Germany’s Lower Saxony State Bans Unnamed International Online Payment Processor

As part of Germany’s ongoing efforts to block online-gambling operators licensed elsewhere in the European Union from offering services to German citizens, the German state of Lower Saxony has announced a formal ban on an unnamed but likely prominent online payment processor.

According to a statement published this week by the Lower Saxony Ministry of Home Affairs and Sports, “For the first time, the Lower Saxony Ministry of the Interior and Sports, as the responsible gaming supervisory authority, has banned a large, international payment service provider from participating in payment transactions in connection with illegal gambling in Germany. This was done with effect for the entire federal territory.” The latter phrase means that due to the way state-level bans are enacted in Germany, the payment processor so banned will be blocked across all of the country.

Germany FlagBoris Pistorius, the Ministry’s head, said: “We are signaling and expect pressure on other payment service providers to reorganize their business processes in connection with illegal gambling, if they have not done so already.”

While unnamed, the targeted online processor was likely among those used by one or more European Gaming & Betting Association (EGBA) operators, several of whom serve German citizens. The EGBA, in response to the announced ban, immediately slammed the ban as being “ineffective and detrimental”.

“We set an example for the entire industry!” crowed the announcement by Home Affairs and Sports Minister Pistorius. “Online casino is no triviality, prohibited by the Gambling Treaty and also punishable. In the meantime, however, it is moving a billion-euro market. As a rule, the actors are companies based abroad, which is beyond the reach of the German authorities.”

According to the Lower Saxony declaration, the only exceptions to online gambling being illegal, despite its widespread availability throughout, are through Germany’s state-run lotto, some licensed sports-betting providers, and, due to prior legal exceptions, the German state of Schleswig-Holstein. Numerous online operators and payment processors might disagree with that interpretation, but bans such as this one are likely to stay in force unless challenged and overturned by a German court.

This latest episode continues the long-running story between Germany’s convoluted online-gambling laws and their general incompatibility with EU-wide trade pacts, though the European Commission’s decision to stop pursuing online gambling-related complaints against EU member countries has created a virtual open season for rules such as this to be enacted.

Lower Saxony’s Pistorius declared, “For online casino games including online poker, the event and mediation via the Internet is forbidden and otherwise punishable. The same applies to the so-called second lotteries (‘black lotteries’), which are not based on their own game plan or draw, are not real lotteries, but under German law inadmissible betting on the drawing results of domestic or foreign lottery providers.

“Online casino,” says Pistorius, “is no triviality, prohibited by the Gambling Treaty and also punishable. In the meantime, however, it is moving a billion-euro market. As a rule, the actors are companies based abroad, which is beyond the reach of the German authorities.” Later, he added, in a message to online payment processors, “The payment service providers have an important responsibility here. You are required by law to refrain from payments in connection with unauthorized gambling.”

The unauthorized gambling offer underlying the payment suspension has already been prohibited. Although courts have confirmed the official procedure, the gambling companies continue their unauthorized offers from abroad, where they can largely escape the access of German authorities. Therefore, the Lower Saxony Ministry of Home Affairs and Sport also addresses the payment service providers involved with the aim of effectively preventing the implementation of illegal offers in this way. Minister Pistorius said: “The payment service providers have an important responsibility here. You are required by law to refrain from payments in connection with unauthorized gambling. ”

Whichever payment processor has been targeted isn’t likely to be the only one. The ministry’s statement claimed that it “is currently in contact with a number of predominantly foreign companies that have been found to be involved in illegal gambling payments,” claiming that, “some of these companies have already responded and suspended payments.” It is likely that the affected processors will soon be identified publicly, even if only anecdotally via postings by affected German gamblers finding their favorite deposit and withdrawal channels to no longer work.

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