Is Online Gambling Legal in Germany

Gambling can be traced in Germany all the way back to Roman times when soldiers were playing several forms of dice games. At some point after the introduction of online betting, the government attempted to create a monopoly, which ultimately failed. For years, the main problem was that laws were not very specific regarding where you could place wagers. In addition, most states had different regulations, adding to the uncertainty level.

All these changed in 2021 and the question ‘Is online gambling legal in Germany’ finally has a clear answer. Brands will require a local license to operate. However, you should note that this is not in full force yet and you can still access international bookmakers. Here, we will examine how this new information affects online betting, as well as the intriguing case around the gambling tax. But first, here is a list of the top German betting sites.

Is Gambling Legal in Germany

Since it is a federal republic, each state in Germany was in a position to interpret the laws around gambling differently. As a result, some states, like Schleswig-Holstein, started to issue local licenses for online bookmakers and casinos, while the rest accepted international licenses. The attempt of the government to monopolise the industry was in direct violation of the EU gambling laws.

Article 8 of Directive 98/34/EC states that, since it is part of the European Union, Germany has to open the way for European companies to acquire a license. So, is gambling legal in Germany today? The legislation that was rebuilt in 2021 says yes. In the new regime, operators must obtain a license to accept users and the gambling governing bodies in the country attempt to block unlicensed sites. However, you should note that the government has not yet taken any action against a player placing a wager on an illegal sportsbook.

Gambling licensing per state

Despite the complete overhaul of online gambling laws, each German state is free to enforce its own regulations. Some follow the general rules, while others have made some changes. Understandably, something like this makes answering the question, ‘is betting legal in Germany’ a lot tougher. It is better to inspect separately some of the most notable adjustments that some of the states have implemented:

Berlin: The Department for Economy, Energy and Business primarily examines applications around land-based horse and greyhound race betting.

Bavaria: No license will be issued to any operator since online gambling is a state monopoly in Bavaria. Bayern Staatliche Lotterieverwaltung and LOTTO Bayern oversee all activities.

Lower Saxony (Niedersachsen): The legislation is currently under advisement, which means that no local licenses have been issued yet.

Baden-Württemberg: The Service Portal of Baden-Württemberg supervises applications but has not set any specific rules yet.

Rheinland-Pfalz (Rhineland-Palatinate): The Ministry for Economic Affairs, Traffic, Regional Planning and Viniculture requires test purchases to examine if the betting sites are complied with the regulations and protect personal data as well as participation from minors.

Thuringia (Thüringen): Games of chance are regulated by the Thuringian Gambling Act, which follows the general principles of the State Treaty.

Hessen: To find more information about gambling legality, you have to visit the Hessian Ministry of the Interior and Sports (Hessisches Ministerium des Innern und für Sport).

North-Rhine Westphalia: The Ministry of Home Affairs and Local NRW has already been granting licenses for a few years. However, each company has a maximum number of casinos and betting sites that can operate under the same license in the state.

Saxony-Anhalt (Sachsen-Anhalt): The Ministry of the Interior and Sports of Saxony-Anhalt states that online gambling sites must set up an additional technical system (server) to ensure player protection further.

Brandenburg: The Brandenburg Ministry of the Interior and Local Affairs is the one in control of online gambling and generally follows the regulations of the 2021 State Treaty.

Mecklenburg-Vorpommern: The state is currently developing legislation around online gambling.

Schleswig-Holstein: According to the Ministry of the Interior, Municipal Affairs, Housing and Sport (MIKWS), any site that operates without a valid Schleswig-Holstein license is liable to prosecution. The same applies to bettors who participate in illegal online gambling.

Saarland: Bookmakers that plan to acquire a betting license have to pass through the Ministry of the Interior, Building and Sport.

Bremen: The Senator for Internal Affairs is responsible for issuing gambling licenses and also runs the Bremen Toto and Bremen Casino.

