Legislation
Germany – Lower Saxony prohibits payment service providers for the first time
By Phil - 17 June 2019
The Lower Saxony Ministry of the Interior and Sports has banned a large, international payment service provider from participating in payment transactions in connection with illegal gambling in Germany for this first time. This was done with effect for the entire federal territory.
The Lower Saxony Minister of Home Affairs and Sports, Boris Pistorius, said: “We are signalling our intent and expect this more to put pressure on other payment service providers to reorganise their business processes in connection with illegal gambling, if they have not done so already.”
The offer of gambling on the Internet is generally inadmissible in Germany under the state gambling contract. Exceptions apply only to the distribution of state lottery products and in the field of sports betting and, due to a special regional law, in Schleswig-Holstein. On the other hand, for online casino games including online poker, the event and mediation via the Internet is forbidden and otherwise punishable. The same applies to the so-called second lotteries (black lotteries), which are not based on their own game plan or draw, and are not real lotteries, but under German law inadmissible betting on the drawing results of domestic or foreign lottery providers.
“Online casinos,” added Mr. Pistorius, “are no triviality. They are prohibited by the Gambling Treaty and also punishable. In the meantime, however, it is moving towards a billion-euro market. As a rule, operators are companies based abroad, which are beyond the reach of the German authorities.”
The unauthorised gambling offer underlying the payment suspension has already been prohibited. Although courts have confirmed the official procedure, the gambling companies continue their unauthorised offers from abroad, where they can largely escape the access of German authorities. Therefore, the Lower Saxony Ministry of Home Affairs and Sport has looked to punish the payment service providers involved with the aim of effectively preventing the implementation of illegal offers in this way.
Minister Pistorius said: “The payment service providers have an important responsibility here. You are required by law to refrain from payments in connection with unauthorised gambling. ”
The State Treaty on Gaming contains a general prohibition on participation, which is aimed directly at all those involved in payment transactions involving unauthorised gambling and is obliged to take appropriate self-responsible measures. The idea behind this is that an essential component of the infrastructure required for the operation of unauthorised gambling would be eliminated and that action against illicit gambling could be sustainably successful if payment service providers act in conformity with the law and no longer make such payments. It is up to the company itself which measures it takes to comply with the legal obligation.
The Ministry is currently in contact with a number of predominantly foreign companies that have been found to be involved in illegal gambling payments. Some of these companies have already responded and suspended payments.
Minister Pistorius continued: “The successful measures of some payment service providers show that an effective approach is quite possible.”
With the prohibition order now issued, the Ministry is responding to missing measures of the company concerned despite appropriate instructions. Further prohibition orders are expected to follow.
The market for unauthorised online casino games and second lotteries in Germany is growing steadily. According to a black market study carried out on behalf of the gambling supervisory authority, an estimated gross gaming revenue of EUR 2.14bn was generated in 2017 (without including sports betting). This corresponds to a share of the total market of approximately 15 per cent.
Caption: Lower Saxony Minister of Home Affairs and Sports, Boris Pistorius
