Online casinos are in great demand and the industry continues to grow. This is also noticeable in the software developers who are constantly bringing new games to the market. While many markets have long been regulated, Germany was a legal grey area for a long time. Players were confused and never knew exactly whether gambling was legal or not.
For many years, online gambling was prohibited in Germany. Interestingly, however, gambling itself was not. This led to the uncertainty of many players. A company was not allowed to host a gambling site within Germany. But it would have been no problem if the site was abroad. Customers were allowed to register and could play without any problems. Many casinos in Malta had therefore concentrated on the German market. Nevertheless, players were unsettled. Especially when Schleswig-Holstein decided to take a special path. They were the only federal state to issue casino licences. However, they were only valid for customers from Schleswig-Holstein.
After years of discussion, a new State Treaty on Gambling was finally reached. Gambling has been permitted in Germany since 2021. However, the new law contains a few points for player protection that bring little joy. Many players therefore still want to look more to foreign casinos. A licence can now be issued throughout Germany. With this guide, we try to look at the end of the legal grey area. Especially the changes and what that means for you as a customer.
Development of Online Gambling in Germany
For a long time there was an unregulated market in Germany. Online casinos were widespread. When the State Treaty on Gambling came into force in 2008, online gambling was suddenly prohibited. Not only online casinos were prohibited from offering their games. All banks and service providers who cooperate with the platforms were also threatened with penalties. Fines ranging from a fine only to imprisonment were announced. In the end, the EU prevented Germany from banning gambling completely. Since they also have to abide by applicable EU regulations.
The original draft of the State Treaty on Gambling namely, provided for a comprehensive ban also for foreign casinos. Within the EU all businesses must be able to operate across borders. As strict as the law sounds, it was not implemented in the end anyway. The government wanted to use it to fight gambling addiction and fraud on the internet. But after it was not implemented as intended, there were more years of an unregulated market.
It was not until 2012 that the state treaty was revised and sports betting and online lotto were allowed. The ban on online casinos and online poker, however, remained in place. Only 15 of the 16 federal states agreed on this change. Schleswig-Holstein has chosen a special path. They issued their own casino licences for their federal state. The licences were then only permitted for residents of the state. Residents of the other federal states had to continue to gamble in a grey zone.
In the following year, there were already over 50 licensed online casinos in Schleswig-Holstein. The licences were valid for 6 years and the companies paid 20% as gross sales tax to the state. After this success, the other federal states talked about a new State Treaty on Gambling. However, there were many points on which the federal states could not agree.
Therefore, the process dragged on for many more years. In the end, uniform regulations were adopted. Schleswig-Holstein also deviates from its special path. They agree and implement the uniform rules. The casinos that had already received a licence before could officially continue to operate them until the 6 years expired.
Changes in Gambling Law in Germany
The amendments to the State Treaty on Gambling in 2012 were intended to regulate the market. The German draft provided for a limitation of foreign providers. The EU did not want to accept this and took action against the draft. The European Court of Justice then condemned the draft. Germany was unable to implement its plans as it wished. EU laws on the free movement of services within the Union continued to allow casinos in Germany. Although they were licensed abroad, Germans were allowed to gamble legally.
Again and again, there were new treaties that were drafted. For example, in 2017 when there was an adjustment. The intention was to implement the EU regulations and still stay on a strict course. But after it was rejected again, many federal states wanted their own laws. Following the example of Schleswig-Holstein, some thought about taking special paths. They wanted to pass their own law for the awarding of casino licences for their federal state. In this way, gambling was to be legalised in the federal states. For customers, however, this would have created even more uncertainty. If there are different rules everywhere, it confuses unnecessarily.
In the end, the politicians were able to agree on uniform rules. There is a new State Treaty on Gambling and it is valid throughout Germany. The first changes were already made in 2020. Since then, the identity of the players must be carefully checked by the casino. There is also a maximum deposit limit and you have to confirm your losses. The entire gambling law came into force in July 2021. Online casinos can apply for a licence and the market is regulated. The State Treaty on Gambling has resulted in some further changes for German players.
- A game round must be at least 5 seconds long
- Autoplay is no longer allowed
- The maximum stake per game is 1,- €.
- Voucher or cash payments are no longer allowed
- Maximum deposit per month is 1.000,- €
Taxes on winnings in the online casino
If you are lucky and win at the online casino, you get to keep the entire amount. Gambling winnings are tax-free in Germany. You do not have to report them to the tax office. You should keep in mind you have to declare a payout of more than € 10,000 to your bank. If you forget to do so, the payment may be rejected. You should not take this risk and think about it beforehand.
Online casinos, on the other hand, have to pay considerably more taxes. In addition to the usual 19% VAT, there is also a gambling tax. For online slot machines and online poker, 5.3% tax is due. The amount is calculated on the gross bet made in the casino. For many casinos, the market in Germany is therefore not attractive enough. At least not to apply for a licence in Germany. Since the EU laws still apply, there are still many sites from the past.
The Future of Gambling in Germany
With the State Treaty on Gambling of 2021, the market in Germany has gone in a new direction. Gambling is legalised and casinos can apply for a German licence. However, it was already clear to many when it came into force that the rules are very strict. The 5 second spin rule or, for example, that you may bet a maximum of 1,- € per game round. Many players are angry about this and hopefully it will be improved. If this does not happen, more and more players will deliberately play at foreign providers.
The EU law continues to apply that there must also be freedom of services across borders. Although it is now possible to apply for a licence in Germany, it is difficult to obtain. Many reputable providers are licensed in Malta. There are also strict rules here, so you can be sure that the provider is fair.
The State Treaty on Gambling was supposed to take away the uncertainties of the past for customers. But clearly there is more confusion. That cannot have been the plan. Above all, player protection is found in the rules. The contract is supposed to ensure that customers are not exposed to any risk of gambling addiction. Consumer protection in case of problems and also the protection of minors were clearly in focus. But in the end, this is of no use if customers prefer to play with foreign providers. The restrictions go too far for many players. They have lost a lot of fun in the games due to the new rules. High rollers in particular will have problems with the maximum deposit per month. It is not yet foreseeable how this can be changed.
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