Update: German Sports Betting Regulation

By Dr. Michael Stulz-Herrnstadt and Christoph Engelmann

The state parliament of Schleswig-Holstein announced that it will not approve the new State Treaty on Gambling. They want to push for an entire new law that includes licenses for online casinos as mentioned in their coalition agreement.

In addition the administration of North Rhine-Westphalia announced that it will not ratify the new law and that it stopped the implementation of the new responsibilities (the new law provides that North Rhine-Westphalia takes over the sports betting regulation from Hesse).

The consequence of this situation is that the new State Treaty will not enter into force on 1 January 2018 as planned. This is because the law provides that it will be invalid if it is not ratified by all 16 German states until 31 December 2017.

Until the German states find an agreement for a new law the current regulatory situation remains. Sports betting will be tolerated for EU-licensed operators as long as they comply with material regulatory requirements like advertising restrictions and AML obligations. This is now confirmed by several higher administrative courts like the ones of North Rhine-Westphalia, Saarland and Hesse.

Dr. Michael Stulz-Herrnstadt and Christoph Engelmann recently commented on the decision of the higher administrative court of Hesse in the German magazine “GRUR-Prax” 2017 p. 387; the article can be viewed here (in German, subscription based). Dr. Michael Stulz-Herrnstadt was also interviewed about the Schleswig-Holstein situation by the magazine “Online Gambling Lawyer“.

Announcement of re-opening of the Spanish online gambling market

As anticipated in a previous blog entrance dated on 12 September, the DGOJ has just published in its website the draft call for tender.

As a main difference from previous call for tenders, is seems that the time frame for operators to file their licenses applications will be of one (1) year from the publication of the call for tender in the Official Gazette (it has not been published yet) instead of one (1) month. Nonetheless, the maximum time frame for the the DGOJ to resolve on the granting of the licenses will remain the same, that is to say six (6) months from the date the application was submitted.

In this sense, the sooner a license application is submitted the sooner said license could be obtained and therefore the game operated. The rest of the applicable requirements are very similar to the ones applied during the previous two call for tenders. We will keep you updated on this process.

ITALY: Online gaming licenses coming very soon!

The tender for Italian online gaming licenses might be launched very soon and companies interested to it shall get ready.  Read the rest of this entry »

Possible re-opening of the Spanish online gambling market

The Spanish authorities could be considering publishing a new call for tender by the end of 2017.

Taking into account the following factors, the online gambling market could benefit soon from a new call for tender;

1.- Time elapsed since the previous license-call
The second call for tender was published on October 31, 2015. Therefore, it has been more than 18 months since the last call and therefore, interested parties were allowed to request the promotion of a new procedure for applying for online gambling licenses.

2.- Positive development of the Spanish online gambling market
The figures and statistics arising from the 1Q 2017 on the online gambling market in Spain.

3.- Interest showed by international operators in the Spanish online gambling market.
International operators have showed their interest in entering into the Spanish gambling market ensuring therefore the need of a re-opening of the market.

All of the above seems to indicate that we would be facing the third procedure for applying for Spanish online gambling licenses most likely by the end of 2017.

How the EU Privacy Regulation impacts Gaming Affiliates

The EU Privacy Regulation will oblige gaming affiliates to comply with stringent requirements in the processing of personal data of players.  Read the rest of this entry »

Update on the new AML Act in Germany

By Dr. Michael Stulz-Herrnstadt and Christoph Engelmann

The new German Anti Money Laundering (AML) Act entered into force on 26 June 2017 after it has been published in the Federal Law Gazette.

The new AML Act brings three important changes for gambling companies:

  • Extension of the scope from online to offline gambling and from licensed to unlicensed gambling
  • Revised AML measures in detail
  • Extended catalogue of administrative offenses with higher administrative fines (up to 1 million Euro)

For more information on the new AML Act we published a client alert for gambling companies that are offering their services in Germany. In addition we wrote an article in the German newspaper FAZ covering the main impacts on gambling companies.

Implementation of the AML Directive in Poland

By Magdalena Gmur

The first quarter of 2017 saw extensive amendments being made to the Polish Gambling Act. However, gambling operators should now focus their attention on proposed anti-money laundering (AML) regulations, which may also affect their business activity. The Polish government has just published the first draft of the new Act on Combating Money Laundering and the Financing of Terrorism (Draft AML Act), which will implement into Polish law  Directive EU 2015/849 of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. Read the rest of this entry »

New licenses for online casinos in Germany?

By Dr. Michael Stulz-Herrnstadt and Christoph Engelmann

After the elections in the German state Schleswig-Holstein the Christian Democrats, Free Democrats and Greens plan on a new gambling law in their coalition negotiations.

The Greens mention on their website that the coalition does not want to implement the new State Treaty on Gambling into their state law. Instead they plan on resigning from the State Treaty and on passing a new gambling law together with the states North Rhine-Westphalia, Rhineland-Palatinate and Hesse. The new gambling law is supposed to be based on the 2012 Schleswig-Holstein gambling law. Other than the State Treaty on Gambling it intends to offer (new) licenses not online for sports betting but also for online casinos including poker games.

