The limited number of licenses available in Germany’s notoriously tightly regulated online gambling marketplace has already created fierce competition among online gaming operators. But now a major telecommunications company has applied for a license themselves, further tightening the market for the few licenses available.
May or May Not Use License
Deutsche Telekom announced this week that they have applied for a sports betting license in Germany. The company said that the process is at a very early stage, and that there’s no certainty that they will ever even create a working online gambling business. The application is currently being reviewed by the Interior Ministry of Hesse, a German state.
Deutsche Telekom would certainly be a formidable name in Germany’s online gambling landscape if they did go forward with a sports betting site. Based in Bonn, the company is a worldwide telecommunications giant that was formerly owned entirely by the state. The German government still holds a more than 30 percent stake in the company, both directly and through the national government bank.
Germany has been struggling to craft an online gambling policy that would allow them to maintain tight control over the industry in the country, while also passing muster with the European Union. For many years, there was virtually no regulated online gambling in Germany, with only wagering on horse racing allowed. But this was challenged by the European Commission, prompting Germany to declare that they would revisit their laws.
State and Federal Legislation Issues
While the rest of Germany’s states debated exactly how they would change the existing gambling regulations, the state of Schleswig-Holstein decided that it would take action on its own. In late 2011, the state passed legislation that would allow companies to apply for licenses for online poker, online casino games and online sports betting.
That news was met with excitement by online gambling operators, who quickly moved to apply for licenses in the German state. In all, Schleswig-Holstein issued 23 sports betting licenses and 13 casino and poker licenses.
But the rest of Germany eventually agreed on a gambling reform plan – albeit one that wasn’t nearly as liberal as the steps that Schleswig-Holstein had taken. The other fifteen German states agreed to a plan just months after Schleswig-Holstein had begun to issue licenses, allowing for 20 sports betting licenses to be awarded nationally. In addition, there would be a 5 percent sales tax on online gambling levied on the companies who obtained these licenses.
By early 2013, Schleswig-Holstein had agreed to join the rest of Germany and adopt the national sports betting licensing plan. However, that didn’t mean that the licenses that had previously been issued by the state were voided, and the companies holding those licenses are expected to be valid for another six years without counting against the national limit.
Germany consulted with the European Court of Justice on whether the federal legislation is sufficiently liberalized to comply with EU law, with the European Gaming and Betting Association saying that it did not meet European requirements. In the meantime, the European Commission has issued an opinion expressing disappointment in Schleswig-Holstein’s decision to pull back from its licensing program.
Despite the rapid changes, several major companies have expressed interest in being licensed by the German government. However, the sluggish pace of the licensing program and the fact that these companies would have to give up any poker or casino operations in the country have made it unclear what companies – if any – will ultimately be licensed.