Regulatory Challenges from New Forms of Gambling

On 28 April 2023, the Joint Gambling Authority of the Federal States (GGL) confirmed in a press release that, following its hearing letter, a provider…

Published on: 04.05.2023
Reading time: 3 mins
Author: Kevin Rieger

On 28 April 2023, the Joint Gambling Authority of the Federal States (GGL) confirmed in a press release that, following its hearing letter, a provider of “daily fantasy sports” (DFS) had stopped offering its product in Germany. According to the GGL, it had “within its remit […] reviewed certain forms of the game concept […] and classified them as illegal gambling.” After the hearing initiated by the GGL, the offer was discontinued.

With this, the GGL makes clear that the new regulatory framework gives it strong enforcement powers. Its review is structured around two key questions:

Is it (online) gambling? If so, the GGL is responsible.
If it is gambling: Is the provider licensed? And can this type of gambling be licensed in Germany at all?

The daily fantasy sports case shows how firmly the GGL acts on the answers it reaches. As soon as it considers something to be gambling and the provider is not licensed, it takes enforcement action. Put differently: if the 2021 State Treaty on Gambling (GlüStV 2021) does not provide for a type of game, that game is considered “not licensable” and therefore becomes a target for enforcement.

However, what is licensable is the result of a political negotiation process. Regulation is never “finished.” The current State Treaty on Gambling is the best example of this. Before the GlüStV 2021, there was no nationwide regulatory framework for virtual slot machine games. Partly because of strongly increased demand, the State Treaty included this type of game. The result is a legal market with clearly defined regulatory requirements. Stronger enforcement by the GGL makes access to unregulated types of games much more difficult. Still, regulation can be the more effective option, drawing on experience from other markets. Only when a type of game is regulated can specific player protection standards be developed and enforced for it.

Daily fantasy sports is just one type of game that German gambling regulation currently treats only as a matter for enforcement. The same applies to betting on esports. Both are currently considered gambling, but not licensable. Other countries take different approaches. Great Britain, for example, regulates daily fantasy sports as “pool betting,” which corresponds to the German “Totalisatorwette.” On betting on esports events, the UK Gambling Commission’s general position is also clear: “Betting on eSports should be treated no differently as betting on any other live event.”

Other trends also require a regulatory response:

Social casinos offer copies of virtual slot machine games that require a license, but without the possibility of winning real money.
Crypto casinos allow people to gamble using cryptocurrencies.
Loot boxes and copies of real gambling games in video games blur the line between “gaming” and “gambling.”

These many new topics show that after regulation comes the next round of regulation.

I will give 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,” you get 20% off the registration fee. I look forward to interesting discussions in Düsseldorf.