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Gambling law in Germany



Games of Chance

Differing notions exist concerning games such as games of chance (Glücksspiel) or prize games (Gewinnspiel) or games of skill (Geschicklichkeitsspiele).

Only objective criteria may be used to determine whether a game should be designated as a game of chance (Glücksspiel) or another form of game.

The federal law contains no legal definition of games of chance: the provision of sec. 284 StGB therefore refers to a notion not defined in the legislation but interpreted by case law and doctrine. The distinctive criteria thereby established have been more or less adopted in sec. 3 para. 1 LottStV, which itself contains a legal definition. According to the common unwritten definition and the above mentioned sec. 3 of the Interstate Agreement on Lotteries the elements of a game of chance can be described as follows:

  1. a) The payment of stake money is required in return for a chance to win. This stake must respresent a considerable sum flowing to the operator. It can also be required to be paid indirectly, e.g. the charges incurred in using a 0190-number if a relatively long term connexion is required but not the cost of a stamp. The dividing line between a considerable or insignificant amount of stake money however is as yet unclear.
  2. b) The success depends predominantly or completely on chance or coincidence and cannot be influenced by the player. Success or loss must depend predominantly or completely on coincidence and not on abilities and knowledge. It is unclear whether requiring the player to answer a very simple question asked in a game is sufficient to negate the characterization as chance. Official criteria defining the level of “skill” necessary have however not yet been established.
  3. c) A public game of chance is a game of chance which is either offered to an open circle of persons or which is regularly organized in associations or other similar groups open to the majority of the public.

Lotteries, raffles

Lotteries and raffles are special forms of games. Section 3 para. 3 LottStV, contains the following two definitions:

  1. a) lottery

“A lottery is a game of chance (para.1) in which a majority of persons has the possibility of winning a money prize in accordance with a certain plan and after paying a certain amount of stake money, the winner being determined clearly by coincidence.” The term however is not used uniformly in the Länder. For example, Saxony Anhalt considers a number lotto to be a “bet concerning the drawing of numbers.” Moreover the notion is commonly interpreted broadly and comprises savings lotteries or bingo games.

  1. b) raffle

“A raffle is a game of chance where these [see under a lottery] criteria are fulfilled but the prize consists not of money but of objects or another advantage with a monetary value.”


A casino is commonly understood to be a public facility in which participants can compete for prize money through the joint participation in games of chance. Winning depends completely or predominantly on coincidence and cannot be influenced by the players.

Machine Gaming outside Casinos

The study only refers to Machine Gaming outside casinos, which is not subject to the Länder legislation but to the federal Trade, Commerce and Industry Act (GewO). The qualification of machine gaming as a game of chance was controversial, depending on the type of machine and the characteristics of the game in question. Commonly, machine gaming is gambling operated with machines that are equipped with a technical device that influences the score and enables the player to win something (Art. 33c GewO).

The qualification remains however non-uniform, as some argue that this type of game does not fulfil the criteria of a game of chance. Others however maintain that machine gaming is to be considered to be game of chance, but as long as the machines are in conformity with the Federal Gaming Regulation and satisfy the criteria set out by the National Metrology Institute, this kind of gambling is to be regarded as unobjectionable, because the danger of large losses in a short period of time is then excluded. In any event, sec. 33c GewO which regulates the authorisation, and contains further requirements concerning the commercial operation of machines outside casinos, equipped with a technical device that influences the score and enables a player to win, indicates that it is this device – rather than actions of the player that influences the outcome of the game and, as such, this is appropriately classified as a game of chance.


A bet initially is a contract aiming at settling a controversy, whereas lotteries are played for the reason of winning a prize or the simple entertainment. The qualification of bets as games of chance was controversial, the legislator recently clarified the situation following the prdominant opinion in case law: According to sec. 3 para. 1 LottStV it can be spoken of a game of chance in cases of games in which success depends predominantly or completely on coincidence and cannot be influenced by the player. Pursuant to sec. 3 para. 1 subpara. 2 LottStV success is considered to depend in any case on the element of coincidence, if the relevant aspect is the occurrence of an uncertain event.

Bets on horse races

Horse race betting is either offered in form of totalisator bets on race tracks or by licensed bookmakers. In the first case race track non-profit organisations offer pool betting on the result of their horse races, whereby the total amount of money staked less a part of winnings for the race track is divided among the winners. In the latter case, the operator (bookmaker) offers fixed-odds betting services in respect of horseracing. Licensed bookmakers although offer totalisator bets on a commission base for the race tracks.

Sports bets

Sports bets are to be understood as bets on the results of sports competitions (see sec. 3 Lower Saxony Act on lotteries and bets) which are either offered in the form of totalisator bets (Fussballtoto) or oddset-bets. An important role plays not only their operation but also the transmission of sports bets by intermediaries. Due to the German legislative structure they have to be distinguished from bets on horse races.


Bingo games are considered to be a specific form of lottery and governed by the Länder legislation on lotteries.

Sales Promotional Gambling

The games offered by the industry for promotional purposes are games usually performed without any stake. The prizes may rather rarely exceed €1 Mio. There is no specific regulation governing this sector with the exception of sec. 4 UWG which provides that the participation of consumers in games must not be structured in such a way that the ability to participate depends on the acquisition of a good or the request of services. The fact that the consumer is requested to order a good when asking for his prize is considered to be an illicit combination of game of chance and order of goods.

If a game requires a stake it can either be treated as a raffle which is subject to lottery rules or as an “other game with winning prospects” in the sense of sec. 33 d GewO both of which would be subject to a license requirement.

