The German state of Schleswig-Holstein on Wednesday opened the way to liberalising the region’s online gaming market, a move which private operators hope will help push the whole of Germany to follow suit.

The majority of conservative Christian Democrats and free-market Free Democrats in the state assembly in Kiel passed a law allowing any commercial operator to apply for licences for web-based betting from March 2012.

The move sets Germany’s northernmost state apart from its 15 other regions, which want to loosen the ban on private providers by granting only seven online sports betting franchises for a five-year experimental phase from January.

Operators Betfair and welcomed the move. Peter Reinhardt, responsible for Betfair’s German operations, said the decision would “not only benefit consumers” but also state governments and sports clubs.

Hans-Jörn Arp, Christian Democrat leader in Schleswig-Holstein’s state assembly, said the region was the first to “recognise the importance of the internet” in the gaming industry, crafting itself “possibly the most modern betting law in Europe” which could produce an annual €60m in tax revenue.

Germany’s 16 states, which are responsible for rules covering lotteries, casinos and off-site sports betting, were forced to act last year when Europe’s highest court, the European Court of Justice, said the states’ traditional monopoly on providing gambling contravened EU law.

While all states agreed they wished to preserve state lottery systems in order to keep gambling addiction under control, they split on how far to liberalise the online market for casino games and sports betting.

The large majority of the states set about drafting a limited reform to allow a small number of online providers for a limited period – a reform since criticised by the European Commission – while Schleswig-Holstein decided to open the market for all comers.

While Betfair claimed the latter region’s legislation would allow commercial operators to provide online betting from Schleswig-Holstein to consumers across Germany, state officials privately told the FT that any such move would likely be contested in court.

This legal uncertainty over the applicability of the new state law appears to be one reason why Schleswig-Holstein has decided to enact its law three months after that planned by the other states – the delay would allow it to work in any compromises agreed with the other states.

All 16 state premiers will meet in October to discuss the issue. Reiner Haseloff, premier of Saxony-Anhalt, told the Financial Times in July he stuck to the view that “Germany has a distinct legal tradition” which allowed strict regulation of betting to prevent gambling addiction.

Copyright The Financial Times Limited 2018. All rights reserved.

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