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Interview | “Our goal is to ensure that illegal online gambling is not economically viable long term

On January 1, 2023, Germany's new interstate gambling operator, Gemeinsamen Glücksspielbehörde der Länder (GGL) became fully responsible for supervising the country's online market. We sat down with GGL co-chair Benjamin Schwanke to discuss the current state of the market, the regulator's enforcement strategy, and the extent to which the GGL sees permitted operators as important discussion partners.

Thinking back, what were the biggest challenges in setting up the GGL?

Establishing all the necessary structures and processes to make possible effective market supervision, the issuing of operator permits, and the fight against illegal gambling was certainly our biggest challenge. In addition, we needed to find appropriately qualified personnel.

Are you satisfied with the current state of affairs?

Yes, I think we can be very satisfied. Even though there was limited time – only one and a half years – we have succeeded in building up the GGL into a robust and incisive supervisory and permit-issuing authority for the regulation of the interstate gambling market. We can show good results. Only when it comes to IP-blocking do we have to rethink our legal approach.

Specifically, the use of IP blocking as an enforcement tool suffered a setback with the decision of the Higher Administrative Court of Rhineland-Palatinate in March 2023. The court ruled that the legal basis for IP blocking in GlüStV 2021 is deficient, as Germany's Telemedia Act established that internet service providers may not be made responsible for blocking access to individual websites. This decision, however, was only reached in summary proceedings. The main proceedings are still ongoing.

From the point of view of a regulator, what distinguishes the gambling market from other markets?

In contrast to other regulated markets, the regulation of the gambling market does not involve removing the barriers against free competition. Rather, the gambling market must be economically limited in such a way that addiction risks and the dangers of criminality can be eliminated, and that the protection of minors as well as players is guaranteed.

Having said that, as a regulator it is also our job to ensure a level playing field for all permitted operators.

Finally, compared to other markets, we see a stronger tendency in the gambling market to implement the latest IT technologies and trends. Generally, this happens a lot quicker than in other regulated markets.

To what extent do you see permitted operators as your partners in creating a healthy and sustainable gambling market?

The GGL talks to all stakeholders in the gambling sector. This includes private and state-owned operators, as well as research and prevention organizations. We stand for talking to each other on an equal footing.

We carefully examine all concerns that are brought to our attention by operators and, as much as we can, consider these and implement solutions. Ultimately, however, the decision as to what is desirable – in the sense of what the legislator intended – remains with us as the responsible supervisory authority.

Nonetheless, we are always open to discussion and are willing to hear the concerns of permitted operators. This principle, I must add, applies to our communication with all stakeholders in the gambling market.

How big a threat are illegal operators to a healthy regulated market?

Tackling illegal gambling is the flip side of wanting to have a large regulated gambling market. Our goal is to ensure that the business model of offering illegal gambling on the Internet is not economically viable in the long term.

At the same time, we must ensure that all permitted operators comply with the rules and that violations have consequences. To successfully combat the illegal market, the cooperation of all authorities and institutions involved, such as public prosecutors' offices, tax authorities, and the state media supervisory authorities, which are responsible for combating illegal advertising on television and radio, is also required.

In any case, we can see that the fight against the illegal market is taking place successfully and that, as a result, this market is declining. In our opinion, the threat to the regulated market from illegal providers is diminishing.

What can you tell us about your enforcement strategy? Have you had any notable successes?

Our enforcement strategy focuses foremost on those offers that have a special market significance, be it because they have a high advertising volume, or the website has particularly high click rates, or because their brands have a high name recognition.

Regarding results, we can definitely say that the instrument of payment blocking has been and continues to be very successful. Payment service providers have been very cooperative. Most have willingly withdrawn from doing business with illegal gambling operators.

What are your thoughts on the importance of data-driven market supervision?

I think this is a very helpful approach. After all, the safe server system lies at the heart of our future supervisory activities. With these data-driven supervisory systems, we will be able to automatically track, in anonymized form, all gaming and player activities. This will allow us to check whether permitted operators comply with all legal requirements and stipulations. I believe this is a vital necessity to ensure the protection of both minors and registered players in online gambling.

Do you have any particular hopes for the future of the German online market?

As the digitalization of our society continues, it is to be expected that the online gambling market will continue to grow. Because of this, our hope is that the outstanding legal issues surrounding the GlüStV 2021 and related enforcement approaches will be clarified as soon as possible, so that we can effectively regulate the online gambling market on a solid legal basis with the result that players can be adequately protected.

These open legal issues include the pending court proceedings on the ancillary provisions included in the operator permits, as well as issues relating to the fight against illegal gambling, such as the permissibility and applicability of IP blocking.

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