On 28 April 2023, the Joint Gaming Authority of the Federal States (GGL) confirmed via press release that as a result of its hearing letter, a provider of “Daily Fantasy Sports” (DFS) had discontinued its offer in Germany. The GGL had “reviewed […] certain forms of the gaming principle within the scope of its competence […] and classified them as unauthorized gambling.” After the hearing initiated by the GGL, the offer had been discontinued.
The GGL thus has strong enforcement tools thanks to the new regulatory framework. The GGL’s review is structured by two guiding questions:
- Is the offer in question (online) gambling? If so, the GGL is responsible.
- If the offer in question is gambling: Is the operator licensed? Is the offer in question even eligible for licensing in Germany?
The “Daily Fantasy Sports” case shows the assertiveness with which the GGL acts on the basis of the answers it has found. As soon as, in its view, the offer is gambling and the operator is not licensed, it takes enforcement action. To summarize differently: If the State Treaty on Gaming 2021 (GlüStV 2021) does not recognize a form of gambling, it is considered “not permissible” – and is accordingly the target of enforcement.
However, what is permissible is the result of a political negotiation process. Regulation is not “completed” or “finished”. The current State Treaty on Gaming is the best example of this. Prior to GlüStV 2021, there was no nationwide regulatory framework for virtual slot gaming. Partly due to the sharp increase in demand, the State Treaty on Gaming has taken up this form of gaming. The result is a licensed market with clearly defined regulatory requirements. It is true that the enforcement strengthened by the GGL makes access to unregulated forms of gaming significantly more difficult. Nevertheless, regulation may be the more expedient option to build on the experience of other markets. Only when a form of gaming is regulated can specific player protection standards be developed and enforced.
“Daily Fantasy Sports” is only one form of gambling which is currently only seen as a subject of enforcement by German gambling regulation. The same applies to betting on eSports. Both product types are currently regarded as gambling, but not as permissible. Internationally, there are different approaches here. Great Britain, for example, regulates “Daily Fantasy Sports” as “Pool Betting”, corresponding to the German totalisator bet. Regarding betting on eSports events, the general statement of the UK Gambling Commission is also clear: “Betting on eSports should be treated no differently than betting on any other live event.”
In addition, other trends require a regulatory response:
– “Social casinos” provide replicas of virtual slot games that require a permit, but without the ability to win real money.
– “Crypto casinos” allow gambling with the use of cryptocurrencies.
– “Loot boxes” and replicas of real games of chance in video games are blurring the lines between “gaming” and “gambling.”
The multitude of new topic blocks shows: After regulation is before regulation.
I will provide detailed insights into these upcoming challenges and opportunities at the Düsseldorf Gaming & Gambling Congress on 16 May 2023, organized by the Zeitschrift für Wett- und Glücksspielrecht (ZfWG) and Hogan Lovells. With the discount code “Referentenempfehlung” there is a 20% discount on the registration price. I am looking forward to exciting discussions in Düsseldorf.
