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German States Seek Online Gambling Payment Blocking

September 29, 2014 News & Reports

By David Altaner, GamblingCompliance

The warning letters, which threaten prison sentences, follow dozens of prohibition orders issued by Lower Saxony and other German authorities seeking to shut unlicensed websites.

The effort is similar to German officials’ attempts several years ago to get internet service providers to block websites — efforts that were not successful in the courts, said Munich-based gambling law attorney Wulf Hambach.

“I don’t think this time they will be successful either,” he said.

The Administrative Court of Wiesbaden also suspended the issuing of sports-betting licences this month after losing bidders said the process was unfair.

Many operators are continuing to offer online poker and casino, forbidden in Germany, while the wrangling over sports-betting licences continues, as they reason that German law is not coherent or in compliance with European Union guidelines on fair trade.

Although authorities’ website blocking efforts a few years ago foundered, German bankers are taking the requests seriously and banking officials are currently in talks with Lower Saxony officials about how exactly they should respond.

“German banking supervisory regulations foresee certain obligations of banks to support state control of gambling activities,” a spokeswoman for the Association of German Banks said in an emailed response to questions. “Banks wait for the result of these talks.”

Lower Saxony’s press office did not respond to emailed questions.

European internet service providers have resisted helping French, German and other  governments block player access to websites, claiming that blocks are not effective and that law enforcement is not their appropriate role.

The small German state of Schleswig-Holstein has licensed 23 companies for online casino and poker, but the permits are only valid within the state.

Since last year, Schleswig-Holstein has joined the German state treaty, but existing licences are valid for six years.

Every company offering online poker or casino in Germany without a Schleswig-Holstein licence is a potential target for blocking, according to Ingo Fiedler, an economist at the University of Hamburg who studies gambling.

Applicants for a sports-betting licence probably aren’t a target, at least for their sports-betting operations, he said.

“I expect an incomplete black list which will grow over time,” he said.

But even if banks cooperate, website blocking might not be effective, because banks are not the key parties in the transactions, Fiedler said.

“It is the payment processors who have the knowledge about the nature of the transaction, not the banks,” he said.

Norway, where Norsk Tipping and Risktoto have an online gambling monopoly, tried to require banks to block financial transactions with unlicensed gambling operators.

But a Norwegian Gaming Board report found that a 2010 law did little to stop players gambling with offshore websites.

The Norwegian experience, plus European data protection law, suggests Lower Saxony will fail in its attempts, Wolfgang Kubicki, a Schleswig-Holstein politician who spearheaded the state’s liberal gambling laws, told German public television station NDR.

EU-licensed operators do not have to worry about going to jail because they have a “valid administrative licence”, Kubicki said.

The report on the states’ enforcement action first appeared in the national newspaper Süddeutsche Zeitung, which said jail sentences could be up to five years.

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