The gambling landscape in Germany is turbulent, to say the least. Current issues for players and operators alike originally stem from the fact that the government was somewhat late to the party in online regulation. Indeed, prior to 2008, there were no efforts at all to enshrine any governance in law. Early efforts to rectify this were similarly haphazard, with the original attempt at some form of clarification resulting in a ban on anything other than sports betting from state-owned companies.

With that said, there was little impact on players. Casino and sportsbook operators from abroad were not officially licensed and regulated within Germany, but that was a hurdle for the operators themselves to overcome. Regulators were typically hands-off in their approach, and numerous casinos were happy to accept German players, with some gambling groups even going as far as to design specifically German sites which featured language options, payment methods and games that were unmistakably created with German players in mind. To date, while any play at an online casino in Germany has technically fallen outside the law, no player has been pursued or prosecuted for doing so.

The Early Days of the Interstate Treaty on Gambling

Every state in the country opted to become part of the treaty until, in 2012, Schleswig-Holstein famously opted out and took the unprecedented step of opting out of the agreement. They even went so far as to award their own gambling licenses to a mix of local and international operators. These awards were short-lived, with no further licenses given to operators after the first year, although existing ones remained in effect until their expiry in 2018, which brings us up to today.

Prospects for players and operators now appear better than they have ever been with a seemingly concerted effort to regulate online gambling across Germany rather than to ignore it completely. However, to take one step forward, gambling companies in the country first had to take a couple back.

The Loss of Online Merkur and Novoline Slots

While plans were seemingly already afoot to overhaul the gambling protocol in all 16 states, the German government wanted to demonstrate that it meant business. While plenty of discussions took place behind the scenes, the most visible change in the gambling landscape came through the disappearance of some vastly popular online slots.

Both Merkur and Novoline are brands that are heavily ingrained in German gambling culture. Between them, they make up more than 80% of all land-based slots in the clubs and casinos of the country. Unsurprisingly, given their vast market penetration, famous games from both brands were often the first stop for any player heading to an online casino. The likes of Book of Ra and Triple Chance wasted no time in establishing themselves as online heavyweights commensurate with their offline performance.

Crucially, however, both companies see far more value in offline German gambling than its online counterpart. This is down to a number of factors, such as the importance of the duopoly and the fact that both companies were relatively late starters in the online gambling space. Most importantly of all, they were the companies with the most to lose should they opt against sticking to the letter of the law in Germany.

As a result, when strict procedures and licensing requirements were implemented, notable slots and casino games from Merkur and Novoline were the first to go. Practically overnight, German players that visited their favourite Novoline casino would find that their favourite games had been removed or blocked.

Frustratingly, the influence of German regulators over the offline market played the most critical part. International brands with a robust online presence, such as NetEnt of Sweden, were not compelled to take such immediate action. To this day, it is not uncommon to find a former Novoline casino now pulling together games from alternative brands that are not as inclined to stick to German regulation. While this does give longstanding members alternative slots to enjoy, it does breed a sense of familiarity from one casino to another, where Merkur and Novoline slots previously allowed them to stand out.

Germany Takes Online Gambling Seriously

Changes are afoot, and while German players have had to endure a turbulent market for some time, the wait looks set to have been worth it. A new treaty was drafted in March 2019 with the goal of converting the original Interstate Treaty on Gambling into a relatively open but highly regulated market as opposed to the isolationist approach of the original.

As part of a trial effort, 20 operators were earmarked for licenses, representing a thoroughly progressive approach. While regulation previously appeared to favour state-owned operators with the ultimate goal of a monopoly, the German government now actively seeks to discover the impact of increased competition within the country.

While 20 operators already form part of the trial, there is no cap on the number of licenses that may be issued. Indeed, reputable operators are actively encouraged to become licensed within the country as more companies make for a better stress test as the industry is evaluated, and the bill is adapted accordingly. It could see an influx of dominant and less familiar names given that these licenses are for both online and offline gambling.

However, German regulators still insist on everything being done their way. Perhaps the most striking regulation of all is a blanket ban on television and radio advertising for gambling companies. Regulators bypassed operators altogether in February 2019 when the Media Authority of Hamburg Schleswig-Holstein contacted all German broadcasters to notify them of a blanket ban on gambling advertisements. Most complied immediately, with those that do not facing further action.

A More Liberal Gambling Future for German Players

It could be argued that Germany is behind other countries in Europe, notably Italy and the UK, in their approach to gambling regulation. However, the wait looks set to have been worth it as players can expect a safe, fair, but ultimately relatively open and legal gambling market going forward. As the largest economy in Europe, Germany represents an attractive proposition for gambling operators, and the opportunity to market to players in the country is one that they will not take lightly.

Explicitly legal operations are critical to more player choice. There is more to an unlicensed operation than the risk of falling foul of regulatory powers for online casinos. It also restricts their access to games, payment providers and marketing channels. While players have never been the ones at risk in an unregulated market, the results of this test period, which is scheduled to run until June 30, 2021, will shape opportunities and enjoyment going forward.

For casino players exclusively, discussions are underway to extend the original Schleswig-Holstein licenses by 3 more years to match the sports betting trial period. At that point, we expect to have a far clearer vision of what we can expect from betting and gambling in Germany far into the future.