Media Gambling Services

Games offered by public or private broadcasters (e.g. 9 live) where the audience must dial a number or send a postcard to participate and must answer questions or solve riddles are predominantly not considered to be games of chance but games of skill based on the following arguments:

(a) These games do not depend on the element of “chance/coincidence” but on personal knowledge, so that the result of the game can most probably be influenced by the average participant. A quiz where a question must be answered to win a prize is therefore not a game of chance, but a game of skill, the success depending on the intelligence of the player. The question has been raised concerning whether if a very simple question is generally sufficient to negate the element of chance, the fact that the question is so simple that any person would be able to answer it without thinking (e.g. 1+1= ?) should lead to a different result. Official criteria to define the level of “skill” necessary have not yet however been established.

(b) There is no considerable stake money paid in addition to the costs for the phone call or a postcard. Although the jurisprudence reveals that the costs of using a 0190-number (but not those of a stamp) can be deemed an indirect stake, the dividing line between a considerable or insignificant amount of stake money is to date unclear. As an example, it has been suggested that the threshold of 2,50 € be used. The average cost per call of a participation in media games is 0, 49 €. This amount being significantly lower that the threshold, the telephone costs of participation in media games would therefore not be deemed “considerable stake money.” The situation may soon become clearer as the draft law on telecommunication provides that the costs per call be limited to a maximum of 2 and 3 € for mobile phone calls .

Since 1.4.2005, public-law broadcasters are no longer even allowed to earn revenues from the use of premium rate telephone numbers.

A different approach is however indicated when e.g. the phone call technically enables the caller to participate in a lottery or casino.

Charity gambling

Chartity gambling is commonly understood as gambling for charitable purposes, churches or other public interests. In general charity gambling is of less economic interest and usually carried out in form of charity-lotteries either on the local level or e.g. in TV. The two major German public-law broadcasters ARD and ZDF operate two charity lotteries (Aktion Mensch (the former Aktion Sorgenkind) and Ein Platz an der Sonne).

Taxation of the different gaming sectors

1) Tax obligation of the operators of games

The taxation of games of chance in Germany is dealt with in different federal and provincial acts as well as communal acts on local taxes.

The following Panorama demonstates the different taxes that can be levied on operators within the framework of games of chance:

  1. a) Horse race and lottery taxes

Horse races: The taxation of horse races is regulated in the Horse races Betting and Lottery Act According to sec. 10 RennLottG the tax levied on the totalisator operator amounts to 16 2/3% of the amount bet. The bookmaker must pay 16 2/3% of the global stakes amount.

No additional turnover tax need be paid (see sec. 4 Nr. 9b UStG).

Lotteries and Oddset-Bets: In accordance with to chap. II, sec. 17 et seq. RennWLottG the tax rate is 20% of the nominal amount of the lots or betting-slips (=scheduled price net of tax). As a result, the 20% refers to only 5/6 of the stakes. This corresponds to a tax of 16 2/3% of the gross stakes. For foreign lots the tax is 0, 25 € per € of the stake demanded of them.

No additional turnover tax need be paid, except where the lottery or raffle is exempted from the lottery tax under sec. 18 RennWettG (see sec. 4 Nr. 9b UStG).

  1. b) License levies (“Konzessionsabgaben”)
  2. aa) Example Rhinland-Palatinate: Section 8 GlückspG provides for a license levy to be paid as follows:

Number lotteries: at least 20% of the gaming capital stock
Other lotteries:at least 25% of the gaming capital stock
Sports bets:17 1/3% of the stakes
The percentage can be raised up to a max.of 30 %.
An additional license tax can be fixed which can amount to 60% of the annual surplus

  1. bb) Example Bremen: Section 11 WettLottG

Oddest bets: 15% of the stakes
Other bets: 21% of the stakes
Horse race bets: 16% of the stakes

  1. cc) Example Brandenburg: Section 4, para. 2 LottoGBbg

20% of the stakes.
dd) Example Niedersachsen: Section 6 NsLottG
The license levy amounts –according to the general rule in Sec. 6 para. 1 subpara.2 -to
Number lotto: 20% of the gaming capital stock
Sports bets:18% of the gaming capital stock
Oddset bets: 15% of the gaming capital stock
Lotteries and raffles: 25% of the gaming capital stock

  1. c) Turnover tax

A Turnover Tax of 16% must be paid by every gaming operator which is not subject to specific regulations and/or thus exempted from the VAT. The VAT rate will be changed and amount to 19 % by 1.1.2007.

Lottery and betting operators are only subject to turnover tax if they are exempted from the Lottery tax stipulated in chapter II, sec.17 et seq. RennLottG. See also sec. 4 Nr. 9b UStG. In accordance with sec.18 RennLottG this is the case for raffles, the global amount of which does not exceed 650 €, except if the operator is carrying on a trade in the sense of the trade and industry law or when the prize consists totally or partly in cash. Also exempted are authorised lotteries and raffles if the global amount of the lots does not exceed 40.000€.

Machine Gaming Outside Casinos (in arcades or the restaurant business) was subject to a turnover tax obligation of 16% while machines situated in casino kursaals fell under the general exemption of casinos from that tax under sec. 4 Nr. 9b UStG. This practice has been revised as a result of the recent decision of the Federal Court of Finance (Bundesfinanzhof, BFH) following the ECJ jurisprudence Linneweber/Akriditis, ECJ 17.2.2005, C-453/02 and C-462/02 according to which the German approach to turnover taxation in the matter was held to be contrary to EC-law. In fact, since 2001, the BFH has been in favour of a direct application of Art. 13 B f of the 6th directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes (BFH/ NV 2001, 657; aA: e.g. FG Schleswig Holstein, EFG 2001, 1001; FG Sachsen EFG 2001, 802) on machines operated outside casinos. The BFH held recently in consequence of the ECJ jurisprudence, that art. 13 B lit f dir. 77/388/EWG applies directly, with the result that both the operation of machines outside and inside casinos must be VAT free.

