Sportsbooks in Germany’s Hesse State Are Going After the Government

Posted on: May 5, 2022, 07:22h. 

Last updated on: May 5, 2022, 10:01h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Sports betting operators in the German state of Hesse aren’t happy with the way the market is moving. They have run out of patience and are suing the government in one massive lawsuit.

German flag
Germany isn’t finding a lot of enthusiasm on the part of sports betting operators. Those operating in the state of Hesse are suing the government for mismanaging the market. (Image: Shutterstock)

Germany’s gambling industry is in disarray. It has been this way for years, despite attempts to add regulations and clarity to the operations.

The Third Interstate Treaty on Gambling (ISGT, for its German acronym) was a start, but didn’t go far enough. The ISGT first appeared in 2012, but it took seven years for it to become a reality. The Fourth Interstate Treaty on Gambling (ISTG 21) last year hoped to improve the situation. It apparently failed.

Sports betting operators in the German state of Hesse have no more patience. All 33 land-based and online operators, according to iGaming Business, have come together to sue the state, hoping to force changes.

Hesse Pushing Players to Offshore Sites

Initially, the ISGT had a limit on the number of licenses each state could award. That was later changed. However, the market already shifted, and a rise in the use of offshore sites followed.

Later, even though the government removed the limit, Hesse implemented other restrictions, such as in-play betting options and monthly spending limits, that hampered the growth of the legal market. Live betting has always been a significant part of the market. German Sports Betting Association President Mathias Dahms stated in 2020 that it accounted for 60% of all the action.

As a result of the continued restrictive nature of the market, Germany’s sports betting industry is losing ground. In 2019, betting revenue reached €9.3 billion (US$9.86 billion). However, that fell to €7.8 billion (US$8.23 billion) last year.

All holders of permits for the organisation of both land-based and online sports betting have filed lawsuits against individual ancillary provisions in their respective permits,” a Regional Council of Darmstadt spokesperson told iGaming Business.

Enough’s enough, the sportsbooks proclaim. They are taking Hesse to court in hopes of rewriting the book on legal sportsbooks.

Flashbacks to Previous Controversy

Hesse is familiar with friction in the gambling industry. Some 20 online sportsbooks lost the right to operate in the state in 2015 because of a problem with the issuance of licenses. Hesse sued the country over the ISTG, arguing that the agreement was unfair.

Now, the state is returning to a courtroom with sportsbook operators. This time, it’s the defendant. Sportsbooks argue that Hesse’s overhanded approach to the industry is stifling it and forcing consumers to use black market sites.

The issues stem from the ISGT and the measures Hesse implemented. When the treaty went live in 2019, Hesse discovered it didn’t make any friends. No operator applied for a license at that point.

Following another lawsuit in April 2020 that halted all licensing activity, the market finally began to see movement when things turned around later that year. However, the restrictions remained, even as the European Union kept pressuring Germany to pull back.

Not even the arrival of the ISTG 21, which added online casinos, has done much to sway the market. There are still a number of restrictions that operators aren’t happy with, including a newer call from last November to ban sports betting advertising.

At the end of March, the head of Germany’s new gaming regulator, Glücksspielbehörde, promised to look into the state of affairs. The entity will conduct a “data-based evaluation” of the industry, which will take a while to complete. In the meantime, more consumers will continue to seek entertainment options that better align with their own goals.

Despite the controversy, some operators expect the market to grow. Delasport recently predicted that it will achieve a year-on-year growth of 10%. However, it also recognizes that the continued conflicts and unclear regulations are leaving some operators uneasy.