the 16 German federal states liberalized online gaming to some extent. Private companies may now obtain licenses to offer and broker online sports betting and lotteries in all 15 states that have ratified the Interstate Treaty. Private companies may also apply for a license to advertise their online services. The German Monopolies Commission has already criticized the new online gaming law, stating the government should re-evaluate and revise certain aspects of the law and be in compliance with EU legislation. The Commission, as well as the European Commission and gaming operators, is heavily criticizing the legislation that online gaming licenses will be awarded to the companies that bid the most money in a public auction. The European Commission stated it will pursue infringing procedures against member states that are currently breaking EU trade laws and policies involving online gambling.

On 24 January 2013, Schleswig-Holstein (SH) voted in parliament in favor of joining the State Treaty of Gaming, thus repealing the existing SH online gambling law. All 16 states have now joined in the State Treaty of Gaming. However, the German Federal Court ruled to suspend its decision on the legality of the State Treaty of Gaming and deferred its decision to the Court of Justice for the European Union. The restriction of issuing 20 licenses for sports betting and not permitting online casino and poker games is inconsistent with free trade laws in the EU. The case is suspended indefinitely until the ECJ responds to the questions posed.