A closer look at what the German State Treaty: the black & white

Recently, the 16 Federal States of Germany discussed how to move forward with online gambling laws. It’s expected that these new regulations will come into force from mid-2021.

Earlier this week, we took a surface look at the impact of the proposed German State Treaty for affiliates. And we hate to be the bearer of bad news, but it wasn’t positive.

If you haven’t already, you check that out here. But today, we’re going to look into the draft in more detail to explain how gambling laws in Germany – should the current proposals go through – would affect affiliates and the operation of their websites in more detail.

What exactly does the treaty say that relates to affiliates? 

To look at why the proposed German State Treaty would be detrimental to affiliates, we need to look at the fine print. And in particular, we must delve into paragraph 5.2. Here, it states that both on and offline marketing is prohibited during daylight hours. This means that affiliate marketing via web would pretty much be snuffed out.

Translated into English, here are three key snippets.

“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… 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 effected via affiliate links.”

Along with the bold text above, there’s another problem. As we mentioned in our previous article, 60% of German sports betting traffic alone comes from in-play betting. Thus, in-play ad bans stop affiliates from reaching a large portion of the market.

Who are these restrictions *really* benefitting?

As is often the case in markets where regulations become stricter, one could argue that this is counter-productive. That is, after all, the stance that the European Betting & Gaming Association (EBGA) took on this matter.

Other experts have expressed similar concerns too. One of those individuals is Joerg Hoffmann, a partner at MELCHERS Law. In a Gambling Compliance article, he said the following.

“The ban on performance-based rewards may originally not be intended as a prohibition on affiliate business, but in the context of the advertising regulations it serves more to reduce the number of high-traffic new customer acquisitions.”

“However, the authors have failed to consider that an entire industry is affected, and that affiliate advertising has an invaluable role to play in channelling players to licensed offers.”

We should also note that Germany’s black market is big enough as it is. According to Business Matters, it was – as of April 2019 – worth €3 billion. Much of this is because players are seldom hit with legal action, as long as they gamble with EU-based operators.

In this context, affiliates are even more important for German players. Since many of them bet with unregulated brands, affiliates would be able to highlight which have been vetted by the country’s authorities. But without this, player protection becomes difficult to measure since illegal operators might not necessarily have the appropriate measures in place.

Final thoughts 

While it’s good that Germany has sat down and discussed how to move forward with regulated online gambling, there’s still a lot of work to be done. On the face of things, the new regulations look beneficial for the industry. However, a different picture is painted when you delve a bit deeper into the details of how it will change.

The proposed advertising laws in the Treaty are not only fatal for affiliates, but also detrimental to operators too. Rather than liberating the market, they will stifle competition and could leave an open door for the black market to grow even bigger because of it. This is even more so when you consider the €1,000 cross-operator monthly deposit limit that is being proposed.

But with around 18 months still to go until an integrated gambling legislation is set to go live, Germany has a chance to revisit things. It’s important that regulators listen to the concerns of responsible affiliate business owners, operators and other governing bodies. They’re putting in the effort to regulate gambling throughout the country and provide responsible services to players via online marketing portals that seek to direct, educate and instruct players – so they might as well ensure that players are wagering with *regulated* brands. Right?

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