Providers Prepare for New Gambling Regulations in Germany

Details: Category: Gambling Industry; Created: Saturday, 18 January 2025 22:00

According to the annual report from gambling regulators, Germany’s gross gaming revenue in 2022 was 12.5 billion euros. It increased by more than a third. In addition, 80 percent of the revenue came from brick-and-more facilities. However, times are changing, and providers are now preparing for new gambling regulations in Germany.

According to Germany's Federal Republic's National Risk Analysis, the gaming industry has a significant potential for money laundering. The rapid handling of funds and the large volumes of transactions often form the basis of the evaluation. Several typologies for terrestrial gaming, particularly casinos, were created by the Financial Action Task Force in 2009 for their study on gambling industry risks. The argument goes like this: when casinos take deposits and send money, they engage in potentially dangerous financial activity. Physical gambling enterprises, which rely heavily on cash, are especially vulnerable.

Some formerly banned online games are now legal under the new Interstate Treaty on Gambling, which took effect on July 1, 2021. Accordingly, by October 2023, 78 licenses for online poker, virtual slot machines, and casino games had already been issued. So, it's safe to say that legitimate internet gambling will only grow in significance over time. Due to the variety of payment methods, including cryptocurrency, there are hazards associated with online gambling. These techniques work well for masking the player's identity and the source of the content. However, it didn’t allow people to be an online bookie in the country.

New Gambling Regulations in Germany

As of the end of 2022, the FIU's annual report states that the reporting portal has around 1,550 registered gaming providers and brokers. Less than 6% of the registered firms filed 462 complaints of suspicious behavior throughout the evaluation period. So, the gaming sector barely contributed 0.1% of all SARs, even though it's a rather large and high-risk industry. Only by looking at data from different periods can one notice a promising trend: the reporting rate is now more than double last year.

Not every part of the gaming industry has the same level of abuse danger. Games where illegal actions might influence the result are especially at risk. Examples of this kind of focused game manipulation include hacking into the internet industry or attempting to influence the outcomes of athletic events. According to sportsbook reviews and news sites, the layout of the safety protocols also has a role. Money launderers can get around these measures by bribing those who work for the casino operator. Games are suitable for money laundering if offenders can affect the loss risk without directly changing the game's outcome. For instance, this occurs when money launderers place bets simultaneously or purposefully lose when competing head-to-head to benefit their accomplices.

Laundering ill-gotten gains via fake accounts created by third parties, sometimes called "straw men, " is also typical. These dummy players usually don't perform much, if any, gaming themselves, but after the game ends, they demand payment for the remaining amount, which they claim as gambling profits. On purpose, the money launderers take little losses. On the other hand, criminals can legitimize illicit funds by acquiring a legitimate claim to a payout from an ordinary player.

Current Legal Situation

The fact that criminal organizations have partially infiltrated the sector, especially in the realm of so-called clan crime, poses a unique risk. Gambling enterprises managed by such institutions present the chance to launder money straight into the legal economy and plot additional illegal acts.

The organizers and brokers of games of chance must take precautions to prevent money laundering and terrorist funding by the Act on the Tracing of Profits from Serious Crimes, more commonly known as the Money Laundering Act. Gambling refers to activities where results are mainly based on chance, and participants pay for the opportunity to win. Operators of totalisers3, gaming machines regulated under commercial law2, and lotteries licensed by the competent authorities are now exempt from this.

As a general rule, the Money Laundering Act stipulates that all gaming operators must strictly adhere to its provisions. Legislators have made provisions to ease the requirements for low-threshold land-based gambling. Consequently, companies that must do so should meet the typical due diligence requirements for transactions involving player stakes or wins up to 2,000 euros. Virtual games of chance are exempt from this rule. Controlling entry to the gambling facility satisfies this criterion in practice. Annually, gambling providers must update all papers, data, and information on their contractual partners and commercial relationships in light of the increased danger of money laundering. In most cases, the gaming industry does not qualify for the streamlined due diligence requirements. In addition, there’s no framework on how to open a sportsbook in the country.

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