A pivotal lawsuit in Germany aimed at reimbursing gambling losses has been referred to the European Court of Justice (ECJ). The Federal Court of Justice of Germany (BGH) was initially scheduled to decide on whether unregulated operators should refund player losses earlier this month. However, this hearing was canceled after the defendant, an Austria-based sports betting operator, withdrew its appeal.

Last week, a regional court decision on player reimbursement lawsuits mandated that all German civil courts, including the BGH, must either suspend proceedings or submit them for review. This action, spearheaded by the German law firm Hambach & Hambach, ensures that online sports betting and casino issues related to EU law will now be heard by the ECJ. The European court will ultimately make the final ruling on these cases.

The BGH has faced criticism for its perceived reluctance to refer cases to the ECJ. During a March ruling on a sports betting case, the BGH neither suspended nor submitted a referral, which some saw as a hesitation to seek an overarching EU law decision. This could have led to ongoing legal confusion without a decisive EU court ruling until regional courts intervened.

Potential Precedent of Reimbursement Rulings

Claus Hambach, partner at Hambach & Hambach, along with senior associate Phillip Beumer, cautioned that a decision to reimburse players could establish a problematic precedent in Germany.

“Mass media reports have already picked up on the above note by the Federal Court of Justice,” stated Hambach & Hambach. “According to representatives of the ‘player claim industry’, this might now result in a deluge of complaints and court cases.”

They warned that such an outcome could be driven by significant advertising and media coverage, indicating that financiers appear ready to continue backing these claims, potentially extending to sports betting losses, not just casino losses.

Hambach & Hambach expressed concern that reimbursing players might inadvertently bolster the black market. “Germany’s massive black market will even grow further. If players are reimbursed for losses with unlicensed operators, this will only incentivise them to bet with unlicensed operators as the case law basically established betting without a risk of loss.”

Challenges with the Black Market in Germany

A 2023 study by the University of Leipzig highlighted the prevalence of offshore operators in Germany’s online gambling market, revealing that nearly half of all online gambling occurs with these unlicensed entities. The channelisation rate in Germany’s online gambling space stands at just 50.7%, with the study estimating that the black market accounts for three-quarters of online revenue. This situation results in the state missing out on hundreds of millions in tax revenue.

In response, both the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV) have urged the German gambling regulator (GGL) to make onshore operators more attractive to bettors. By improving the appeal of regulated platforms, these associations hope to draw players away from the black market and ensure that gambling activities contribute to the national economy.

As this lawsuit progresses to the European Court of Justice, its outcome could significantly impact the regulatory landscape for online gambling in Germany and potentially across the European Union. The final decision by the ECJ will be crucial in shaping the future of player reimbursements and the fight against the black market in the gambling industry.

Source: “Germany loss reimbursements lawsuit to be sent to European court”. iGamingBusiness. May 20, 2024.

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BetConstruct, the powerful international supplier of software, technology, and live dealer games for online casinos, has announced that its global footprint is bound to further expand after having secured a German license for its virtual slot machine games.

The respective license was obtained from the GGL, the German iGaming regulator, and it gives BetConstruct the opportunity to offer its virtual online slot machines to companies that operate online casinos in this market.

This news affects both slot game providers, operators and ultimately German players as they will receive access to a wider range of slot games, including new content from BetConstruct.

Hermine Gevorgyan, Head of the Licensing and Certification Department at BetConstruct, revealed that the company is “thrilled” to have secured the German virtual slot license and described it as “a remarkable achievement.” The BetConstruct executive also added that the German license represents “the culmination of a challenging and rewarding journey” for the company’s licensing team.

Gor Mnatsakanyan, Regional Director for Germany at BetConstruct, admitted that “securing the German slot license was undeniably a challenging journey” but the difficulty of obtaining it makes it an even prouder moment for the company as it represents a “significant achievement.”

The Regional Director added that BetConstruct is now “poised to introduce a new niche to the market” in Germany and to set “higher standards” for the whole industry thanks to the “innovative and award-winning products” offered by the supplier.

An Experienced Company

BetConstruct was founded in 2005 in London and since then it has grown into a global powerhouse, employing around 800 people in several offices located in the United Kingdom, Armenia, Ukraine, Latvia, Malta, Latin America, France, Germany, Austria, Peru, Mexico, China, South Africa, and the United States of America.