A proposal included in the Draft of the 20th Act amending the turnover tax law and the Income Tax Act to subject casinos to the turnover tax obligation had not been approved by the Bundesrat and became obsolete by discontinuity in the new legislative period. However the situation changed the 28.4.2006 with the approval of the Act on the reduction of abusive tax arrangements. Its Art. 2 abolished sec. 4 Nr. 9 lit b UStG and in consequence both machine gaming outside casinos and casino gaming are entirely subject to the VAT tax obligation.


In consequence of Art. 2 of the Act on the reduction of abusive tax arrangements casinos are by the 28.4.2006 no longer exempt from turnover tax on revenue resulting from gaming activities.

  1. d) Corporate income tax

The corporate income tax rate is 25% of the revenues (sec. 23 para. 1 KStG). Lotteries: According to sec. 5 para. 1 Nr. 1 KStG the state lotteries as well as the class lottery SKL) are exempt from the corporate income tax liability.

  1. e) Entertainment tax

Machine Gaming: An entertainment tax is levied on machines on the basis of the Länder legislation. The relevant provisions are either contained in entertainment tax statutes and provide for fixed tax rates, or in local tax statutes that do not set specific rates of taxation. The margin of tax rates is very large. The entertainment tax for gaming machines is normally levied on the basis of a lump sum taxation. The lump sum varies: 0 € in Bavaria, where a entertainment tax is forbidden, in the other Länder it amounts from 46 to 306 € per machine per month for arcades. For restaurants the margin varies from 0€ in Bavaria to100€. To cite some examples (lump sums in € per machine permonth of operation):

Bavaria (KAG, 04.04.93 (GVBl. S. 264), amended 25.7.2002): entertainment tax prohibited (see art. 3 para. 2 KAG)
Berlin (VgStG 28.10.88, 16.07.01): arcades: 306, 78 restaurants 25, 56
Brandenburg (VgStG 27.06.91, 18.12.01(GVBl. I Nr. 20, 20.12.2001)): arcades: 46, 00 restaurants: 15, 00
Mecklenburg-Vorpommern (Schwerin) (KAG 14.3.2005 (GVBl. S. 91)): arcades: 179, 00 restaurants: 92, 00
Saarland (VgStG (ABl. S. 496), 22.04.93/ amended 7.11.01): Highest tax: arcades: 138, 00 restaurants: 30, 70
Sachsen (Dresden)(KAG 23.5.2004 (GVBl. S. 418)): arcades: 204, 52 restaurants: 51, 13

The lump sum taxation has recently been the subject of court decisions which question its constitutionality. See e.g. FG Hamburg, 26.4.2005, VII 293/99, which submitted to the Constitutional Court the question of whether equal taxation of machines with very different returns (as opposed to taxation based on the rate of return) violates the constitutional principle of equality of treatment and BVerwG 10 C 5.04, 10 C 8.04, 10 C 9.04, restricting the possibility of a lump sum taxation if no proportionality test is made as to the revenues per machine).

  1. f) Kursaal levy

Casinos are subject to the so-called kursaal levy, the percentage of which differs from Land to Land (50% or more of the gross revenues, based on a graduated system) but which may be reduced in the first year(s) of the operation of the casino. Some Länder also receive an additional levy (of up to 20 % of the annual gross revenue) The rates might soon be modified to equalize the new VAT obligation of casinos, resulting from Art. 2 of the recent Act on the reduction of abusive tax arrangements.

  1. aa) e.g. sec. 7 SpbkG B-W: The licensee is required to pay the following percentage of the annual gross revenue as kursaal levy to the Land:

For gross revenue of up to 25 Mio €: 50%
For gross revenue exceeding 25 Mio € but not exceeding 50 Mio €: 55%
For gross revenue exceeding 50 Mio €: 60%

  1. bb) e.g. sec. 5 SpbkG Bavaria: The licensee is required to pay the following percentage of the annual gross revenue as kursaal levy to the Land:

For gross revenue up to 5 Mio €: 50%
For gross revenue up to 20 Mio € 60%
For gross revenue exceeding 20 Mio €: 70%

  1. cc) e.g. sec. 3 SpbkG S-A:The licensee is required to pay the following percentage of the annual gross revenue as kursaal levy to the Land:

For gross revenue up to 7,5 Mio €: 50%
For gross revenue exceeding 7,5 Mio € but not exceeding 15 Mio €: 60%
For gross revenue exceeding 15 Mio €: 70%

Futhermore, the licensee is required to pay an additional levy to the Land S-A. (sec. 3 para. 2 SpbkG S-A)

For gross revenue up to 7,5 Mio €: 20%
For gross revenue exceeding 7,5 Mio € but not exceeding 15 Mio €: 10%

The percentages can be raised (up to + 15%) of the gross revenues, according to the ability of the tax debtor to pay dd) e.g. sec. 4 NSpbkG (Lower Saxony)

The licensee is required to pay the following percentage of the annual gross revenue as kursaal levy to the Land:

50% of the annual gross revenues

In addition, the licensee is required to pay an additional levy of 20% (sec. 4 para. 2 NSpbkG) if the gross revenues exceed 1 Mio € per year. The casino act of Lower Saxony also provides for a third levy calculated on the basis of the annual surplus or deficit of the licensee (30% of the surplus or deficit).