State revenues will be used for prevention of gambling addiction, consumer protection, grassroots sport and common public interest. Brick-and-mortar casinos will be sold neutral in terms of effect on competition after the online licenses have been issued.

This is a very exciting development for operators that are looking into the German market. After the new State Treaty on Gambling has been criticized in recent court decisions it now looks like at least a few states might rethink their current gambling policies.

E-Sport will finally be recognised as a sport in Poland

Rafał Burda and Wojciech Biegański

On 14 March 2017, the Council of Ministers adopted a draft law amending the Act of 25 June 2010 on Sport (accessible here). The draft is currently subject to its first reading in parliament. The draft introduces an extension to the existing definition of sport, supplementing the solely physical activity expressed thus far in the sports law with “competition based on intellectual activity aimed at achieving a sports result”. This extension is aimed at achieving two main goals: (i) to officially recognise sporting disciplines like checkers, chess or sports bridge as sports competitions; and (ii) to bring e-sport competitions under the jurisdiction of sports law, due to the fact that such intellectual activity is widely regarded as having similar social effects to physical activity. Given the fact that e-sport is expected to expand its global fan-base to around 345 million by 2019, this change in the law seems absolutely necessary. As of 1 April 2017, accepting bets on virtual events (including e-sport) is expressly allowed under the Polish Gambling Act.

New AML Act for Germany – impact on gambling operators

By Dr. Michael Stulz-Herrnstadt and Christoph Engelmann

The financial committee of the Federal Parliament agreed on amendments to the new German Anti Money Laundering (AML) Act (Geldwäschegesetz, GwG) yesterday. The new law will bring important changes for gambling operators.

While the scope of the new AML Act will be extended from online gambling to also offline gambling operators, there are some gambling products (e.g. social lotteries, slot machines) that might benefit from new exceptions because of their low money laundering risk. Other gambling operators (e.g. sports betting shops) might be faced with new challenges like restrictions in payment methods and new administrative offenses with administrative fines of up to 1 million Euro.

To implement the 4th AML directive the new law has to enter into force by 26 June 2017. Prior to this the Federal Parliament and the Federal Assembly are expected to agree to the proposed changes. We will keep you updated on the developments.

Update (19 May 2017): The Federal Parliament adopted the changes on 18 May 2017.

Global: Prize Promotions around the world

DLA Piper is pleased to announce the launch of Prize Promotions Around the World, an updated version of our previous prize promotions handbook.

Prize Promotions Around the World is an online tool designed to assist our clients across the globe with the management of the early development stages of a prize promotion (such as a sweepstake or skill-based contest), and to bring to their attention potentially problematic issues.

Key features include:

  • Additional jurisdictions, now with over 35 countries
  • Expansion of topics, including rules on judging and sanctions
  • Interactive map, highlighting the range of risk profiles in different jurisdictions

Access Prize Promotions Around the World here

ITALY – Increased Italian VLT and Comma6a gaming taxes, with what effect?

The increase of the gaming taxes provided by the recently approved Italian law opens a number of questions on their impact on the market. Read the rest of this entry »

ITALY: Is the 4th AML Directive a risk for the market?

The implementation of the 4th AML Directive might have a considerable impact on the Italian gaming market, subject to the way the new provisions will be interpreted by the competent authorities.  Read the rest of this entry »

The Netherlands: annual report Gambling Authority – visible enforcement is “Achilles heel”

By Richard van Schaik and Róbin de Wit

Yesterday, the Dutch Gambling Authority (Kansspelautoriteit, “KSA”) published its 2016 annual report. The report provides some facts and figures with respect to 2016, as well as a forecast for the following years. A short overview:

  • The KSA will increase the level of enforcement, as it considers visible enforcement as the “Achilles heel” of a regulator. It confirms that if is fully ready to meet the 80% channeling degree to the legal online offer as envisaged by the Dutch government, meaning that the KSA will actively fight against illegal online operators.
  • The KSA stipulates that despite its efforts, fines imposed are difficult to collect. This is partly because a binding remedy to collect fines imposed on foreign illegal online operators is lacking, but also because offenders are often unable to pay because of debts issues. Despite this, the KSA takes several steps to improve the number of fines actually collected.
  • The KSA confirms its stricter enforcement strategy for the coming period to combat illegal online gambling. This means that the KSA will no longer issue a warning first but will take immediate enforcement measures. Such measures may involve fines of up to EUR 820,000 or 10% of the operator’s turnover. For more information, please read our earlier blog here.
  • It is expected that the KSA will also continue to put up barriers against third party service providers that provide services to illegal operators (such as payment service providers).
  • The KSA expects to grant a totalizator license in Q2 2017. For more information about the background of this procedure, please see our earlier blog here.
  • A number of charity lottery license applications are still being handled over the coming period. More background information can be found here.
  • The KSA will be closely involved in the revised casino regime, whereby Holland Casino will be privatized. Sixteen business locations will be sold and two additional licenses for new locations will be issued. The KSA will be responsible for granting the necessary licenses and will supervise the (feasibility of the) new regime. It is unknown when the new regime will kick off: the bill was adopted by the House of Representatives on 31 January 2017 and will now be handled by the Senate.

