Unusually, his optimism comes from the fact that recent amendments to the German State Treaty on Gambling are insufficient to bring the law into compliance with European Union treaties.
Non-compliance means that the new laws are as illegal as the ones they are trying to replace. As such, companies can rely on the German courts not to enforce them, and operators can legally ignore them.
The result should be some form of replacement of the treaty with one which Alexander believes will include licensed online poker.
Alexander told investors that this was about the twentieth time that he had given a review of German regulation. However, this time he was very optimistic:
“I’ve never been more confident about the future of the regulatory environment in Germany. The German federal states have announced that they are evaluating the regulation of online casino and poker.”
The webcast slide on regulation and taxes made the point:
“The European Commission has upheld its Detailed Opinion on the proposed changes to the State Treaty on Gambling. Amongst EU criticisms is that current amendments do not create a sustainable solution for the growing online casino market.”
The German State Treaty made provision for online sports betting, while leaving online poker and casino illegal. Court challenges both before and after the award of the new licenses rendered the treaty unenforceable.
The new amendments came when the treaty was ratified by all 16 state minister-presidents on March 16. The key treaty change was an increase in the allowable number of sports betting licenses from 20 to 35.
The changes fall far short of bringing the treaty into compliance with EU law. Moreover, they fail to address the consumer protection issue of players using unlicensed gambling sites.
Deutsche Sportwettenverband President Mathias Dahms commented:
“The minor changes to the Treaty is a small step in the right direction, but it is not enough. If the majority of consumers continue to gamble via black market sites the goals of addiction prevention, youth and consumer protection will not be achieved.
“The restrictive regulations for sports betting are based on an out-of-date monopoly system and are not yet suitable to create an attractive, regulated market.”
Politician Wolfgang Kubicki of the Schleswig-Holstein Free Democratic Party said that the new treaty would not get parliamentary support in his state:
“For five years we have not made any progress towards sensibly regulating gambling in Germany. The State Treaty, which has now been agreed by the Länder, will not secure a majority in the state parliament of Schleswig-Holstein, because the Greens and the [Danish minority] Südschleswigsche Wählerverband now also understood that we can only guarantee the protection of gamblers and minors when we erase the grey market with sensible regulations.”
The state of Schleswig-Holstein was the last signatory to the original state treaty on gambling.
Under a previous government, it set up its own license and regulatory system which did include online poker.
All the major operators — including 888, PokerStars and GVC’s PartyPoker — successfully applied for licenses. Each license remains current, but when the six-year term expires in 2018, the licenses will also expire.
The Schleswig-Holstein model was the basis for a separate proposal to amend the interstate treaty put forward by the state of Hesse, which acts as the treaty regulator.
The Hesse proposal arose in the first meeting of the state presidents to discuss treaty changes in March 2016. The state presidents rejected this practical solution. They were unable to secure political support for the expansion of regulated gambling.
The EU Commission’s rejection of the latest amendments makes the tenth occasion on which German state politicians have failed to create a legal online gambling law.
The process cannot continue for much longer. When an EU member state persists in keeping an illegal law on the statute books, the EU Commission gives it several chances to replace it with a compliant law.
If the use of quiet pressure fails to work, then the commission initiates infringment proceedings. These can see the offending country fined a percentage of GDP in the European Court of Justice.
The EU Commission has already started (paywall) the infringement proceeding process against Germany. That marked the end of the road for the political evasion of responsibility.
Germany is coming to the end of a long journey that must result in compliant online gambling regulation.
It is the prospect of an end being in sight that has enthused Alexander, and not a sense of schadenfreude at the plight of German politicians unable to fulfill their responsibilities to their electorates.