  1. ee) e.g. Section 3 para. 2, sec. 4 para. 1 and 2 HessSpbkG (Hessen)

The licensee is required to pay the following percentage of the annual gross revenue as kursaal levy to the Land:

For gross revenue up to 25 Mio €: 50 %
For gross revenue exceeding 25 Mio € but not exceeding 50 Mio €: 55 %
For gross revenue exceeding 50 Mio €: 60 %

In addition to the above-cited reduction for the first year of operation, the levy can be lowered for services offered by Internet casinos. Futhermore, the licensee is required to pay an additional levy of 30 % to the Land H. (sec. 4 para. 2 HSpbkG) for gross revenues of up to 25 Mio € per year.

For the gross revenue exceeding 25 Mio € but not exceeding 50 Mio €, the levy is 25%
For the the gross revenue exceeding 50 Mio € the levy is 20 %

  1. g) Trade tax

The taxation rate differs depending on the municipality of domicile:

Casinos are exempt from trade taxation according to sec 3 Nr. 1 GewStG for all activities of licensed casinos subject to the kursaal levy.
State lotteries are also exempt from trade taxation according to sec 3 Nr.1 GewStG, 12 GewStDV, even if the lottery activity is exercised as a trade.

  1. h) Income tax

The revenues from state lotteries are subject to income taxation under sec. 18 EStG, if they are not deemed to be a commercial enterprise (in which event sec. 15 EStG applies).

  1. Taxation of the winnings

Winnings are not subject to income taxation, as German income tax law is based on the principle of operation and counter-operation as a compulsory condition for taxation.



In the German federal system, the regulation of the gaming sector mainly falls within the scope of the Länder legislation and consequently the number of different Acts adopted by the 16 Länder is considerable. Due to the legislative power of the federation in certain sectors such as horse races or machine gaming and other relevant federal provisions, such as the pertinent sections of the Criminal Code, the structure of German gambling legislation is rather difficult to survey.



Sec. 284 et seq. Criminal Code – Strafgesetzbuch (StGB) in the amended version of the 13.11.1998 (BGBl. I 3322), last amendment the 1.9.2005 (BGBl. I 2674)

Act on unfair trading – Gesetz gegen den unlauteren Wettbewerb (UWG), 3.7.2004 (BGBl. I, 1414), last amendment 19. 4. 2006 (BGBl. I S. 866)

Protection of Minors Act – Jugendschutzgesetz, 23. 7.2002 (BGBl. I, S.2730), last amendment the 23.7.2004 (BGBl. I 1857)

Act on service providers – Gesetz über die Nutzung von Telediensten (TDG), 22.7.1997, last amendment the 14.12.2001 (BGBl. I 3721)

Horse Races

Horse races Betting and Lottery Act – Rennwett- und Lotteriegesetz (RennLottG), 8.4.1922, last amendment 24.8.2002 (BGBl. I 3412)

Implementing provisions to the Horse races Betting and Lottery Act – Ausführungsbestimmungen zum Rennwett- und Lotteriegesetz (RennLottAB),16 june 1922, last amendment 21.8.2002 (BGBl.I 3322)

Regulation on Horse races Betting – Rennwettverordnung (RennwettVO), 21.5.1976

Machine Gaming Outside Casinos

Sec. 33c et seq. Trade Commerce and Industry Regulation Act – Gewerbeordnung (GewO) in the amended version, 22. 2.1999 (BGBl I 202); last amendment 6. 9. 2005 (BGBl. I S. 2725)

Gaming Regulation – Spielverordnung, in the version of 27.1.2006 (BGBl. I 280).

Länder Regulatory provisions concerning the application of sec. 33c et seq. of the Trade Commerce and Industry Regulation Act – Allgemeine Verwaltungsvorschriften zum Vollzug der sec. 33 c, 33 d, 33 i und 60 a Abs. 2 und 3 GewO (SpielVwV)

Accident prevention provisions for gaming dens and Casinos, Unfallverhütungsvorschrift Spielhallen, Spielcasinos und Automatensäle von Spielbanken, 1.4.1997 mit Durchführungsanweisungen (amendments taken into account until 2002)


Sec. 287 Criminal Code – Strafgesetzbuch (StGB) in the amended version, 13.11.1998 (BGBl. I 3322), last amendment the 1.9.2005 (BGBl. I 2674)

Sporting bets

Sec. 284 et seq. Criminal Code – Strafgesetzbuch (StGB) in the amended version, 13.11.1998 (BGBl. I 3322), last amendment the 1.9.2005 (BGBl. I 2674)

Act on unfair trading – Gesetz gegen den unlauteren Wettbewerb (UWG), 3.7.2004 (BGBl. I, 1414), last amendment 19. 4. 2006 (BGBl. I S. 866)

Promotional Gambling

Act on unfair trading – Gesetz gegen den unlauteren Wettbewerb (UWG), 3.7.2004 (BGBl. I, 1414), last amendment 19. 4. 2006 (BGBl. I S. 866)

