Germany State Lures Internet Gaming Sites

The northern-most German state of Schleswig-Holstein has approved a major revision to the rules governing the online gaming industry.

Alone of the sixteen states comprising Germany, Schleswig-Holstein voted to adopt the changes by a slim parliamentary majority of 46 to 45 votes. The other 15 states had proposed a nationwide regulatory scheme.

Online gaming companies Betfair Group Plc and party digital entertainment Plc characterized the strict rules favoured by the other 15 German states as overly restrictive and inherently unworkable. Because of the more favorable regulatory environment in Schleswig-Holstein, both companies may move their facilities to the northern province.

Speaking for another gambling company, Internet-based Jaxx SE, spokesman Stefan Zenker said, "We want to make the same business as we do now, just we do it in Germany, instead of in Malta". Jaxx SE provides Internet-based casino and poker, as well as sports betting, beginning in March.
The new rules in Schleswig-Holstein provide no restriction on the number of licenses for web gaming. This is dramatically more relaxed than the rules in the other states, which limit companies to a maximum of seven licenses.

Taxes are also lower in in Schleswig-Holstein, with a 20 percent levy on gross profit, versus a 16.7 percent tariff in the other states on betting stakes.

Schleswig-Holstein's rules allow for an unlimited number of web-gambling licenses, plus a less onerous tax regime than that proposed by the other states. The rules proposed by the 15 states would limit licenses to seven and place a 16.7 percent tax on betting stakes, while the Schleswig-Holstein rules are for a 20 percent tax on gross profit.

According to Ari Last, speaking for the UK-based Betfair company, there was "certainly a possibility" that companies would move operations to Schleswig-Holstein. party officer Norbert Teufelberger explained in April that moving to Schleswig-Holstein is "one of the possibilities we are looking at."