Which companies have a German betting license

Since the new legislation has only recently been implemented in the country, questions such as ‘is Bet365 legal in Germany’ appear more often than not. Players want to ensure they can still place wagers on their favourite bookmakers. So let’s look at some of the top brands on the market.

Bet365 

Arguably the biggest bookmaker in the world, Bet365 has obtained a local license to operate in Germany. You can freely enter the official website, register, and place wagers. The Bet365 mobile app is also available to users from Germany. The sportsbook does not absorb the 5% betting tax on all stakes.

N1bet

This relatively new online bookie was established in early 2021 and has become particularly prominent in Germany. Even though the company has not yet applied for a local license, it still welcomes German players. If you are unfamiliar with this site, follow our N1bet review to get all the latest information.

22bet

The sportsbook has been online since 2017 and is known for its high odds and wide-ranging bonuses and promotions. Much like N1bet, it does not run under a German gambling license, but users from the country can still sign up. However, reliability is not an issue because it belongs to one of the most widespread betting groups worldwide and has obtained local licenses in other countries.

Betfair

Unfortunately, the biggest exchange in the world is not available in Germany. If you want to access an online betting exchange, your options are minimal. Besides Betfair, Matchbook is restricted to German residents. However, we expect both to apply for a local license sooner than later.

How does the German gambling tax work

Besides wondering whether betting is legal in Germany, several bettors also worry about how the gambling tax works. Generally, the betting tax is 5% and applies to the stakes. For example, if you bet €100 on Real Madrid to beat Barcelona at 2.00 odds, your actual stake will be €95. Here, we have to underline two things. First, the German betting tax existing doesn’t mean all bookmakers pay it. Some non-EU-licensed sites might not be paying the tax at all.

Players, in that case, do not have any obligation against the state to declare their winnings. Punters should also know that the legal entity that has to pay the tax, in this case, is the bookmaker and not the bettor. Secondly, not all bookies follow the same approach. Let’s take a look at the different ways they use to tackle this problem:

Tax on every bet you place (Stake)

You are taxed 5% on each one of your bets and this is displayed on your bet slip immediately. You should remember that this applies even if your bet is void, which is the worst-case scenario. For example, if you bet €100 on Lionel Messi to score, the bookmaker will immediately charge a 5% tax. However, if he does not play, your bet will be cancelled, but you will only receive €95 back.

Tax on gross profit

That’s the model most sportsbooks have adopted. In simple terms, the 5% German betting tax only applies if you win. For example, you bet €100 on odds of 2.00, and the bookmaker takes nothing out of that bet. You end up winning with a profit of €200. The bookie deducts 5%, namely €10, leaving you with €190.

Tax on net winnings (net profit)

Apart from the aforementioned tax on gross profit, this is the tax on net winnings. In simple terms, the 5% betting tax applies only to your net profit. For example, you bet €100 on odds of 2.00, and you end up winning with a net profit of €100. The bookie deducts 5%, namely €5, leaving you eventually with a €95 net profit.

The bookmaker absorbs the tax

This is the best-case scenario. It’s self-explanatory, as the sportsbook assumes all of the tax and you don't have to pay anything. In other words, you bet €100 again on odds of 2.00, and if you win, your profit is €100. Nothing will be deducted at any point. Here is a list of bookmakers without the 5% tax.

Gambling products & bet types the 5% tax applies to

According to legislation, since 1st July 2012, a 5% tax has been applied to all sports bets, both online and offline. Horse betting is also on the list of gambling products the tax applies, although not all sites offer it. Due to the lack of a casino licensing system (except for Schleswig-Holstein), profits from online casinos do not have to be declared; thus, no tax applies there.

However, casino operators pay 18% VAT. The Race Betting and Lottery Act defines Germany's regulatory framework on gambling taxes. German punters should know that single bets are usually taxed, including free bet winnings and cashed-out wagers, while combos and systems are often not.