Germany’s Association for Telecommunications and Media (DVTM) has emerged as a major advocate of regulatory reform. CEO Renatus Zilles explains why he believes it is high time for the federal government to take charge of Germany's gambling market.
Years of stilted progress and legal battles seem to be finally culminating in a strong consensus in favour of a liberalised German gambling market. With the European Court of Justice finally ruling that the model supported by the state lottery monopolies contravenes European Union law and infringement proceedings likely to follow, politicians seem to have finally woken up to the need for action.
A lot is riding on the proposals put forward by Hesse Ministry of the Interior and Sport (HMDIS), the body responsible for handling the failed process to award Germany’s twenty sports betting licences. Now formalised in a draft State Treaty, Hesse proposes lifting restrictions on casino and poker, removing the licence cap and establishing a new body based under the Ministry of Finance to regulate the sector.
This bill, put forward by Interior Minister Peter Beuth, is set to be discussed at the Minster Presidents’ Conference today (March 17th) and it seems that once again the ultimate responsibility is being left with the states. The same states that have consistently pushed through State Treaties that have contravened EU law, prevented a viable market from opening and stunted the growth of what could become Europe’s largest gaming market.
The federal government has been quick to bat the responsibility for developing effective regulation to the states but after numerous failures it is understandable that those pushing for progress may feel it is time for the government to get involved.
One such body is the Deutscher Verband für Telekommunikation und Medien (DVTM), an association representing some of the country’s leading telecommunications and media bodies, from internet service providers to radio stations.
DVTM chief executive Renatus Zilles tells Gaming Intelligence that his association believes Germany should be pushing for a “convergent solution” based around the concept of “bettertainment.”
To Zilles this means acknowledging that gambling is effectively a combination of entertainment and technology.
“Gambling is a product that converges entertainment and technology,” he explains. “The chief operating officer of Deutsche Telekom explained to me that [his company] wanted to enter the gambling market [through the Tipp3 brand] because it allowed them to combine their IT and entertainment expertise.”
This helps explain which such major companies are backing the association’s support of a liberal gambling market.
“When Deutsche Telekom decides to participate in the iGaming market other major companies such as Volkswagen or Axel Springer may want to follow,” Zilles explains. “These companies can converge a range of products such as sports betting, poker, casino under this bettertainment banner.”
Channeling players towards the licensed offering
Instead of putting any major restrictions on operators, the DVTM advocates a model in which strict consumer protection standards are upheld, such as measures to prevent minors from playing and ensuring that consumer data is carefully protected. If operators can prove that they can meet these standards, why should they not be allowed to operate?
“Our strategy is focused around the protection of young people, users and data, and under such a model we will only have winners,” Zilles says. “The end users, the regulators and the state are all winners; Germany earns more taxes and creates additional jobs.”
This in turn can channel players towards the licensed market, Zilles adds. All companies with a licence will be able to work with any media publisher they choose, meaning such operators would be able to advertise freely, creating little room for unlicensed entities to throw money at media and sports bodies.
Of course this may sound rather idealistic, but ultimately it is a perfectly viable system. And ultimately one that supports the original goals of the most recent State Treaty on Gambling.
But Zilles is critical of the frustratingly slow rate of progress, which has ultimately prompted the DVTM to take a more proactive role. After all, he says, through its work with general media and telecommunications the association has an existing set of widely respected standards for conduct and advertising guidelines. This means it can act as a major partner and representative of pro-gambling companies when dealing with politicians.
“As a representative of these companies we can act as a guarantee of quality,” he says, noting that politicians will be aware of the DVTM’s processes and standards. “We understand each sides’ concerns, and we have the authority to ensure that a workable solutions is reached that can benefit all sides.
The rewards are clear: “We can ensure that the German states can gain access to up to €10bn in additional funding through taxation of this bettertainment market,” Zilles explains. “We are looking at the models from Denmark and Schleswig-Holstein, and acknowledging Peter Beuth’s suggestions in Hessen.”
Bypassing the states
Yet while Zilles shares a goal with Hesse’s politicians, he has a very different approach to achieving this goal. Rather than rely on the individual states, he believes it is time for the federal government to take charge.
“We are looking to ensure a uniform regulatory system across all markets, rather than engaging with individual states. Individually we would have sixteen different models of regulation, which goes against the idea of convergence – we want to bring things together. We want to make bettertainment a form of media similar to newspapers or television.”
As a result the DVTM will look to engage directly with the federal government, bypassing the state authorities. According to Zilles and many other industry stakeholders, now is the time for the nuclear option.
“I belive that it is important to speak directly with the government, highlight that they could have user and data protection controls while ensuring that the Bundeslander can benefit from the regulations,” he says. “We can show that they can benefit from the €8bn directly.
“Representatives from the other European states say that it’s a case of finding the balance between the interest and goals, and the money at stake. I feel we can change it from a state issue to a national issue.”
This approach may be unpopular among certain states, especially those that are only willing to accept cosmetic changes to the existing system. Perhaps a year after the previous State Treaty was passed their concerns may have prevented the process, but we are approaching the fourth anniversary of the Treaty being implemented, with minimal progress towards a regulated German gambling market. The nuclear option may be the best hope for change.
As things currently stand, every state will need to approve the new Hesse proposal. The likes of Bavaria, Nordrhein-Westphalia and Niedersachsen have all said that they want to see the 2012 Treaty continue with only minor tweaks. This could either derail Hesse’s proposal or see yet another unsatisfactory compromised reached.
Zilles notes that betting advertising could generate an additional £300m a year for media companies in Germany, meaning it’s not just a question of politics, it’s potentially of benefit to numerous sectors of the economy.
“After years of dealing with breaches of the legislation and inaction we can make things move forward under the federal system to create a workable regulatory model. Earning these higher taxes rather than having all the money going to offshore companies will be more appealing to the states.”