Tax Law

– sec. 10-13, 17 et seq. Horse races Betting and Lottery Act, Rennwett- und Lotteriegesetz (RennLottG), 8. 4. 1922 last amendment 24.8.2002 (BGBl. I 3412)
– sec. 14 et seq, 27 et seq. Implementing Provisions to the Horse races betting and Lottery Act, Ausführungsbestimmungen zum Rennwett- und Lotteriegesetz (RennLottAB),16. 6. 1922, last amendment 21.8.2002 (BGBl.I 3322)
– sec. 18 Income Tax Act, Einkommensteuergesetz (EStG), in the version of 19. 10 2002 (BGBl. I S. 4210, ber. 2003 S. 179), last amendment 22.12.2005 (BGBl. I S. 3683)
.– sec. 3, 35c Trade Tax Act, Gewerbesteuergesetz in the version of 15. 10. 2002 (BGBl. I S. 4167)
– sec. 13 Trade tax implementing regulation, Gewerbesteuer-Durchführungsverordnung (GewStDV 1991), 24.3.1956, Änderungen berücksichtigt bis zum 12.11.2004
– sec. 5 Corporate Income Tax Act, Körperschaftsteuergesetz (KStG) vom 31. August 1976, amendments taken into account until 12.11.2004
– Art. 2 of the act on the reduction of abusive tax arrangements, 28.4.2006, (BGBl. I 1095), abolishing sec. 4 Turnover Tax Act, Umsatzsteuergesetz 2005 in the version of 21.2.2005 (BGBl. I 386)
– Länder Lottery and Betting Acts (License levies), Lotterie- und Wettgesetze der Länder
– Länder Casino Acts and regulations (Kursaal levies), Spielbankgesetze der Länder
– Länder Acts on entertainment taxes and local taxes, Vergnügungssteuer- und Kommunalabgabengesetze der Länder




Several federal provisions are applicable to all types of games of chance, e.g. the provisions of sec. 284, 287 of the Criminal Code (StGB), which punish not only the operation of games but prohibit as well to act as an intermediary and to transmit games except if the operator holds a valid national license which must generally be issued by the Land in which the activity is exercised. These provisions are interpreted in an extremely controversial manner, in particular in the case of sports bets.

Other federal provisions of the law on unfair trade (sec. 3 UWG) must be viewed in conjunction with the criminal provisions, as conduct which constitutes illegal gaming is very often considered to be an act of unfair trade as well.

Barriers to the Free Movement of Gambling Services

– Sec. 284 I, 287 StGB – The provisions penalize the organisation and operation of and provision of equipment for games of chance without holding a licence. According to sec. 3, 9 StGB, sec. 284 et seq. StGB can also apply to foreign operators, operating within German territory. It is however controversial whether a foreign operator providing games on the internet “operates” within German territory. It has been argued that the access to a foreign gaming website must be considered equivalent to the provision of equipment for the operation of games pursuant to sec. 284 para. 1 StGB. It has however to be considered whether the foreign operator specifically addresses the German public. In jurisprudence the question was raised whether a valid license issued by another EU Member State can replace the internal authorisation required by sec. 284 StGB. This is controversial, but in principle foreign licenses are not recognised.

– Sec. 284 IV StGB – The promotion without a license of a public game of chance is subject to punishment, the same problem arises as in the context of sec. 284 I StGB. The notion of promotion of or advertising for a game of chance was interpreted by jurisprudence and is commonly understood as the incitement of the public or of a certain person to participate in a game of chance. Advertising activities for foreign gaming operators on German websites may constitute a criminal offence under sec. 284 para. 4 StGB. In that context it is controversial whether a link to a website of an unlicensed operator is sufficient to constitute a violation of Art. sec. 284 para.4 StGB. To act as an intermediary enabling the public to participate in illegal internally organized or foreign games of chance e.g. by transmitting bets might be considered to be a case of sec. 284 para. 1, 4 or sec. 284 para. 1, 27 StGB (assistance in the commission of an unauthorized organization of a game of chance), depending on the circumstances of the particular case.

– Sec. 285 StGB: The participation as a player in a public game of chance which is not legal in light of sec. 284 StGB is considered to be a criminal offence

– Sec. 3 UWG n.F.  – An operator holding a foreign license and no internal license may additionally be accused of unfair trading according to German competition and trade law, because of the simple fact that the operator does not have an internal state authorisation.

– Sec. 6 JuSchG – Certain games of chance and especially the access to gambling dens or casinos is prohibited for children or adolescents which are only allowed to participate in games of chance organised in public provided that the prize is composed of goods of low value. The access to casinos is dependent on the respective Casino Act prohibited either for persons under 18 or under 21 of age (e.g. 18 years in Hamburg, 21 years in Baden-Württemberg).


As games of chance are considered to fall within the purview of administrative and police law, the Lottery sector is governed by the legislation of the 16 Länder. Each of the Länder has its own respective Lottery Act, which Acts were recently partly modified and supplemented by the conclusion of Interstate agreements (Staatsvertrag zum Lotteriewesen in Deutschland (18.12.2003, 13.2.2004), Staatsvertrag über die Regionalisierung von Teilen der von den Unternehmen des deutschen Lotto-Toto-Blocks erzielten Einnahmen (18.12.2003,13.2.2004)) and standardized for class lotteries in 1992 by an Interstate agreement concerning class lotteries (Staatsvertrag zwischen den Ländern Baden-Württemberg, Bayern, Hessen, Rheinland-Pfalz, Sachsen und Thuringia über eine Staatliche Klassenlotterie, 1992).

The Interstate Agreement on lotteries (LottStV) sets up a common framework for the regulation of the lottery sector in the 16 Länder. Its purpose is to control the human passion for gambling, to avoid excessive incentives to game, to exclude the abuse of the human passion for gambling for private or commercial profitmaking, to insure that the practice of gambling is in compliance with regulations and is coherent and to insure that a main part of the gambling proceeds is used for the promotion of public purposes. The Interstate Agreement on Lotteries principally requires the Länder to operate commercial games either by themselves, by public law entities or private law entities the majority of whose shares are held by public law entities.