The company has developed its offering in various sectors of the gaming world, offering online and retail sportsbook services, classic and virtual casino games, poker and skill games, along with live casino games.

The company currently holds several licenses in key jurisdictions from all around the world, including approval from the United Kingdom Gambling Commission, the Romanian National Gambling Office, the Malta Gaming Authority, ARJEL (the French Regulator), the National Gambling Board in South Africa, the Government of Curacao and Spelinspektionen (the Swedish Gambling Authority).

Source: “BetConstruct Obtains a German Licence for Virtual Slot Machine Games from GGL“. BetConstruct. December 1, 2023.

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Entain Plc, a prominent player in the global gaming industry, endorsed the findings of a study commissioned by the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV), highlighting the significant presence of black-market operators in Germany. The operator noted that current regulations disincentivized consumers from engaging with regulated gambling companies, contributing to substantial regional losses.

Unlicensed Operators Hurt the Regulated Market

According to the University of Leipzig report, only about 50.7% of players were channeled towards licensed online gambling spaces, while approximately 28.9% of traffic headed to unlicensed EU providers and 19.9% to unlicensed offshore providers. The study estimated that the unregulated online gambling market generates three-quarters of the revenue, resulting in significant tax revenue losses.

Germany’s regulatory deficiencies have also been detrimental to operators, as the aftermath of the State Treaty on Gambling in Germany included a visible shift of players towards illegal providers due to access barriers imposed by the current regulations. The operator has since experienced a significant decline in recorded sales and has been a vocal advocate for more effective enforcement efforts.

When looking at individual gaming behavior, it becomes clear that players are obviously switching to illegal providers and continuing to play there.

Grainne Hurst, Entain Group Director of Corporate Affairs

Entain operates Bwin, one of Gernamy’s top three online sportsbooks, and maintains an impressive presence among many European jurisdictions. While the Old Continent is infamous for its diverse regulatory environment, the company noted that current German regulations were among the most restrictive, significantly limiting competitiveness with grey market entities.

Entain Offered to Collaborate with Lawmakers

During an interview with GamesundBusiness.de, Entain Group Director of Corporate Affairs Grainne Hurst stressed the necessity for regulatory amendments to enhance player protection and make legal gaming offers more appealing. She reiterated that proper implementation of regulations could effectively redirect players towards legal platforms and reduce the appeal of unlicensed operators.

Entain also criticized German regulator Glücksspiel (GGL) for its lacking methodology, which only recorded a 2-4% share of illegal gambling activity. The operator expressed willingness to engage in discussions with the GGL to help foster improved player protections in Germany and encourage a fair, sustainable, and player-focused market.

Entain is making great efforts in Germany to ensure that implementation is now consistently geared towards the best possible player protection with appropriate channeling.

Grainne Hurst, Entain Group Director of Corporate Affairs

While Entain’s stance against illegal operators in Germany is commendable, the company remains primarily motivated by the impact of such activities on its bottom line. Increased competitiveness with unlicensed entities would significantly bolster its regional presence and signify a milestone achievement. A victory in Germany should also alleviate the company’s ongoing troubles and improve investor confidence.

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The German Interstate Treaty on Gambling was introduced in July 2021 as a piece of legislation that represented the cornerstone of the government’s efforts to strike a balance between the desire to develop the online gambling industry and the obligation of providing a safe gaming environment. Two years later, the industry is still trying to find the perfect balance.

One of the main objectives of the Interstate Treaty on Gambling was to protect players from gambling harm. For this reason the law introduced strict regulations, including mandatory ID checks and a rather low deposit limit of just 1,000 euros per month. Moreover, the legislation introduced a ban on advertising gambling products during certain hours.

Another aim of the German government was to curb illegal gambling activity, because before 2021 the market was invaded by online casinos which were run by unlicensed operators. The legislation introduced clear regulations and licensing requirements and it seems to have been a success in this regard as recent surveys reported a drop of 65 percent in illegal gambling activity in Germany.

