Germany’s new license proposals could be devastating for affiliates if passed

The German gambling market is thriving, with a 21% growth in 2019 despite the absence of any major sporting event, it still managed to generate €9.3 billion in total revenue and close to €500 million in taxes. 

However the new decade might not start off on the same high note as the previous ended. The 16 federal states agreed on a new treaty back in March 2019 although a recent draft has been greeted with criticism from a number of sides. While most would agree that a regulation is needed in the country, unanimous agreement on how to move forward is yet to come.

What has changed?

The legal gambling landscape was comprehensively altered on January 1st 2020 when the Third Amendment to the State Treaty came into effect. As a result, the market opened up to international operators who can now apply for a license in Germany. Prior to previous regulations an international gambling operator was required to have headquarters within German borders, although now only an authorised representative is deemed sufficient. 

This is however only a temporary solution that will run to June 30th 2021, when a complete overhaul is expected. 

Earlier this year we got a sneak peek of how it could look from July 1st 2021 and on. The leaked proposal contained restrictions on advertising as well as stake and deposit limits for players, something that has made waves in the industry. A deposit limit of €1000 per month is included in the proposed new Treaty as well as a €1 stake limit per spin on slot machines. Heavy restrictions on TV advertising is another point heavily emphasised, set to be prohibited between 6AM and 11PM. The question of television advertising has led German media body Vaunet to call on state lawmakers to rethink current advertising restrictions. 

Affiliate could be set to lose out

In addition, marketing restrictions during daytime hours, including all online channels, might have the biggest impact as it rules out all forms of affiliation. The following can be read in the newly proposed Treaty:

“Any advertising related to virtual slot machine games, online poker, and online casino games via radio broadcast or on the Internet shall not be permitted between 6AM and 9PM daily.”

“Any advertising for sports bets on sports events directly before or during live broadcasting of such sports events shall not be permitted.”

“The negotiation or payment of any variable compensation for gambling advertisement, especially for games that users are banned from taking part in, shall not be permitted, in particular if the aforementioned compensation is based on turnover, deposits, or wagers, and advertising for the aforementioned games is affected via affiliate links”

This could be set to have a huge impact on lead generation businesses, as it rules out the entire business model that affiliates operate under. While these concerns are set to directly affect affiliates, the industry as a whole could be set to take a big hit if these restrictions become a reality.  

“This proposed amendment would have a devastating impact on the entire industry, not least to the players. Affiliates serve a vital function in seeking to empower players on various factors in order for them to make an informed decision, whether it’s bonuses, promotions or payments and withdrawal methods available at specific operators” says Eskil Kvarnström of MySportwetten.de

“A fully functioning and regulated gambling market is something to strive for, but restricting the objective information available to players is a dangerous path to take. Limiting choices and knowledge might lead to less player protection ensuring it more difficult to compare necessary information before playing.” continues Kvarnström.

It is still unclear which turn current changes to proposed legislation will take, as the Third Amendment only is a temporary solution until consensus has been met between the 16 federal states on further amendments to the State Treaty. The 1st of July 2021 has been earmarked as the date for the states to have reached consensus.

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