Restrictions on Fund Transfers: Highest Administrative Court Upholds Prohibition on Financial Transactions to Illicit Gambling Entities
The German gambling regulator, Gemeinsame Glücksspielbehörde der Länder (GGL), has successfully blocked access to around 450 illegal gambling websites and geo-blocked an additional 657, as part of its efforts to combat illegal online gambling in the country [1]. This move, known as payment-blocking, has seen banks and payment service providers prohibited from processing deposits and withdrawals to these providers.
The Higher Administrative Court of Saxony-Anhalt confirmed the permissibility of payment-blocking in a decision on 26 October 2023, following a lawsuit filed by a Maltese gambling company against the prohibition of offering gambling in Germany [2]. The court's decision was based on § 9 para. 1 sentence 3 no. 4 of the State Gaming Treaty, which allows for the prevention of payments related to illegal gambling.
However, despite these efforts, an estimated €500–600 million black market still exists, representing a substantial portion (25%) of the high-risk betting segment [1]. This suggests that blocking payments and access alone is insufficient to eliminate illegal gambling completely.
Legal experts and industry stakeholders argue that the current regulatory framework, especially the Interstate Treaty, imposes strict limits like a €1 maximum stake on online slots and a €1,000 monthly deposit cap. These rules, combined with strict compliance and player-blocking systems, have made the legal market less attractive compared to the illegal one [2][3]. This regulatory environment indirectly undermines payment-blocking efficacy by encouraging player migration to unregulated sites that evade these controls.
The GGL emphasised at a press conference that payment-blocking should be enforced more consistently. Industry calls for regulatory reform, including revisiting deposit/betting limits and IP blocking, suggest ongoing legal and administrative debate about adapting enforcement tools like payment-blocking to be more effective while balancing user rights [3].
In summary, payment-blocking is a useful but incomplete tool against illegal gambling under German law. It needs complementary regulatory reforms to increase the legal market’s attractiveness and reduce black market appeal. Enforcement effectiveness is also influenced by judicial decisions and pending treaty updates that could reshape the legal framework governing online gambling payments [2][3].
| Aspect | Current Status in Germany | Impact on Payment-Blocking Effectiveness | |--------------------------|------------------------------------------------------|--------------------------------------------------------------| | Payment-blocking orders | ~450 illegal sites blocked; 657 geo-blocked sites | Disrupts illegal operators but does not fully eliminate black market[1] | | Regulatory limits | €1 slot stake max; €1,000 monthly deposit cap | Limits attractiveness of legal market, pushing users to illegal sites, reducing overall control[2][3] | | Legal challenges/Debate | Calls for Interstate Treaty reform and enhanced enforcement | Includes discussions on IP blocking and payment restrictions efficiency[3] |
[1] Source: German Gambling Regulator Announces Successful Blocking of Illegal Gambling Websites
[2] Source: Higher Administrative Court of Saxony-Anhalt Confirms Permissibility of Payment-Blocking
[3] Source: Industry Calls for Regulatory Reform to Address Payment-Blocking Ineffectiveness
What is the impact of strict regulatory limits on the legal market in Germany regarding its appeal compared to the illegal market, and how does this indirectly influence the effectiveness of payment-blocking?
The ongoing legal and administrative debate about adapting enforcement tools like payment-blocking suggests a need for regulatory reform, including revising deposit/betting limits and IP blocking, to increase the legal market’s attractiveness and reduce black market appeal, thereby enhancing the efficacy of payment-blocking.
