Schleswig-Holstein Joins Germany’s Interstate Gambling Treaty

The northern German state of Schleswig-Holstein will be changing its gambling laws once again. It was not too long ago that the state went “rogue” and passed its own Gambling Act without the support of the other 15 German States. Under the act, 7 internet sports betting licenses were issued to operators including bwin, Betfair and bet365. However, the gambling laws were put into action by a more liberal government than the newly elected SPD-led government.

The new government has decided to join the other states in their restrictive gambling treaty which went into effect on July 1st and bans both internet casino gaming and online poker. This treaty allows for up to 20 licenses to be issued to private operators but would include a 5% turnover tax on all sports bets. This 5% tax makes the market not commercially viable for Betfair so the company was going to pay the Schleswig-Holstein state tax of 20% on gross profits. Bwin, on the other hand, has chosen to pay the higher 5% tax.

When this treaty was initially proposed the European Commission (EC) had its doubts. However, the EC offered Germany 2 years in which to prove that the treaty would protect players from fraud, crime and addiction as the country’s 15 other states believed it would.

Schleswig-Holstein will still issue another four to six licenses before the parliament returns and can issue a moratorium and introduce new bills. Andreas Breitner, the Interior Minister, has suggested that canceling issued licenses may not be an “out of this world” solution since the operators who have already obtained licenses legally could sue.