News that online casinos can continue to accept players from Germany ahead of regulations coming into force next year has seen operators breathe a sigh of relief. However, that relief could have been short lived – in order to remain active in the market, they had to ensure compliance with the new rules without delay. 

This roundtable looks at some of the challenges operators will face over the coming months, and how by working closely with all stakeholders they can be overcome.

Rebecca Forrest, business development executive at Amber Gaming, Leon Thomas, commercial director at Microgaming, Matej Novota, head of data and complaints at CasinoGuru, Stefan Esch Schulte, a managing director for Betsson Group, and Tom Galanis, managing director of First Look Games, continue the conversation.

CB: What challenges lie ahead during the coming months for those seeking to fulfil their German ambitions?

MN: From checking out the regulations, it seems to me that there is a big number of technological challenges that make participating in the regulated German market quite complicated.

Operators will have to work with game providers to ensure that the maximum bet per spin is €1 and that each spin takes at least five seconds to be completed. Similarly, implementing a site-wide €1000 limit for all players, a panic button, hourly usage statistics for all players, etc, is not something that all online gaming platforms support, as far as I know.

On top of these challenges, the market poses additional questions by the unclear situation during the transition period, and being separated into 16 states doesn’t help either.

SES: We will continue monitoring all the discussions around the development in Germany. I think one of the challenges most operators will have are the level of uncertainty that will exist until a process is finally formalised. 

We welcome a regulated market which will thrive and be a success and not one which is so constrained”

When you look back at the process to obtain a sports betting licence earlier this year, one quickly understands how fragile such a setup can be. Being an operator, we do our utmost to deliver on the requirements and deadlines and it is in our best interest to protect the industry. The unlicensed operators will hungrily fill the gaps that online operators cannot offer, such as being able to offer live casino.

We encourage the regulator to adopt a more dyadic approach and listen to what operators are saying. We’ve been through such processes before – we know what works and what does not work.

We welcome a regulated market which will thrive and be a success and not one which is so constrained that it will eventually see the market share shift to offshore gambling operators. We have seen this happening in other jurisdictions, no one wins in such scenarios and the worse off are usually the consumers as they will play with unlicensed operators in an unprotected environment. 

TG: Clearly the biggest challenge is going to be filling the revenue stream void that a restricted German market will bring – hopefully just short term. Affiliates and operators will likely be forced to subsidise these losses in other markets whilst the changes bed in for those operators who’ve been granted a licence.

For those operators granted a licence, it will be a case of realising what structural changes are required to their business in order to make a success of it. For those hoping for success in future licensing rounds, it’s an opportunity to see whether that’s worth pursuing – not the worst position.

From an affiliate perspective, a focus on compliance is essential and I expect new interpretations of the regulations to reveal themselves in the coming months.

RF: Sports betting is already regulated within Germany through the provision of an Interstate Treaty. It is now online casino and poker operations which will be regulated through the incoming State Treaty on Gambling, which is scheduled to come into force in July 2021. Operators therefore have a transition period where they will be required to comply with specified terms.

“…the ultimate test will be making sure we are absolutely ready for July 1, 2021″

Any operator who offers or continues to actively participate within the German market without satisfying these requirements will likely be subject to enforcements and/or excluded from any future licensing process or procedure in the future. Therefore, it is imperative that operators either withdraw entirely from the market or adapt to the requirements of the transition period.

The European regulatory landscape for remote gambling is, (like the USA), complex with different countries having their own specific licensing and regulatory requirements. However, unlike the USA, each of the separate markets within Europe have their own local language requirements. This will likely be challenging for a number of operators who are not resourced for such market entry and ongoing practicalities of operating in this market.

LT: Many of the key products no longer allowed in Germany, such as live casino, progressive jackpots, and table games have previously been important to our operators. The challenge for us now is continuing to cater to that customer need within the constraints of the new regulation.

It’s something we need to work through to ensure our offering is as varied as it can be in a compliant and responsible way, and that we continue to bring German players the most engaging exclusive studio and partner content we can.

Of course, the ultimate test will be making sure we are absolutely ready for July 1, 2021. Until then, we’ll continue to monitor the situation as it evolves, staying on top of our regulatory advice and paying particular attention to customer feedback.

CB: Finally, and perhaps most crucially, what will be key to ensuring long-term sustained success in the market?

SES: Securing a long-term success in the market can be split into two key areas. It is of utmost importance that operators can rely on a clear and fair market environment where the regulator provides guaranteed conditions that are sensible and fair for everyone and protects the consumer. 

“…it will be critical that the regulator acknowledges the threat of a black market”

Once this is guaranteed, then it is up to the operator to define its image within the market and to stand for something. At the end of the day we all pretty much sell the same product with different variations, so the key to an established position must relate to a unique product image, in combination with a unique, localised customer experience.

TG: The regulation will devour margins – more so than in markets like the UK. Operators running as much in-house tech on as lean an infrastructure as possible will have the best chance of success. With that in mind, I fully expect relatively rapid consolidation in Germany.

Any investors will need to see efficient operational mergers to realise returns and this brings in to question the appeal for the market, despite its obvious size, even compared against other tipping point markets such as individual US States, Netherlands, Ukraine or Greece.

For those invested in the regulated German market, it will be critical that the regulator acknowledges the threat of a black market when it comes to progressing strict depositing and wagering limits.

RF: The key to long term success for operators in any regulatory markets, including Germany, are the same. Operators should ensure that they:

  • Undertake regular front line staff training on core compliance areas in line with key responsibilities and accountabilities and assurance of implementation of systems and procedures to ensure the business remains in good health. 
  • Instil a compliance culture throughout all areas of the business; this ‘tone from the top’ will ensure all areas of the business act in accordance with required procedures, frameworks and codes of conduct. 
  • Design and implement robust yet pragmatic governance risk and compliance frameworks in all key areas of regulation such as anti money laundering, responsible gambling and advertising and media, amongst others.

LT: Having the adaptability to work within the regulatory regime. It would be quite easy for operators to look at the new regulations in a negative way. We need to turn this on its head and start looking at the opportunities that lie in store for operators and players. I think the online gaming appetite will persist, despite tighter regulations.

MN: In terms of operators, the first step is to comply with all the regulations that can keep evolving and making it all more difficult. Once the situation is clear and stable, it will become more about the usual stuff of marketing, customer satisfaction, and knowing the preferences of German customers in general.

In terms of success of the market itself, it’s crucial that Germany puts together a reasonable set of regulations that will not handicap licensed operators and make them lose customers to casinos operating without the official German license.