Voices that criticized the Interstate Treaty on Gambling insisted that the strict legislation leaves the German gambling market with a narrow range of products compared to other countries. In fact, the German market does offer a limited range of sports betting products and casino games, but the government intentionally did that in order to promote responsible gambling.

The main goal of the Interstate Treaty on Gambling remains preventing gambling addiction and harm, and that is why the government emphasizes having a secure and controlled gaming environment rather than a wide variety of options.

Strict Advertising Regulations

The strict advertising regulations have also been controversial in the German iGaming industry. The legislation aimed to protect non-gamblers from exposure to gambling content while giving existing gamblers enough opportunity to make informed choices.

However, markets like the United Kingdom and Denmark have demonstrated that more advertising does not necessarily lead to more gamblers. The difference can be made by the type of advertising that is made available. If the advertisements are focused on legal options and player protections, then they can help guide gamblers to make informed decisions.

Overall, the German gambling legislation seems to have reached its goals as they were set out back in 2021. Illegal gambling activity was significantly reduced, players receive enough protection and responsible gaming is promoted. It is also true that there is limited product diversity in this market, but this downside was accepted by the legislator as a necessary trade-off in order to protect player welfare.

Source: “German Gambling Legislation: A Winning Bet for Player Protection?“. European Gaming. October 12, 2023.

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A week after signing a partnership with the VBA, Genius Sports, a company at the heart of the sports data ecosystem, has unveiled an expansion of its integrity cooperation with the German Football Association (DFB). Together, the two parties will protect the integrity of professional soccer and will stand united against the threats of match-fixing and betting-related corruption.

Genius Sports first joined forces with the German Football Association in 2019, when it agreed to provide it with its cutting-edge Bet Monitoring System. The system analyzes global odds movements from more than 7,500 games a year. Thanks to special algorithms, the solution is able to instantly identify potentially suspicious betting activity.

Under the expanded partnership, the DFB will still receive the constant monitoring and analysis Genius Sports offers. In addition to that, the association has now further reinforced its protection against corruption by leveraging Genius Sports’ Intelligence platform, provided in partnership with Clue.

As a result, the soccer body will now be able to spot suspicious patterns faster. The DFB will also enjoy increased visibility of threats to players, match officials and coaches. Thanks to Genius Sports’ global intelligence and transparency tools, the DFB will be able to better manage the risks across professional German soccer.

Finally, Genius Sports’ Intelligence system will provide the DFB with a centralized vault for all integrity reports. This will make investigations smoother while ensuring a fruitful partnership between the two parties.

The Deal Will Help the DFB Secure the Integrity of German Soccer

Eva Immerheiser, integrity officer at the DFB, highlighted the importance of protecting the integrity of soccer from gambling-related corruption and fraud. She said that the current deal is an opportunity to make fraud detection easier.

In the continuation of the cooperation with Genius as well as the intelligence upgrade with Clue, we see the opportunity to detect possible illicit patterns faster and to be able to intervene at an early stage. We look forward to working with Genius on a new level.

Eva Immerheiser, integrity officer, DFB

Simon Martyn, Genius Sports’ director of rights enforcement and integrity, also commented on the matter. He said that his company’s partners require constant vigilance and product enhancements to keep up with the concerning fraud rates. He added that the current deal with the DFB will supply the association with everything it needs to protect German games from betting fraud.

By expanding our cooperation with the DFB, we will provide rich intelligence, analysis and visibility to help protect one of the largest and most prestigious football associations in the world.

Simon Martyn, director of rights enforcement and integrity, Genius Sports

A month ago, Genius Sports also joined forces with the European League of Football, securing exclusive rights to capture, manage and distribute official ELF data.

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The German Sports Betting Association (DSWV) published a press release on its website, criticizing the market figures, sources and methodology used by the German Head Office for Addiction (DHS) in its article, Yearbook Addiction 2023.

Incorrect Market Size Calculation

The DSWV states that the DHS uses incorrect figures as per the sports betting market size in Germany in 2021, putting up total sales at €18.3 billion ($19.9 million), translating to an increase of 409.6% year-over-year, while the market totaled €9.4 billion ($10.2 billion) in wagers, or an increase of 21%.

The DSWV was provoked to inform the public that Yearbook Addiction 2023 was based on incorrect figures after informing the DHS about the correct method of calculation did not change the figures the DHS used to calculate the 2021 market size in the revised version of its article.

