Online Gambling – Betting, bluffing, gambling: Online gambling is booming. But what is legal and how can you protect yourself against rip-offs?
The following article was originally published in German in the 10/2013 issue of CHIP, one of the leading computer and communications magazines.
by Benjamin Hartlmaier, CHIP ONLINE
Internet gambling is booming: Online casinos are open 24/7, you do not have to leave the house to play, which in return reduces the costs of board and lodging and the virtual roulette and poker tables also always have a seat open. According to estimations by analysts from H2 Gambling Capital, 6.7 billion U.S. dollars were generated with online poker world-wide in 2012. Within only five years, turnover has thus doubled. A large percentage of the stakes supposedly came from Germany, since it is the world’s second largest online poker nation: according to a study by the University of Bremen, 581.350 people gambled at the virtual poker tables in Germany in 2011. The figures are even higher in the United States, the homeland of poker: Here, the number of web-bluffers is about three times as high as in Germany.
H2 Gambling Capital shows a similar picture with regard to online sports betting: experts estimate that last year online sports betting providers achieved a turnover of 5.9 billion U.S. dollars world-wide. This amount is linked to the total bets of approximately 74 billion U.S. dollars. As with online poker, the operators` turnovers have risen steadily over the last years in the field of sports betting. In Germany, online sports betting is more popular than online poker: According to the computer and technology analysis by Allensbacher, each year about 1.5 million Germans participate in online sports betting or play the lottery online. Therefore there are about three times as many users compared to the online poker players.
Online gambling is very attractive. However, in the digital Las Vegas, players are exposed to risks that do not exist (or only to a small extent) in the physical world. For many players it is difficult to assess whether they are dealing with a serious offer or with fraudsters. But those who know what to be aware of can reduce the risk of being ripped off. For instance, an important indication for serious operators is a seal of quality, which is usually found at the lower end of a gambling site. Besides, the payment and contact options offered can also act as indicators for the quality of a provider.
Apart from security aspects, there is also always the question of the legality of online gambling in Germany: Is it at all allowed to play online poker for real money, or to place a bet? Is it likely to even face criminal prosecution? “The legal situation concerning online gambling in Germany is quite tricky at the moment”, Dr. Wulf Hambach explains, who is an expert in the field of online gambling law. The lawyer describes the muddled situation: “For example, currently there are 25 licenses for providers of online sports betting, although the Interstate Treaty on Gambling only allows a maximum of 20”.
These contradictory figures result from the fact that Schleswig-Holstein had temporarily withdrawn from the Interstate Treaty on Gambling and therefore was the only federal state to issue an unlimited number of licenses for online poker, casino and sports betting. However, the current Interstate Treaty on Gambling, which Schleswig-Holstein has re-joined after a change of government, altogether prohibits online poker and casino games.
German License: Double security
Gaming law attorney Hambach has a simple advice for users: “Who wants to play it safe, should check whether the provider has a license from Schleswig-Holstein. This would be a permission of a public authority in terms of the German Criminal Code (StGB). If there is one, the player does not have to expect penalty.” Besides legal security, a German license also means a high level of data protection and payment security for the players.
“Those who are in possession of such a license once have passed through the filter of a German regulatory authority,” Hambach explains. For example, each licensee in Schleswig-Holstein was to show a payment provider with a so-called full banking license. That guarantees a high level of security regarding bets and payment of winnings, according to the lawyer. A list of all holders of a gaming license in Schleswig-Holstein can be found on the website of the Ministry of the Interior (schleswig-holstein.de/IM/DE/IM_node.html) under the heading “Games of Chance (Glücksspielwesen)”.
However, a German license is not necessarily required in order to be safe from prosecution: “Due to the unclear legal situation and the relevant Union law, the jurisdiction tends towards the viewpoint that a valid license from an EU country already has a legalizing effect,” Hambach states.
Hope for unified regulation
“Many providers of online gambling have a license from Malta, which is often ridiculed. But the Maltese requirements are strict: A licensing procedure usually lasts a year,” says Hambach. In Schleswig-Holstein, the procedure took between six months and one year, so the lawyer. It does not play a big role in which EU country a provider is registered, since they all have to adhere to EU-guidelines regarding data and consumer protection, Hambach explains.
With regard to the granting of nationwide licenses for online betting providers in the near future, Hambach is rather pessimistic: “Probably not this year.” For the longer term, he hopes for a unified regulation of the online gambling market in Germany: “It is likely that the current Interstate Treaty on Gambling, which prohibits online poker and casino games, will be scrapped by the courts.” That would pave the way for a clear legal regulation: “Liberalization and regulation of the offers along the lines of Schleswig-Holstein would be the blueprint for a reasonable legislation in the field of online gambling.”