Its provisions explicitly allow private lotteries to avoid illegal gaming. These lotteries must comply with certain strict conditions; the games proposed must not present a potential danger, they must be organised for a charitable or similar purpose and they must not fulfil the exclusory criteria set out in the Interstate Agreement. Their activity is limited to the territory of the respective Land and the advertising campaigns of every operator are required to be adequate.

The Agreement affords the Länder the authority for derogation of its provisions for charitylotteries organised within a single state whose proceeds do not exceed 40.000 €. Most of the Länder have enacted implementing laws which grant a general permission for those lotteries of charitable and unimportant economic interest and which replace former Länder Acts on lotteries and raffles concerning that type of “small lottery”.

Pursuant to the provisions of the LottStV, however, private operators cannot offer sports bets, which constitute a highly controversial sector.

The 16 Länder have either formed own statehold entities for the organisation of commercial lotteries or have provided that companies all or the major part of whose shares are held by the Land or by direct subsidiaries of the Land, organise both Lotto and Toto.

The Land Brandenburg Lotto GmbH is a private law enterprise and a 100% subsidiary of the Land Brandenburg, which is required to pay the lottery tax and license levy to the Land. The Lotto Toto Companies participate in a partnership organisation (“Lotto-Toto-Block”) in order to structure their activities in a uniform manner. They established a dense network of lotto offices throughout the federation, the structure is higly commercialised. Their offer is also accessible via Internet. They all promote the classic lotteries, sports bets (oddset, toto) some of them form suborganisations offering specific lottery-types (e.g. KENO) and bingo.

The two existing bingo games (tele-bingo and bingo) are thus equally treated as lotteries and governed by the same legislation.

There are two class lottery blocks existing (Norddeutsche Klassenlotterie (NKL)/Süddeutsche Klassenlotterie (SKL)). The SKL is a public-law institution (seat Munich) founded and held by 6 Länder, while the other ten formed the NKL. Their supraregional activities are governed by specific rules (Interstate agreement on class lotteries).

In addition to these state lotteries there are charity lotteries, some of which are carried out on TV by the two major public-law broadcasters ARD and ZDF (Aktion Mensch (the former Aktion Sorgenkind) and Ein Platz an der Sonne).

A specific form of a lottery is the so called “Gewinnsparen”, a savings concept offered either by banks or by specific bank-supported associations. The net proceeds of those offers must equal 25% of the payments and must be used for tax-exempt purposes. Authorisations can be issued according to sec. 16 para. 3 LottStV. Barriers to the Free Movement of Gambling Services Federal law

Barriers to the Free Movement of Gambling Services Federal law

– Sec. 287 StGB – The unauthorized organization of a lottery or raffle is punishable when performed without license; foreign licenses for the exercise of commercial games are not recognized (controversial), see sec. 284, 285 StGB and chapter III jurisprudence.


Interstate agreement on lotteries (LottStV)

– Sec. 5 para. 3, para. 4, sec. 6 LottStV – The operation of games is limited to the territory of the respective country, the LottStV provides for a restricted access of private operators, an authorisation is only granted to organisations of charitable nature, the contents of the provided services and of the advertising campaigns are strictly regulated, the authorisation is limited in time to one year maximum; Sports bets cannot be operated by private operators.

Casino Gaming

Legislation regulating casinos is the exclusive power of the Länder, regulated in the casino acts (Spielbankgesetze) that, in most of the Länder, replaced the former federal law on casinos. 84 German casinos are operating at present.

Some casino acts (e.g. Lower Saxony) allow private operators to access to the casino market and in that case admit also foreign shareholders; others do not provide for private ownership but for either a mixed private-public ownership (e.g. Schleswig-Holstein, Saarland) or they are completely State held (e.g. Bavaria where casinos are operated as State enterprises).

In practice the majority of the casinos are run by companies whose shares are totally or predominantely held by the Land. A minority is run by private operators, which are extensively controlled by the State. Casinos are usually exempt from income and lottery taxes but are subject to a kursaal levy and, depending on the Länder legislation, to additional levies. As sec. 4 Nr. 9 lit b UStG has been abolished by the act on the reduction of abusive tax arrangements of 28.4.2006, casinos are no longer exempt from turnover tax. This modification is expected to shortly be equalized by a diminuition of the rates of the kursaal levies.

Aas an example Lower Saxony amended its legislation in 2004. Up to 10 casinos can be permitted and licenses can be issued to private operators (as opposed to the act of 1989 pursuant to which only private companies whose shares were exclusively held by the Land were allowed to obtain licenses). The license determines who may operate the casino, in which commune and in which local location it may be operated and which games may be authorised, and can also include authorisation of games on the internet. The license is however not transferable. Saxony-Anhalt amended its legislation in 2004 as well but still only issues licenses to companies whose sole shareholder is the Land, however the Land is authorised to sell its shares.

The license is usually granted for up to 10 years. In some Länder under certain modalities it can be extended once for an additional 10 years period.

Some Länder amended their Casino Acts to provide for the possibility of authorised casinos also to operate online. For example, this is the case in Hessen (sec. 2 para 1 HSpbkG; Real Game of the Casino Wiesbaden) and Lower Saxony (sec. 2 para. 1 phr. 2 NSpbkG).

Machine Gaming Outside Casinos

Machine gaming outside casinos is governed by the Federal Trade, Commerce and Industry Regulation Act (sec. 33 c ss. GewO) and the Gaming Regulation and not by the Länder legislation. These provisions focus on offline-games.

