German State of Thuringia Wants to Operate an iGaming Monopoly

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German State of Thuringia Wants to Operate an iGaming Monopoly

A small state in Germany has big ambitions for its iGaming market. Thuringia, home to around 2.1 million inhabitants, is putting forward legislation that would give it autonomous control over iGaming within its borders. If approved, the state’s lottery operator, Lotto Thüringen, would become the sole iGaming operator of many online gaming options.

Lotto Thüringen
Lotto Thüringen
Staff of Lotto Thüringen in Thuringia, Germany, which could operate an iGaming monopoly in the state. (Image: Lotto Thüringen)

Germany is undergoing massive changes in its gaming industry. It is introducing new rules and regulations, some of which have been controversial and threaten to increase black market gaming. Thuringia, a neighbor of Bavaria and Saxony, has approved an amendment to its gambling regulations that would give the state lottery monopoly power over all online casino activity in the state.

A New Era Of Gaming

Thuringia’s parliament signed off on the “fifth act” to its Thuringian Casino Act, which would pave the way for the lottery operator to exclusively offer iGaming in the state. It specifically creates a monopoly controller, which the parliament believes is the best solution to guarantee player protection and reduce illegal online gaming. Legislators are confident that the amendment is in line with provisions laid out in the larger Interstate Treaty on Gambling.

The country’s newly-regulated iGaming market launched earlier this year. The Interstate Treaty on Gambling was meant to crack down on offshore gaming and improve the tax revenue the state and federal governments received from gambling. The treaty was designed to put all the states’ gaming activity under one umbrella overseen by a new regulator, Glücksspielneuregulierungstaatsverag.

In Thuringia, the gaming license would be issued by the Ministry of the Interior and Municipal Affairs, which already oversees the state’s casinos. While, in theory, the license could be given to another state-run entity, Lotto Thüringen is viewed as the most likely recipient. It would have the authority to regulate online versions of games such as blackjack, baccarat and roulette, while others, including slot machines and poker, would still be governed by the provisions laid out in the Interstate Treaty on Gambling.

The amendment will now be sent to the European Commission. If it approves, the legislation will return to Thuringia’s parliament to be enacted.

Gaming Monopolies Not a Viable Alternative

Monopolistic control of virtually any activity, including gambling, often leads to problems. There is no sense of urgency to innovate or offer a competitive market solution, which leaves plenty of room for outside influences to step in.

Germany has come under fire for state gaming monopolies in the past, but most have already forgotten. In 2010, European judges ruled that German gambling laws in place at that time, which protected state monopolies, were not “justifiable.”

The European Court of Justice stated that the “public monopoly of the organisation of sporting bets and lotteries in Germany does not pursue the objective of combating the dangers of gambling in a consistent and systematic manner.”

If the public interest of preventing incitement towards overspending on gambling and combating gambling addiction is established, then restrictions of the kind used by many countries during the formative years of online gaming may be justified. However, this often isn’t the case.

Different studies have shown that gaming monopolies rarely achieve the desired goal, which is, often, reducing problem gambling. The European Gaming and Betting Association has repeatedly produced evidence that monopolies are counterproductive. Last year, it found that Finland, with its gaming monopoly, had a problem gambling rate of around 3%. This is much higher than the 0.3% in Spain, which has a more open and flexible market.

While Thuringia’s monopolistic plans may not be as wide-reaching and only focus on certain gaming activities, the idea still has inherent problems. The model is likely to lead to some operators turning their backs on the local markets. This has already been seen in Germany a couple of times by companies such as Betsson and others.

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