Why is an Online Gaming License Required?
Online games, commonly referred to as iGaming, is a form of online gambling that involves the wagering of money on the results of various events or games, such as sports betting, online poker, virtual slots, etc.
Licensing bodies such as the Regional Council of Darmstadt supervise and control online gaming operators with a fundamental goal, to protect players, mitigate criminal gambling activities, and prevent underage participation. Essentially, they’re here to make the market a safe and fair environment for all, and compliance with government protocols promotes trust among customers, which in turn improves the business’ reputation.
In the ever-evolving online gaming space, a gambling license is granted to businesses that accept and honor a robust set of legislation and guidelines.
To maximize public safety, the compliance body focuses its efforts on responsible online gambling, transparency within the business, and eliminating money laundering:
The convenience of online casinos means the industry is thriving. Players and users with an internet connection, a smart device, or a functional PC or laptop have easy — and instant — access to virtual gaming and gambling platforms.
A gambling establishment must offer a means for their users to self-assess their play to prevent gambling addiction.
Doing business with the utmost integrity and transparency improves the players’ trust in the gaming license and the gambling activities available.
How is this achieved? The regulatory body may decide to assess the online gambling business' software to ensure that it’s operating accordingly and to confirm if players are receiving their correct return on invested capital.
We touched on the illegalities faced in the online casino space.
Having a gaming license means that all iGaming establishments are required to follow and abide by the legislature monitored by the compliance authority to ensure all money and large deposits are coming from a legal source.
They do this by thoroughly inspecting players’ bank accounts to confirm the origins of their money.
Applying for an Online Gambling License
2021 saw the implementation of the much-anticipated Interstate Treaty on Gambling which included new and limited gambling license opportunities for sports betting, virtual slot machines, and online poker for private operators across Germany.
While registering and applying for a gambling license is an arduous undertaking, iGaming establishments that wish to offer live games must endeavor to secure one.
An online gambling license demonstrates your pledge to a safe and fair gaming policy.
With transparency comes conviction and with conviction comes a favorable reputation.
Because of the strict laws that need to be adhered to, players know that a gambling business with a legal license in the virtual world can be trusted with their personal information, and, most importantly, their money.
Thus, having a licensed gambling business has a knock-on effect, since it promotes loyalty among consumers.
Requirements to Obtain an Online Gambling License
While each online gaming offering has its own unique set of requirements, the main guidelines of the licensing process are overarching:
An applicant is required to provide a security deposit of at least EUR 5 million and, in some cases, it can be set as high as the expected average monthly turnover, with a maximum of EUR 50 million.
Gambling Offers Must Be Separated
When different online gambling offerings such as sports betting and poker are accessible in the same domain, the gambling business must ensure that they’re independent of each other on the website. Cross-advertising is also prohibited, and a player cannot wager on more than one game at the same time.
At the registration phase of the online casino's website, a player must set their monthly deposit limit to a maximum of EUR 1,000. To negate the possibility of a player becoming a gambling addict, this requirement is crucial. The regulatory body monitors compliance with the EUR 1,000 limitation via a central database.
Virtual Slot Machine Games
For virtual slots, there is a minimum time of 5 seconds per game and a maximum bet of EUR 1.
How to Apply for an Online Gambling License
Furthermore, to qualify for an online gaming license, a completed application form in writing needs to be handed in as well as submitted electronically, along with a declaration.
Documents Outlining Reliability Include:
- A list of authorized representatives.
- A declaration stipulating their commitment to not offer any form of illegal gambling.
- Administrative records like a Clearance Certificate.
The licensing body is also concerned with an applicant’s capacity in terms of financial competence, expertise, transparency, and security.
Plans and Policies
Applicants need to provide audited ‘concepts’ that outline their intended profitability forecast, their strategy and commitment to responsible gambling, IT security, protection of minors, etc.
In essence, all the plans and policies that the business will have in place.
In terms of online casino advertising, an applicant is required to indicate if they will be advertising independently or if they will be outsourcing externally.
An advertisement concept must accompany a licensing application.
Additionally, all relevant details about the gaming business and how it will operate must be given.
This includes their game offering that will be assessed and approved by the supervisory authority.
Online Casinos with a Gambling License
Much like other countries, entering the online gambling market in Germany is filled with a web of obstacles for applicants, but since the inception of the fourth amendment to the Interstate Treaty, businesses are lining up for the prestigious authorization.
To date, sports betting licenses have been granted and the Regional Council’s official ‘whitelist’ includes some 35 licensees.
Online poker and virtual slot game licenses are also open for application, although only a limited number of operators have been given the green light for the latter so far.
To date, licenses for online casino games, particularly roulette, blackjack, and baccarat, have not been issued, but as the country's gambling regulation reforms, so too will the guidelines for this specific offering.
Presently, it is unclear whether online casino games will be open to private businesses or if they will be run under a state monopoly.
Pros and Cons of an Online Casino License
- Applying for an online gambling license is a relatively quick process if all is in order.
- The tax laws are largely agreeable.
- The gambling laws are straightforward and follow global standards.
- Proof of licensing can be exhibited on the gaming website.
- Licensed platforms are trusted and respected by the public.
- Players feel safe knowing that the gambling site has a legal license.
- Since the online gambling license is relatively new to the region, it’s difficult to figure out if they have any flaws that may be problematic for businesses.
- The gambling license is expensive and with ongoing monitoring and compliance checks, maintaining its validity is demanding.
About the author
Ethan Williams, a lively 24-year-old lad from the UK, brilliantly fuses his passion for online casinos with top-notch English localisation, creating bespoke casino guides for Britain's keen gaming lot.