Prof. Dr. Gerhard Meyer from the Health & Society Department of the Institute for Public Health and Nursing Research at the University of Bremen used gross gaming revenue (GGR) of €1.3 billion ($1.4 billion), as well as a payout rate of 93%, using the incorrect sales figures and comparisons drawn from questionable sources, fussballwetten.com, sportwettentest.net and wettProvider.de.

Elaborating on its claims about the dubious nature of the websites used by the DHS, the DSWV points to the anonymity behind these websites and the incomplete nature of the data they provide.

Furthermore, fussballwetten.com advertises gambling, which is illegal in Germany, and ranks only illegal operators in its top ten betting providers list. The website even suggests that a Curaçao license is enough for legally accepting bets in Germany, working against the legal market.

As for the payout percentage, the DSWV claims that data used by the DHS that was derived by sportwettentest.net and wettProvider.de is incomplete as payouts generally vary based on numerous factors, including the level of competition, taxes, provider’s cost structure and willingness to take risks, and the behavior of players on the market.

Online vs Retail, Combined vs Single Bets

To prove its point, the betting association points to the difference between the payout rates online and in retail, with the latter usually being well below those in betting shops, as well as the different payouts based on the type of dominating bets for each bookmaker since customers placing combined wagers tend to lose more than those wagering on a single event.

Adding the high tax burden of 5.3% on each bet in Germany, the association concludes that the payout rate of 93% used by the DHS in the calculations is not realistic, and expresses its concerns that the University of Bremen reverts to using data from such unreliable sources for its scientific work.

As a staunch defender of the legal market, the DSWV demands again that the DHS and Prof. Dr. Meyer correct their article and calculate the market size according to data published by the Federal Ministry of Finance based on the 5.3% tax on stakes and where 95% of the payments come from regulated providers.

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Following an extensive review of Tipster.de’s operations, financial status, and compliance with regulatory requirements, Gluecksspiel (GGL) has concluded that the company’s license must be revoked. The measure will prevent the company from offering games of chance in Germany, effectively banning it within the country. GGL’s decision will significantly impact the struggling operator as it looks to sell off its assets.

The Regulator’s Decision Was Fully Justified

The decision to revoke Tipster’s license is based on the concerning factors uncovered during GGL’s evaluation process. The business currently finds itself in a precarious position after its recent filing for bankruptcy, rendering it unable to meet its obligations to customers, suppliers, and regulatory authorities. Since the betting group is under administration, it cannot effectively dispute GGL’s verdict.

We take consistent action against license holders if they violate elementary rules of the State Treaty on Gaming.

Ronald Benter, GGL co-executive director

Things came crashing down for Tipster after the German police raided the operator’s premises due to alleged ties with organized crime, leading to the arrests of six people. The sudden action was part of a joint pan-European investigation regarding unlicensed gambling, corruption schemes, large-scale money laundering, and tax evasion. In the aftermath of the raid, the group filed for bankruptcy, sealing its fate.

Losing its license at such a critical time will have a devastating effect on Tipster. The company hopes to find a buyer after it restructures its operations. However, its spotty history and inability to operate in one of Europe’s leading markets significantly reduces its attractiveness and can negatively impact the ongoing insolvency proceedings.

Tipster’s Fate Should Teach Operators a Valuable Lesson

GGL’s decision to revoke Tipster’s license appears justified considering the operator’s current state. With its leadership and operations in shambles, the company cannot guarantee basic player protections and meet its contractual obligations. The company refused to comment on the situation, and its website remains offline, making any hopes of a resurgence virtually nonexistent. 

Such a sudden downfall came as a shock, considering the business had annual revenues of €250 million ($273,76 million) and employed over 1,000 people. However, GGL noted that it was willing to take action even against the high-profile operators, evidenced by its recent probe into Daily Fantasy Sports operators in the country.

Glücksspiel’s revocation of Tipster GmbH’s license represents a significant development in the German gambling industry, demonstrating the regulator’s ability to implement harsh punishments given sufficient justification. The case should also send a message to other operators, highlighting the need to uphold financial stability, compliance with regulations, and responsible gambling practices.

