Schleswig-Holstein to join Interstate Treaty

The breakaway German federal state of Schleswig-Holstein is to abolish its own gambling law and join the new Interstate Gambling Treaty recently ratified by the other 15 Länder, it confirmed Tuesday.

Germany’s northernmost state recently issued seven online sports betting licences to companies including bet365, Betfair and bwin under the Gambling Act passed by the previous government. However, the new SPD-led Cabinet announced in Kiel this week that Schleswig-Holstein (SH) would join the restrictive new common gambling treaty that came into force on 1 July, confirming the intent first outlined in its manifesto shortly after coming to power.

SH prime minister Torsten Albig said the process of joining the Interstate Treaty, which would effectively reinstate the previous ban on online poker and casino across the whole of Germany, should now be “quick and perfectly legal”. According to the cabinet, the parliament will discuss the Approving Act (Zustimmungsgesetz) to join the Treaty at its first reading on 1 August.

The SH premier added: “We are beginning to clear the minefield in the German gambling legislation left by our predecessors in Schleswig-Holstein. We will take all the time necessary [to change the existing legal framework]. But in the end, Schleswig-Holstein will join the other 15 states under a common gambling law.”

Germany’s new Interstate Treaty replaced the state monopoly on online sports betting with the issue of up to 20 licences to private operators,  alongside a prohibitive 5% turnover tax on sports bets and a continued ban on online poker and casino.

FDP parliamentary leader Wolfgang Kubicki however accused the new government of drawing the country “into a dead end” by joining the common Treaty. He said the goverment would not only endanger hundreds of jobs, “but it will also infringe EU law.”

The European Commission in March gave German authorities two years to prove the Treaty’s restrictions on freedom to provide gambling services justified its stated aims of better protection for players from crime, fraud and addiction. The new interstate framework also recently came in for criticism from Germany’s Monopolies Commission, that also held up SH’s regime as a model for future regulation in the country.

While SH issued seven licences for online sports betting under its Gambling Act, which provides for the issue of unlimited licences for all products including online poker and casino based on a 20% tax on gross profit, it has been unable to levy and collect taxes due to a clause in the Act, which stipulated “gaming duty shall not be levied on … lotteries and betting that are subject to taxation under the [federal] Betting and Lotteries Act.”

While SH would potentially be able to levy taxes on games that are not regulated by the new Interstate Treaty, such as online casino and poker, it has yet to issue any licences for these other products, despite receiving 21 applications to date, on top of a further 28 for sports betting.

Interior Minister Andreas Breitner admitted last month that SH was powerless to prevent the issue of four to six more licences ahead of the parliament’s return in August, when a moratorium on the issue of further licences could be applied when a new bill is introduced.

Breitner however added that proposals to cancel the existing licences were “not of this world”, due to the potential for operators licensed under the law to sue for damages.

bwin brand owner, that had planned to offer sports betting, poker and casino across Germany off its SH licence and pay 20% on gross profit, “or continue operating in Germany as is”, recently announced it would be paying the higher Rennwettlotteriegesetz (RWLG) turnover tax on all of its sports bets in Germany. Betfair, however, for which the federal turnover tax effectively renders the market unviable for its core betting exchange, declared its intention during its recent FY analyst earnings call not to pay this, instead paying its taxes in SH.

Irish operator Paddy Power decided to block access to its site from Germany once the new Treaty entered into force on 1 July. William Hill also pulled its sportsbook from the market last Friday.

Casino Choice journalist

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