New Law Permits Online Gambling in One German State

At least one German state, Schleswig-Holstein, decided to not wait for the overall German gambling laws to change, and passed a state law for a less restrictive gambling industry. The state’s decision is expected to open up the entire German online gambling market, since residents of the other German states will be allowed to gamble online in Schleswig-Holstein.

Schleswig-Holstein decision immediately helped shares of online gaming giants Bwin.party and Betfair achieve impressive increase. Bwin.party shares grew 13 percent to 129 pence a share, while Betfair shares increased 2 percent to 722 pence a share.

The new laws allows operators to offer players online exchange and sports betting, online poker and online casinos in Germany. The only restriction in regards to online casinos is that roulette, blackjack and baccarat games will not be available.

Gambling operators will have to pay a 20 percent gross profits tax, as compared to previously proposed 16.67 percent tax on individual wagers. The previously suggested tax rate was deemed draconian by the companies, arguing that it ruins their chances against state-run gambling operators.

Gambling laws in Schleswig-Holstein are already approved by the EU Commission and are expected to come into force from January 2012. Licenses, issued by the state, will turn valid in March 2012.

Ivor Jones, a Numis analyst, told online gambling news in Germany: "At best this represents the opening up of Germany to online gaming, in due course, on reasonable commercial terms. At worst it will greatly delay the introduction of a more restrictive regime. This news greatly reduces the risk to Bwin.party in relation to its largest market in our view."

Both gaming companies, Bwin.party and Betfair, have expressed their intent to apply for licenses in the state. Bwin.party spokesperson commented: "The resolution passed today is an important and groundbreaking step on the way to an open and regulated gambling market in Germany. We are now hopeful that the other 15 German States will make the regulated amendments to their proposed State Treaty, in order to bring it into line with EU law."