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In different jurisdictions, gambling regulators monitor gambling activities that can be a lottery, online casinos, sports betting or keno, among others. As regulated gambling activities, they bring tax revenue while a regulator is usually in charge of licensing and monitoring the compliance of the operators to the established framework.

In the UK, for example, anyone can view public data related to licensed operators in the country by visiting the Gambling Commission’s website. Similarly, the gambling regulatory watchdog in Germany, Gemeinsamen Glücksspielbehörde der Länder (GGL), also presents information regarding licensed operators. This public information enables the consumers to determine if an operator holds a license or supplies its services illegally.

Earlier this week, GGL released an update to its white list, adding another prominent gambling operator. In the updated version of the list, the regulator included NetBet, the globally-recognized gaming and entertainment company.

Within the regulated market in Germany, the company operates under the name NetBet Enterprises Limited. Judging by the updated version of GGL’s list, NetBet is permitted to legally offer its services via two different domains. Those domains are vegas.netbet.de, as well as netbet.de, the gambling watchdog explains.

The Company Continues to Expand

In addition to helping users determine if an operator holds a license in Germany, GGL’s white list can also help different providers of media and advertising services. This is because some operators, that do not hold a license in the country can try and engage in advertising services, an action that would be in breach of the existing regulatory framework. Thanks to the list, such companies can ensure they are joining forces only with licensed gambling operators.

The update within GGL’s white list comes after only recently, the Higher Administrative Court of the State of Saxony-Anhalt confirmed that the gambling regulator can enforce penalties over breaches of the regulations from operators. The approval confirms that the GGL can impose penalties for operators that purposefully breach the regulatory framework by using affiliates to advertise their products illegally in the country.

Securing a spot on GGL’s white list in Germany marks an important achievement for NetBet. This is because it helps the company continue to expand its already strong presence on the Old Continent. Only recently, NetBet signed a new deal with G Games for the regulated gambling market in Italy. Although NetBet has established a strong presence in the country already, the new deal will undoubtedly help the operator reach new clients by delivering titles from G Games.

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Germany’s new gambling regulator, the Gemeinsamen Glücksspielbehörde der Länder or GGL, issued a new report Thursday, explaining that licensed sports betting operators had a market share of more than 95% in 2022. This left a niche for black market operators of less than 5%, judging by analysis based on tax data released by the GGL.

Besides the overwhelming share of the licensed market, the watchdog reaffirmed its commitment to continue the fight against illegal gambling. According to Benjamin Schwanke, a Board member of the GGL, a primary focus for the regulator is the protection of customers and continuing the fight against illegal operators. Additionally, he said that the regulator could not “find any crowding out of legal offers by illegal offers.”

“According to our market analysis, the channeling rate is well over 95 percent, which means that apart from less than five percent, the betting stakes are placed with the permitted sports betting providers according to the tax data of the Federal Ministry of Finance.“

Ronald Benter, CEO of the GGL

The announcement by the gambling watchdog comes after a report released recently by the DSWV, a German sports betting association, claimed that the strict regulations have resulted in a decrease in the legal sports betting market in the country last year. The GGL explained that the DSWV backed its statement by claiming that there was “an increase in the illegal sports betting market.” However, the regulator said that its data disagrees with the claims made by the sports betting association.

“Analysis of the tax data for 2022 shows that well over 95% of sports betting sales come from permitted providers,“

reads a statement released by the GGL

The Watchdog Remains Vigilant

The regulator acknowledged that a 5% dip in the sports betting market was observed in 2022 when compared to 2021. This was, according to the Authority, an impact of the pandemic and the postponement of the European championship from 2020 to 2021. Still, the GGL said that the market position of 2022 matched the levels recorded pre-pandemic in 2019.

Details regarding the analysis of the legal sports betting market in 2022 come after the GGL issued its first fine for a gambling ad regulations breach. Earlier this week, the regulator confirmed it has implemented a five-figure fine against one operator who wasn’t named.

At the time of the announcement, the GGL said that it uncovered a licensed operator that advertised its services via a website offering illegal gambling services. As a result, the GGL issued a fine but did not confirm what was the exact amount and rather said only that it was a five-digit penalty.

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