The operation of gaming machines requires a license. Furthermore, operating machines must satisfy certain criteria which are fixed by the National Metrology Institute. The authorisation only covers the authorised machines. The Gaming Regulation contains further details for the operation of such machines.

The commercial operation of machines which contain a technical device influencing the score and allowing the player to win money, must thus be authorised according to sec. 33c GewO and the machines operated must be of a type authorised by the National Metrology Institute. This technical device is another element which influences the score in addition to the actions of the player itself.

If machines of an authorised type are operated without authorisation or if the machine has not been specifically authorised, but fulfils the criteria for authorisation, sec. 284 StGB is not applicable. These cases of irregular operation are subject to the administrative penalty and criminal law provisions of trade, commerce and industry law.

Approximately 200’000-250’000 machines are in operation in Germany. The classification of machines as machines of games of skill or of games of chance may be problematic and has been the subject of court proceedings. Sec. 33 d GewO concerns “other” games that allow players to win something as well as games of skill which are also subject to an authorisation procedure.

The Gaming Regulation (SpielVO) has been recently amended. It establishes conditions as to the construction (§ 11 et seq. SpielV), installation and surveillance (§ 6 et seq. SpielV) of gaming machines. The new version lowers and modifies the conditions for the installation and surveillance of gaming machines.


Horse races

Betting on horse races is a gaming sector which has insofar to be distinguished from the sports betting sector, as the latter (ODDSET, TOTO) is subject to the Länder gaming legislation. Bets on horse races are intended to promote the operation and financing of the horse sport. Their operation is considered to be easier to survey and thus to be less dangerous than sports bets. The pertinent legal bases for horse races are the federal horse race betting and lottery act and its implementing provisions which regulate the licensing of bookmakers and of horse breeding assotiations for the installation of totalisators, the conditions of licensing, the restrictions of the pursuit of the activities of the bookmakers, and the use of the proceeds.

Sports bets

Sports bets (“Toto”, “ODDSET”) are the most controversial gaming sector. They are usually considered to be games of chance, because they depend on an element of chance, however, even this aspect has been controversial in a number of court decisions.

The regulation of sports bets is mostly combined with and corresponds to the provisions applicable to lotteries, i.e. their operation is expressively and exclusively attributed to State or State held entities. Even where private sports bets operators or offering or transmitting bets are not explicitely forbidden, there activity is considered illegal and falls under sec. 284 StGB as licenses are not issued. To summarize, sports bets (“Toto”, “ODDSET”) are considered to be only legally operated either by State entities or by companies in which the Land holds, at least indirectly the shares together with other legal entities under public or private law (Lotto/Toto Block). This monopoly seems to be stressed in light of the recent Interstate Agreement as its sec. 5 IV LottStV does not apply to sports bets. The only “official” exceptions are four providers holding ex-GDR-licenses, the validity of which has been controversially discussed in several court decisions and has either been denied or considered to be limited to only one Land, notwithstanding their former validity for the entire ex-GDR territory.

A regards the exchange/ transmission of bets (“Vermittlung”) to internal or foreign operators the situation is similar. Either a specific regulation exists requiring an authorisation which is only issued if the operation of bets itself is permitted in the Land (e.g. Art. 13 Act on games of chance Saxony-Anhalt) or the activity falls under sec. 284 I, 27 or sec. 284 IV StGB or the Länder administrative sanctioning provisions.

Betting activities of operators trying to offer or transmit sports bets without holding an internal license or without transmitting them to internally licensed operators were either shut down or tolerated depending on the jurisprudence of the respective Land. In the latter case the decision was, depending on the case, mostly based on doubts concerning the constitutionality or EC-law compatibility of the administrative Länder provisions and of sec. 284 StGB.

The jurisprudence in this sector is far from uniform. A significant number of court decisions concern questions of licensing, foreign licenses, advertising for sporting bets etc. mostly in relation to sec. 284 StGB.

The High Courts and the Constitutional Court have been called upon to decide a number of issues concerning this matter, however, there does not appear to be a clear consensus. Nonetheless, several courts consider either the (de facto) monopolistic position of the Länder and/or sec. 284 StGB to be an obstacle to the principle of free movement of services. Even the German Constitutional Court indicated that the existing doubts regarding the EC-law-conformity of sec. 284 StGB must not be neglegted. It criticised a trial court for not having taken into account the supremacy of application of community law in its provisional ruling.

The Constitutional Court most recently rendered an important decision concerning the ban on privates from the sports bets market (28 March 2006, 1 BvR 1054/01). The plaintiff, a horse betting bookmaker who unsuccessfully tried to obtain a license for the operation of sports bets, argued that the monopoly on bets would be unjustified and disproportionate, considering the official justifications as unsuitable for achieving the objectives they purport to attain and the objectives as such a pure allegation. The Constitutional Court indeed confirmed that the (Bavarian) legislation which provides for a State monopoly has to be revised because it violates the German constitution. Even if it is in principle in the discretion of the legislator to opt for a State gaming monopoly, the restrictions the legislator’s decision entails must not be disproportionate. The Court points out that the Bavarian monopoly actually fails to coherently pursue its objectives (prevention of gaming addiction etc.) due to the monopolist’s aggressive marketing strategy and that the interplay of public interest objectives and State fiscal interests becomes contradictory.

