Mandatory oversight for nationwide gambling matters
In the University of Hohenheim's 2020 Gambling Symposium, a shocking report left the federal states with a lot to think about. The current system that puts the burden of regulating online gambling on individual states has been deemed inefficient and prone to deviations by state governments.
Prof. Dr. Tilman Becker, head of the Gambling Research Center at the University of Hohenheim, voiced his concerns about the current state of play, specifically the failure of the federal states to properly regulate the online gambling industry. He highlighted the controversial approach of Schleswig-Holstein from 2011 to 2013 which, in a move to issue internet licenses to bookmakers and casinos, served as a singular example of the possible consequences of having such power.
The federal regulatory system has led to a lack of unity, resulting in multiple states with opposing viewpoints. The most recent attempt at reforming the Interstate Gambling Treaty was scheduled for January 1, 2018, but was met with resistance by certain state governments, leading to its failure. This defiance has enabled illegal gambling providers to thrive, as one state's lax approach to gambling can endanger the regulations in all federal states.
Becker emphasized the high stakes of this oversight, emphasizing that "the responsibility of the federal states is a 'design flaw' with catastrophic consequences". An estimated 95% of the online gambling market consists of illegal providers who evade regulation and don't pay taxes. This situation results in an annual loss of around 500 million euros for the German tax authorities. Becker estimates the size of the casino black market to be around two billion euros.
Call for Federal Oversight
Becker's criticism didn't stop with the regulation of online gambling, he also pointed out the demise of the online sports betting market. Since 2012, there has been no progress made in awarding licenses as the states continue to debate the merits. Hertage & Partner, who initiated the licensing process under the presidency of the state of Hesse, has since stalled due to legal concerns from the EU.
The illegal gambling providers, recognizing the economic benefits of this current status, work to maintain their advantage. They are essentially unnerved by the possibility of a federal authority stepping in to regulate the industry.
This federal expert strongly believes that the only solution is to establish a federal regulatory authority. His view is backed by Prof. Dr. Armin Dittmann, a public law expert present at the symposium. He suggests that the best option would be for the federal states to transfer their supervisory authority to a federal agency under public law, much like the Federal Banking Supervisory Authority, BaFin. At present, only 16 commissioners are responsible for gambling in Germany, one from each state. This is in stark contrast to the number of commissioners in countries like France and Spain which have closer to 100.
Finally, the symposium touched upon the topic of land-based gambling. The discussion favorably mentioned Hesse's initiative to introduce state-wide self-locks in arcades, a measure already in place in state-owned casinos, to combat the addiction risks posed by slot machines. The approach was seen as a necessary step in light of the dangers that accompany slot machines.
[^1]: undermine regulation in all federal states. This alludes to the fact that one state's lax attitude can erode the effectiveness of regulation in all federal states. Essentially, a federal system is only as strong as its weakest link.
[^2]: grandfathered. In the context of online gambling, it refers to the fact that certain companies were allowed to continue their activities without official licensing due to their existing presence in the market. These companies enjoyed an advantageous position compared to those who were required to follow the new regulations.
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Source: www.onlinecasinosdeutschland.com
