analysis
Mixed messages
For a moment the regulatory mist in Germany appeared to be clearing. However, mixed messages from the European Commission, state elections, and a number of protectionist but powerful politicians could soon bring operators’ hopes of a more liberalised market back down to earth with a bump James Bennett
B
win.party co-CEOs Jim Ryan and Norbert Teufelberger have declared the operator is “well-placed” to take advantage of regulatory movement in the coming year. Even in Germany. Just over a year ago however, things were very different with both companies having just merged and their new co-CEOs fresh-faced and bullish about future growth. That was until 6 April when 15 of 16 of Germany’s Länder announced “unworkable” and non EU-compliant regulatory proposals sending the newly listed operator’s share price (close to a quarter of its overall revenues are generated in Germany) tumbling down 14% in just ?ve minutes, 16% in a day and eventually 34% below ?oat price. The federal states’ proposals for a 16.66% turnover tax combined with a ?ve-year “test period” for seven sports betting licences and a ban on online casino and poker, restricting it to land-based organisations for a ?ve year period, was enough to turn off an already battered market. The good news for bwin.party was that the proposals were almost instantly rejected from all sides, and that Schleswig-Holstein, the country’s northernmost state, was pressing ahead with its plans to issue online sports betting, casino and poker licences. It even had ambitions to have operators up and running by 1 January 2012 when the current State Gambling Treaty banning the offer of games of chance over the internet in the country lapsed. But the uncertainty continued in mid-December last year when the 15 Prime Ministers, with the exception of Schleswig-Holstein, signed a second draft of the controversial “anti-EU” treaty agreeing they would only initiate the rati?cation process if they got a “greenlight”, from the European Commission. Without its agreement they said, at the time, that the treaty could not come into effect.
The revised accord proposed the issue of up to 20 licences for online sports betting to be issued to private operators, based on a 5% turnover tax, a €1,000 cap on player bets, and restrictions on in-play, while online casino and poker remained off limits. This was a slight improvement on the original plan but was still considered unworkable by the majority of operators with interests in the €1bn market. Crucial period The events of the next three months could decide the make-up of Germany’s long-term regulated online gambling market. Firstly, Schleswig’s deadline to licence applicants in January may have slipped, but should the state adopt and the EC agree, following noti?cation, the accompanying Monitoring Ordinance outlining player management standards including player validation and veri?cation, the coming weeks could see the ?rst licences issued to some of the 80+ ?rms that have so far expressed an interest. If this is the case, operators such as bwin.party will have a legitimate and EC-approved buffer with which to continue offering its services to German players across not only the state, but also the rest of the country. As Ivor Jones of Numis explains: “Companies licensed in other EU member states [will be able to] carry on trading under the protection of EU law.” If licensing goes ahead in Schleswig-Holstein we could see the market return to events similar to four years ago when the current treaty was passed, and companies licensed in other EU member states continued to trade under the protection of EU law. “The difference now,” says Jones, “is that SchleswigHolstein has broken away and is about to launch its own, liberal, regulatory regime, which will give operators a foothold in Germany and the ability to advertise on television.
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