Polish blacklist of gambling websites

On 1 April 2017, the Polish Regulator set up a gambling domain names blacklist. It will contain all gambling games websites addressed to recipients in Poland (i.e. in particular the websites that are in Polish or are advertised in Poland) which are run by gambling operators that do not have a Polish licence. Read the rest of this entry »

Sweden: Proposal for the introduction of a licensing system

Today, the investigator appointed by the Swedish Government, Mr. Håkan Hallstedt, handed over his proposal (1,340 pages) for the introduction of a Swedish licensing system to the Swedish Minister for Public Administration, Mr. Ardalan Shekarabi.

Read the rest of this entry »

eSports YouTube star and business partner prosecuted for operating and promoting an unlicensed gambling website

By Greg Mason

On 6 February 2017, in the first successful prosecution of its kind by the GB Gambling Commission, Craig Douglas (33) and Dylan Rigby (34) pleaded guilty to offences under the Gambling Act 2005 relating to unlicensed eSports gambling.

Douglas, a prominent eSports YouTuber known as “NepentheZ”, was fined £91,000 for advertising unlawful gambling and inviting children to gamble. His business partner, Rigby, was ordered to pay £174,000 in fines and costs for offences relating to the provision of facilities for gambling and the advertising of unlawful gambling.

The pair admitted to being directors of Game Gold Tradings Limited which operated and advertised the unlicensed gambling website FutGalaxy.com.

FutGalaxy.com, which has no official connection with the FIFA series of games or EA Sports, allowed customers to buy virtual currency known as “FUT coins”. These FUT coins could then be used to gamble (on products including sports betting, a jackpot lottery style game and a higher or lower style game) and could even be converted into FIFA coins which could be sold for real money via an unauthorised secondary market.

In this case, the lack of child protection was particularly concerning. The District Judge, DJ McGarva, labelled the offences as “very grave” given that there were no restrictions on young persons from accessing the website and placing bets. Sarah Harrison, CEO of the GB Gambling Commission, noted that “the defendants knew that the site was used by children and that their conduct was illegal but they turned a blind eye in order to achieve substantial profits. The effect on children of online gambling was rightly described by the Court as ‘horrific’ and ‘serious’“.

Given the gravity and nature of offending, it is perhaps surprising that the Court did not impose a custodial sentence and instead opted for a relatively small financial penalty. Previous voluntary settlements with the GB Gambling Commission relating to failures in AML compliance and social responsibility controls resulted in significant financial penalties.

With eSports and eSports gambling becoming a growing global trend, it is attracting greater attention from regulators. The GB Gambling Commission is currently undertaking a discussion paper on emerging products in the gambling market, including betting on eSports events. The GB Gambling Commission’s current guidance states that “betting on eSports should be treated no differently as betting on any other live event… if you wish to offer bets to GB consumers on eSports events then you will need a betting licence. The types of betting offered and how you offer them will determine the licence required.

For further information from the GB Gambling Commission in relation to eSports, please visit: http://www.gamblingcommission.gov.uk/for-gambling-businesses/Compliance/Sector-specific-compliance/Betting/e-Sports.aspx.

Top 3 takeaways from DLA Piper gambling and tax event

Upcoming licensing regimes, strict sanctions and privacy compliance are among the regulatory changes discussed during the DLA Piper gambling and tax event. Read the rest of this entry »

The Netherlands: fines for online operator and directors

By Richard van Schaik and Róbin de Wit

Today, the Dutch Games of Chance Authority (“KSA”) published its decision to impose a fine of EUR 170,000 on a gambling company for offering unlicensed online gambling aimed at the Dutch public. Moreover, the company’s directors were also in person faced with a fine amounting to EUR 50,000 each.

Reason for the KSA to impose fines is that games – such as blackjack and roulette – were offered through a website using e.g. the Dutch flag and ‘the Netherlands’ as country option in the dropdown menu in the players account. Furthermore, the website was mainly set up in Dutch language. Using Dutch language is part of KSA’s prioritization criteria, meaning that enforcement by the KSA is initially focused on companies who, amongst others, offer gambling websites in Dutch language.

As the company had ignored the Dutch prohibition on offering online gambling as well as KSA’s warnings upfront, the KSA held that the company wilfully took the risk that sanctions would be imposed. Furthermore, the KSA took the opinion that the violations of Dutch gambling legislation could be attributed to the directors involved in person as they failed to take measures to prevent the violations, whilst they were reasonably required to do so. This gave cause for the KSA to also to fine the directors individually.

Notices of objection to the decision of the KSA can still be lodged.

Please click here for the report issued by the KSA.

DLA Piper Italy and AIGI event on the General Data Protection Regulation

DLA Piper Italy and AIGI will run an event on how the General Data Protection Regulation will impact the business of companies on 16 February 2017. Read the rest of this entry »

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