As of July 1, 2021, Germany became a regulated iGaming nation. To ease the transition from the grey market to the regulated one, the regulator is allowing gambling operators who have applied for a license to continue to operate in Germany until they have formally secured one. This transition period will end at the end of 2022.
Considering this information, Payment Service Providers (PSPs) can offer their payment services to gaming operators for the German market without taking any special risks up until the end of this transitional period.
Operators who have already applied for a license are permitted to offer their services in Germany during the transitional period. Only those who have formally received the license will be able to offer services after this time.
Applicants who have submitted an application but have not yet received a license face significant challenges of various kinds (blocked payments, risk of fines, risk of refusal of license application, etc.) when providing services in Germany.
In Germany, there are currently eight casinos and eight poker operations, along with 34 sports betting businesses.
Germany is the European continent’s most populated country, and its economy had the biggest grey market for online gambling in Europe up until the new Interstate Tready on Gambling went into effect on July 1, 2021.
The treaty is a political agreement and includes the signatures of all 16 Federal Republic of Germany states. By permitting online slots and online poker to be offered at the federal level and all other online casino games at the state level, it allows operators to offer previously prohibited games.
Mastercard implemented a new rule as of September 1, 2022
According to the Interstate Treaty (Glücksspielstaatsvertrag 2021), all German issuers must reject all cross-border online gambling transactions made by businesses that don’t have German online gaming licenses as of July 1, 2021. This new rule exists because Germany now regulates iGaming.
Despite the tolerance period until the end of 2022, Mastercard published on July 12, 2022, an enhancement to the Safety Net Policy Manager Service, enabling German issuers to reject transactions for iGaming merchants made with MCC 7995 or MCC 9406, except for those made by merchants possessing German business licenses.
To maintain business continuity, acquirers and PSPs must therefore submit and maintain an up-to-date list of all iGaming Operators they service for the German market who hold a German license by August 20, 2022. Acquirers and PSPs not complying with this requirement risk seeing all transactions in Germany declined, even those from licensed operators.
Each issuer is free to choose whether to participate in this program and when to do so. However, given that failing to comply could result in significant fines, this appears to be the end of the grace period.
As a result, iGaming operators must also take all possible actions to have their licensing made official as early as possible before the end of 2022 to pursue their activities in Germany.
Discover our iGaming white paper to provide astute insights into the payments’ arena.