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November 14, 2017

Comparing Online Gambling in Czechia and Germany

Since January of this year, the online gambling landscape has changed dramatically in the Czechia as a result of new legislation designed to accommodate the major technological advancement of the past few decades: the internet.

Shortly following the 1989 Velvet Revolution, which saw the fall of Communism in what was then Czechoslovakia, new business activities flourished within the Czech market reflecting the people’s hunger to make money fast. In 1990, the first gambling law was put in place, with the intention of enabling and laying the groundwork for gambling operations in the country. However, the gambling sector was soon booming, outgrowing the early legislation’s capacity to adequately and systemically control gaming operations in the country that now boasts the first place in the EU when it comes to the frequency of residents participating in gambling activities.

The advent of the internet posed the greatest challenge to the outdated 1990s gambling law. The old act failed to control foreign operators who readily infiltrated the market via the burgeoning online medium. While Czech gambling operators were required to purchase licenses and succumb to regulations and heavy taxation, a whopping 20% for gross wins on top of a 19% corporate tax, unlicensed operators avoided the legal restrictions and profited from the loopholes in the system. Legitimate license holders railed against Czech authorities, claiming their inability to compete with the unlicensed and untaxed service providers.

The now up-to-date Gambling Act that went into effect in January 2017 was written to meet the needs of the online gaming sector and to more closely align Czech gambling regulations with those of other EU member states. The new law both fully enables and regulates online gaming while permitting EU and EEA countries to operate games within Czechia under proper registration, licensing, and taxation. Under the new act, the Ministry of Finance, the local Municipal Authority, and the Customs Administration are all responsible for executing national administration of gambling operations.

The new law even enacts some security measures for those who fear to acquire a gambling addiction. Online casinos are required to include self-exclusion means, which provide players the opportunity to set a maximum bet and maximum loss over a select period of time. Insolvents and those receiving social benefits and assistance are logged into a register of persons prohibited from participating in online gaming activities.

Perhaps the more controversial of the regulations, however, is the blocking of websites without legal authorization to operate. While some have criticized this measure as a slippery slope to broader internet censorship, its purpose is to benefit casinos that adequately meet the country’s legal requirements.

2017’s legislation has enabled access to dozens of strictly regulated online gambling services, operated both from within Czechia and abroad, allowing Czechs to be both choosy and, most importantly, better protected in their gaming practices.

Much like Czechia, Germany for many years had no laws in place to control online gambling. However, in 2008, the introduction of the Interstate Treaty Of Gambling (ISTG) prohibited all online gambling except for sports or horse race betting, or other government-owned entities.

What makes the German online gambling landscape more difficult to understand is the differentiation between proper implementation at the state versus national level. Germany is comprised of 16 individual states, each of which is permitted to amend or reject federal laws should the local governments choose to do so. In 2012, the state of Schleswig-Holstein decided to reject the ISTG, issuing dozens of licenses to online gambling operators, shortly before a new government chose to reinstate the national law. The licenses granted by Schleswig-Holstein will remain valid until 2018 and are presently the country’s only legal online operators.

Unlike Czechia, foreign operators offering gambling services to German residents online, are not subject to national laws. While German casinos are prohibited from operating online, residents still have access to foreign sites. The omission of international operation from German law, means gamblers receive no legal protection from their local governments should something go wrong.

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