It is open if this judgement may lead to the demise of the State monopoly, as the court obliges the Bavarian legislator to change the legislation at issue until the end of 2007 but leaves it in the legislator’s discretion to either admit a controlled access of private operators to the market or to structure the marketing strategy of the state operator in a way corresponding to its objectives such as consumer protection. Consistency between the alledged aims and the exercise of the monopoly has to be realised with immediate effect. In the meantime the interdiction of commercial betting by private operators is maintained. The court did not pronounce itself on the application of sec. 284 StGB but left it in the discretion of the instance courts.


Bingo games are considered to be lotteries and are thus subject to the same legislation.

Media Gambling Services

TV Lotteries are generally allowed if they fulfil the conditions to which private entities are subject. The two major broadcasters (ARD and ZDF) carry out charity lotteries on TV Aktion Mensch (the former Aktion Sorgenkind) and Ein Platz an der Sonne). For other games of chance the general rules for each game type must be respected. The important question in this sector however is when a game can be considered to be a “game of chance”.

Most of the games offered by private broadcasters (e.g. “9 live”) where the audience is required to dial a number in order to participate and answer questions or solve riddles are commonly not considered to be “games of chance.” The rationale for this conclusion is that the outcome of such a game does not depend on the element of “chance” but rather on the personal knowledge of the player and there is no stake money paid other than the costs of the phone call or a postcard. As of 1.4.2005 public-law broadcasters are no longer permitted to profit from premium rate telephone numbers.

With the exception of the broadcasters’ advertising directives and the Interstate Agreements concerning media services in general, there is no specific regulation or jurisprudence; these services are considered to be exercised in a grey area.

Sales Promotional Gambling

The Industry offers a variety of games which are usually performed without stakes. The prizes can, in exceptional cases, exceed 1 Mio. €. There is no specific regulation governing this sector with the exception of the above mentioned sec. 4 UWG which provides that the participation of consumers in games must not be structured such a way as to require the acquisition of a good or the request of services as condition to participation. If structured in that manner, the game would be deemed an illicit combination of game of chance and order of goods.

If a game requires a stake it can either be considered to be a raffle, as that term is used in sec. 33 h GewO, which is subject to the rules governing lotteries or an “other game with winning prospects,” as that term is used in sec. 33 d GewO, in which case the game would be subject to a license requirement, the granting of which license depends on the issuance of a certificate of non-objection by the Federal Office of Criminal Investigation. These provisions particularly focus on offline-gambling.

Charity Gambling

The charity-lotteries carried out in TV (ARD and ZDF: Aktion Mensch (the former Aktion Sorgenkind) and Ein Platz an der Sonne).obtained licenses because of their charitable character.

Charity gambling with no economic interest can in general be allowed, as has been expressly stated in the Interstate agreement on lotteries and in the (former) Lottery Acts of the Länder. The use of revenues for charitable purposes, churches or other public interests is generally a condition for the exercise of lotteries and raffles by private entities. However the granting of an authorisation depends on the strict conditions fixed in the Interstate Agreement.

Some Remarks on Justifications

The German gambling rules fall within the scope of prevention of danger to public safety and order and base their restrictions and license requirements on overriding reasons relating to public interest. The justifications given generally fall within the categories of avoidance of an increase in and the canalisation of the human passion for gambling, prevention of its exploitation for private or commercial profits, consumer protection, guarantee of gaming activities operated in an ordery fashion and avoidance of the risk of crime and fraud. Notwithstanding the existence of a fiscal interest, the predominant principles on which the gaming legislation is based are to be considered those of public order/ prevention of danger, the latter being a legal obligation of each of the German Länder.

Similar arguments are brought forward with respect to the provision of sec. 284 StGB, the legal purpose of which is also to avoid an uncontrolled exploitation of the human passion for gambling and to maintain the social order.

On the other hand, in practice, the gaming operators of the Länder continue to expand their gaming structures, to develop new games and to engage in aggressive marketing campaigns. An increasing number of authors and courts have thus expressed doubt concerning whether the justifications given are not predominantly used to cover up the fact that the main aim of the legislators is generating revenues. With respect to bets we cite as examples the OVG Saxony, (3 BS 28/04, 405/03, 22.12.2004) or the VG Minden, (3 L 804/04, 12.11.2004) who have taken a position in that vein, stating that “Restrictions must then however really aim at limiting the possibilities to gamble and the financing of social activities resulting from the income of such games must be an incidental consequence of, and not the reason for, such barriers. It is difficult to reconcile a desire to prevent the danger posed to society by private Oddset-bets-operators as a justification for a state monopoly with the advertisement for sports bets in the media by the State, as is the case in Germany.”

Or: “It particularly cannot be stated that the state’s behaviour canalises or limits the human passion for gambling. On the contrary, the conclusion is that the state continuously extends its offer of gaming by means of aggressive advertising campaigns in order to ensure an income of one or several million euros.”

This has most recently been confirmed by the Constitutional Court (1 BvR 1054/01, 28.3.2006). The Court underlined that the prevention of gaming addiction and the prevention of crime are in principle important reasons of public interest which can justify a monopoly, on the contrary to fiscal interests which do not constitute a valid justification. The monopoly however fails to pursue its objectives in a coherent manner, due to an aggressive marketing strategy of the monopolist. The interplay of public interest objectives and State fiscal interests becomes then contradictory especially where a control by a neutral body is not effectuated.

It must however be stressed that these arguments are to be seen in relation to its context, that is, in the the sector of sports bets, where also authors in general question the necessity and proportionality of the ban on private entities from the gaming market and argue that there would be alternative means to control abuse by private operators. Such objective criteria could be the control of the gaming concept offered by the operator, the prohibition of games that have a high risk of gambling addiction, stringent personnel requirements, an obligation to surrender profits and a strict state control.

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