Online gambling in Germany: law and regulation summarized
Gambling in Germany is facing a number of challenges, both politically and socially. This applies in particular to online gambling. Safe and secure protection is therefore especially important for players.
In order to be able to offer gambling online, companies often have to overcome a number of barriers. These include:
- High compliance requirements
- Identity check and age verification for players required
- Fraud prevention measures
- legally compliant IT security concept
- close cooperation with supervisors
On July 1, 2021, the so-called “Glücksspielstaatsvertrag” ( State Gambling Agreement) 2021 (in short: GlüStV 2021) came into force in Germany to re-regulate the gambling industry. Before that, online gambling such as online poker or online casino games were prohibited. Schleswig-Holstein was an exception.
The regulation of online gambling in Germany
Germany is one of the largest markets for gambling in Europe and the demand has been constantly increasing for several years. However, online gambling in particular has a high risk of addiction, which is why the state takes regulatory measures. In addition, the offer is constantly available on the smartphone or computer, whether at home or on the road.
Since the German Gaming Law of 2012, the federal states have not been in agreement with each other with regards to the regulation of online gambling in Germany, and there has been no standardized regulation for a long time. In the meantime, however, the State Gambling Agreement applies, which was signed by all federal states for the first time in 2021. This defined the current regulations for casino operators and players.
GlüStV 2021 was intended to establish a consistent approach to the gaming licensing process in order to address the following issues:
- Prevention and control of gambling addiction
- Controlling the gambling impulse
- Fighting the black market
- Prevention of manipulation
- Preservation of integrity in sports
By regulating online gambling in Germany, the intention is to ensure the protection of minors and players. For this purpose, a joint gambling authority of the federal states has been created, which is based in Halle, Sachsen-Anhalt.
Casino license only in Schleswig-Holstein? Once upon a time...
The first gambling agreement in Germany was passed in 2008. It defined that online gambling was illegal nationwide. The agreement was to remain in force until a new law was introduced.
In 2012, the state government in Schleswig-Holstein was the only federal state in Germany to legislate a new law, making it possible for companies and businesses to obtain a gambling license for online gambling. The law and therefore the license were only valid within the state borders of Schleswig-Holstein.
Except for Schleswig-Holstein, online gambling was prohibited and illegal in Germany from 2012 to 2021. The GlüStV 2021 replaced the Schleswig-Holstein gambling law and since then it has been possible to play poker, casino and other gambling games nationwide.
What does the gambling reform mean for the industry?
GlüStV 2021 introduced a nationwide gambling license, which means that online gambling in Germany is regulated and fully controlled. GlüStV 2021 brings many long-term benefits for both operators and players or gamblers.
However, the gambling reform, the additional player protection, and the high verification, security, and compliance requirements can be a major barrier for online gambling operators. In addition, numerous regulations must be followed. These regulations are sometimes referred to as "casino KYC". This is because they have some similarities to the KYC regulations that are common in the financial sector.
Players can be better protected from the risks of gambling addiction thanks to the regulation reform. For this purpose, among other things, an individual limit on deposits, which amounts to €1000 per month per person, has been set. In this context, one speaks of the so-called "limit file". Since this measure is a limit that applies to all providers, a digital, nationwide and central system had to be developed.
Operators of online gambling must also set up and operate a technical system known as a "safe server." This records all the data required to carry out gambling supervision. Electronic control by the responsible regulatory authority is possible at any time.
The rules laid down by GlüStV 2021 include the following:
- the protection of players is ensured through a blocking file and the detailed tracking of customer data.
- Young people will be better protected: Minors will no longer be able to participate in online gambling by verifying their identity
- Implementing a campaign to inform players of the risk involved in gambling, measures to prevent gambling addiction, and appropriate counseling services.
- Early detection system needed to identify gamblers addicted to gambling
- an IT security concept and compliance measures are required for every operator
- maximum gaming stakes will be limited to 1,000 euros per person per month
- it should be made impossible to log in and play on several platforms at the same time
- different types of gambling may not be offered on the same domain (exception for horse and sports betting)
- if participation in a game of chance is terminated, it is necessary to wait at least one minute to participate in another game of chance
- winnings may only be used in another game of chance after one hour has elapsed
Casino KYC - Special Compliance for Gambling Operators
In the legal sense, the term "compliance" describes the observation of all legal regulations, specifications and guidelines by companies. The individual federal states and their supervising authorities set high requirements and standards for the operators of online gambling. Inspections are carried out regularly and violations can be dealt with by the withdrawal of a license.
One of the most important regulations for online gambling in Germany is verification of identity and age. Since the introduction of GlüStV 2021, operators must have, among other things, a legally compliant verification system that can check the name, address, birthday, place of birth and the nationality of players.
When an online gambling operator accepts new customers, their identity must be checked using KYC verification before the game begins. KYC stands for "Know Your Customer" and these are personal documents of players, such as the "Proof of Identity" and the "Proof of Address". By verifying these documents, new customers have to wait for identity verification before they can play.
This is where PXL Vision comes into play: thanks to the standardized identity verification and age verification service interface, customer onboarding is simple, fast and legally compliant.
Flexible solutions for online gambling providers are provided, which can be configured individually. Age verification takes only 30 seconds, reducing abandonment rates and increasing conversions. PXL Vision's smart identity verification reduces onboarding costs.