Guarantees for German Gambling Licence Applications

by | May 14, 2021 | Business Development, Guarantees

LAG Merchant Group has developed a tested way to support gaming companies in attaining a guarantee when applying for a licence with the German Gaming Authority, without tying up any of the applicant’s liquidity.

 

 

There are numerous steps involved when applying for a licence with a national gaming authority, with each country having their own restrictions and requirements. Companies will find that the process required to obtain a gaming licence will vary, as different jurisdictions set different timeframes, guarantees, fees, and requirements from prospective applications.

 

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Which Gaming Licence to choose?

 

One of the most reputable licences currently on the Market is a Maltese one issued by the Malta Gaming Authority. While this is quite expensive and time-consuming to obtain, owing to the rigorous checks undertaken by the Maltese authorities, it is also one of the most reliable licences for companies operating in the EU.

Other common options include remote gaming licences issued from the HM Government of Gibraltar, the Cyprus Gaming Commission, the Hellenic Gaming Commission in Greece, the United Kingdom Gambling Commission, and alternatives in other European countries. Some companies also opt for offshore licences from entities such as the Curacao eGaming Licensing Authority or other entities in Central American countries including Costa Rica, Belize, and more.

The choice of licence will largely depend on a company’s target markets, and some countries in the EU have national restrictions that can limit operators with European licences from providing remote gaming services in their jurisdiction.

A clear example of this is Germany, which has long had several restrictions and legalisation that limit the number of operators that can providing gambling services to German players. And yet, as most companies in the gaming industry know, such laws change frequently over time and can present new and exciting opportunities.

 

Moving towards a regulated Gambling market in Germany

 

Back in 2018, the German government decided to finally amend its 2nd Inter-State Treaty on Gambling, commonly referred to as ISTG-18. While there have been some changes to regulate gambling operators in Germany as a result of this amendment, the overall consensus is that ISTG-18 is another failed attempt and averts a growing gambling market in Germany.

Germany’s uneasy relationship with gambling companies spans over two decades, when German federal states announced an Inter-State Treaty to regulate lotteries as a means to protect state monopoly on this form of gambling. At the time, sports betting was largely unregulated and performed exclusively at physical operators. But with increasing internet access across the EU, and new providers being available to German consumers, the government announced an outright ban to online gambling.

This manoeuvre was shot down by a 2006 Federal Constitutional Court ruling that found the government’s actions as being unconstitutional. It would that at least another 6 years and a ruling from the Courts of Justice of the European Union to lead to German Federal States to partially liberalise sports betting.

The road to German Licencing

 

The ISTG 12 had foreseen 20 licences to be issued for remote gaming operators in Germany over an experimental phase of 7 years until the middle of 2019. Despite this promise, none of the 20 licences were ever granted as operators where stopped by several court proceedings.

One of the requirements for the issuing of such a licence was the provision of a €2.5 Million guarantee for each operator. Operators who would manage to fulfil this and meet the other basic requirements would receive an interim statutory licence and is review by the German Authorities each year.

Such a guarantee was included as a requirement since it allows the German authorities to receive assurance by a licenced institution that an operator has sufficient liquidity in their company. Despite this, critics often argue how such a requirement makes a German gambling licence very uncompetitive for smaller operators. And yet, a lot of companies will still take such a step in order to potentially tap into the lucrative German market

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The State Treaty on the New Regulation of Gaming in Germany (ISTG 2021) will come into force on July 1, 2021. This comes following a period of consultation with the European Commission which was concluded in September 2020.

An essential part of the granting of a licence by the German Gaming Authority is the provision of a security deposit by the applicant. As described in this document, the granting of permission for sports betting, online poker and virtual slot machine games is possible as long as it:

 

 

“presupposes that the applicant provides a security deposit in the form of an unlimited absolute guarantee from a credit institution based in the European Union or in a contracting state of the Agreement on the European Economic Area to secure the players’ disbursement claims and state payment claims”.
 
 
 
 
 
 
 
 
 
 
 
 

 

 

 

Connecting you to a Guarantee provider

 

LAG Merchant Group has excellent connections across the EU and EEA that can support gaming companies looking to receive a Guarantee as part of their application for a remote gaming licence with the national gaming authority in Germany.

Through our partners, applicants will not be requested to put forward the requested binding capital which would otherwise leave companies with millions of inaccessible funds. The process involves two steps:

Step 1 – A finance company in the United Kingdom will put forward the requested capital that is required by the authorities to be bound as a guarantee

Step 2 – a leading European credit insurance company will hold this guarantee and will therefore issue their Guarantee in favour of the German Gaming Authority on behalf of the applicant.

LAG Merchant Group has already successfully managed to support gaming companies providing such a Guarantee when applying for a licence, in a cost-effective and efficient way without tying up any of the applicant’s liquidity.

If you’re currently looking for such a solution, Contact us today for more information.

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