World Regulatory Briefing Germany: Conference Report 20 Apr, 2012 __ Rita Gyaraki, GamblingCompliance. Text on http://wrbriefing.com/sites/default/files/ReportWorldRegulatoryBriefingGermany.pdf programme on http://www.wrbriefing.com/program Ahead of fast approaching deadlines, the dynamic and ambiguous state of the German regulatory environment was discussed by regulators and industry representatives on April 12 at Clarion Events' World Regulatory Briefing in Frankfurt. The conference, which ran under the title “German roadmap to regulation — the first-ever, all-inclusive focus on 16 German states’ plans for igaming,” was attended by around 160 industry representatives. With the European Commission’s answer to the Interstate Treaty revealed just a few weeks ago and such important deadlines approaching as the May 6 elections in Schleswig-Holstein and July 1, 2012 set for the ratification of the Interstate Treaty, the conference was perfectly timed among/before fast paced developments. The questions everyone was asking were whether the Interstate Treaty will come into force or if it will still be stalled in state parliaments and whether Schleswig-Holstein will join the Interstate Treaty at the last minute.

1. World Regulatory Briefing Germany:
Conference Report
20 Apr, 2012
Rita Gyaraki, GamblingCompliance
Ahead of fast approaching deadlines, the dynamic and ambiguous state of the German
regulatory environment was discussed by regulators and industry representatives last week at
Clarion Events' World Regulatory Briefing in Frankfurt. Rita Gyaraki from
GamblingCompliance gives her take on the event.
GamblingCompliance attended the World Regulatory Briefing in Frankfurt, Germany, on
April 12, 2012. The conference, which ran under the title “German roadmap to regulation —
the first-ever, all-inclusive focus on 16 German states’ plans for igaming,” was attended by
around 160 industry representatives. With the European Commission’s answer to the
Interstate Treaty revealed just a few weeks ago and such important deadlines approaching as
the May 6 elections in Schleswig-Holstein and July 1, 2012 set for the ratification of the
Interstate Treaty, the conference was perfectly timed among/before fast paced
developments.
The questions everyone was asking were whether the Interstate Treaty will come into force or
if it will still be stalled in state parliaments and whether Schleswig-Holstein will join the
Interstate Treaty at the last minute.
Martin Stadelmaier, the head of the chancellery of Rhineland-Palatinate and a leading
coordinator of the new Interstate Treaty on Gambling, seemed to be confident that, after the
elections, Schleswig-Holstein will join the Interstate Treaty. He was also confident that the
treaty will be ratified in 13 out of 15 state parliaments by the end of June 2012, despite the
fact that two states, North Rhine-Westphalia and Saarland, will be unable to ratify it by the
set date due to upcoming elections.
The European Commission, in its answer to the German states, noted that currently it does
not have enough information to decide on the compliance of the treaty with EU law;
therefore, it welcomes the readiness of the German states to prepare an evaluation of the
treaty and present it to the commission. As Stadelmaier noted at the conference, there will be
a full and thorough evaluation of the treaty prepared, the results of which will be presented in
five years. The evaluation process will start as soon as possible and will be conducted at more
stages focused specifically on the areas which the commission has pointed out.
Present at the conference was Guido Schlütz, senior official responsible for gambling in
Schleswig-Holstein’s Ministry of Interior. He revealed that as of the beginning of April 2012
the ministry had received 22 applications for betting, including applications for exclusive
online betting and applications for the combination of online and terrestrial betting. Schlütz
also revealed that currently the ministry has a two-digit number of applications for online
casinos as well. As the state official confirmed to GamblingCompliance, the privatisation
project of the state’s six casinos, which are the only operators which will be entitled to offer

2. banked games online, was stopped due to the lack of interest, namely the lack of bids, which
did not reach the government’s expectations.
Allegations were addressed to Schlütz that Schleswig-Holstein is delaying the licensing
process on purpose, to enable the state to give up its own Gambling Act and join the
Interstate Treaty without having to pay expensive compensation to already existing
Schleswig-Holstein licensees. Schlütz countered these allegations, stating that: “I have got a
law, I will execute it until that law is in force.” Although the gambling industry is looking at
the date of the election as the date by which at least some licences will have to be in place in
order to secure the fate of Schleswig-Holstein’s Gambling Act, Schlütz did not seem to
consider the May 6 deadline as momentous. In his opinion, even if the new government is
against the current Gambling Act, an eventual withdrawal act would take until
October/November 2012 to pass the parliament.
In response to the question as to whether the first Schleswig-Holstein licences will be issued
by the end of this month, Schlütz said that this is a question which depends on the quality of
applications as well. He commented:
“We get applications on a daily basis. To put it nicely, the quality varies a lot. The slimmest
application form we got was a postcard, but we also got a storage box full of nine or ten ring-
binders from one applicant.”
He referred to the currently incomplete and low number of staff as a reason behind the
current delay.
Christian von Boetticher, MP of the ruling Christian Democrats in Schleswig-Holstein, said
that he is confident that the first Schleswig-Holstein licences will be issued by the end of
April 2012.
Representatives of the gambling industry were all of the opinion that under the treaty in its
current form it will be really hard to create an attractive games offering and it will fail to
channel players towards legal sites.
As William Hill Head of International Wilhelm Huber noted:
“We do not really see a profitable business model behind it and it is very hard to operate in
such a market.
“The same product we offer in the UK would not make any profit in Germany, if we want to
comply with the requirements of the 15 states Interstate Treaty, we will need to offer a
completely different product in Germany than what we currently do internationally.
Therefore, the customer will have a worse product at a worse price.
According to Dr. Peter Reinhardt, head of Central Europe at Betfair, “to cut off poker and
online casino means to cut off nearly 60 percent of the total market, so immediately we create
a black market of 60 percent”.
Betfair confirmed that it is among the applicants for a Schleswig-Holstein licence. William
Hill and Sportingbet also stated that they are interested in it and currently they are finalising
their submissions. In reply to the question as to whether they will operate throughout

3. Germany in possession of their Schleswig-Holstein licence, Dr. Peter Reinhardt from Betfair
noted:
“How we deal with customers in other states, this we will have to see. This is a legal question
more than a business decision.”
The uncertainty around the Schleswig-Holstein act did not seem to deter operators. As
Reinhardt noted, they “rely on the existing law, which was passed in the parliament”.
However, general opinion was that the legal turmoil was a long way off coming to an end.
Ian Ince, Sportingbet’s head of regulatory affairs, said he has “a feeling this is going to drag
and drag and drag”.
Ahead of parliamentary elections, Schleswig-Holstein’s state parliament will vote on the
opposition’s second “seek and destroy” act between April 25 and 27, 2012.