Definition and legal classification of the bookmaker
The term bookmaker refers to a person or company that professionally accepts bets, sets odds, and acts in its own name with the direct intention of making a profit. Bookmakers operate as providers of bets, particularly on sporting events, and are subject to strict regulatory requirements in a legal context. The activities of a bookmaker are comprehensively regulated by law in many countries, as they are directly associated with gambling.
Bookmaker under German law
Legal definition and explanation of the term
Under German law, the bookmaker is a central player in gambling law. The legal definition derives from various statutes, in particular the State Treaty on Gambling (GlüStV). There, bookmakers are defined as providers of sports or other types of bets who accept, broker, or organize bets.
Licensing requirement and regulatory framework
Activity requiring a license
The activity of a bookmaker in Germany generally requires a license. Under § 4 GlüStV, bookmakers may only operate if they have obtained an official license. This license is granted by the competent gambling supervisory authority of the federal state in which the service is offered.
Requirements and conditions
In order to obtain a license, bookmakers must meet strict requirements, including:
- Reliability and financial solvency of the operator
- Transparency of business practices (including disclosure of ownership structures and financial flows)
- Measures for addiction prevention and for player protection
- Compliance with technical and data protection requirements
- Prevention of manipulation and money laundering in accordance with the Money Laundering Act (GwG)
- Compliance with youth and player protection regulations
Tax treatment and levies
Betting tax
Bookmakers in Germany are subject to the Betting tax. This is regulated in the Racing Betting and Lottery Act (RennwLottG). Since 2012, the tax on sports bets has been 5% of the stake, with the bookmaker deemed the taxpayer and regularly transferring the tax to the tax office.
Other levies
Depending on the federal state, additional levies or contributions may be imposed, for example, to promote sports or youth and player protection.
European legal classification
Bookmakers often operate across borders, especially online. The law of the European Union therefore plays a significant role.
Freedom to provide services and internal market
The activities of bookmakers fall under the freedom to provide services in accordance with Art. 56 of the Treaty on the Functioning of the European Union (TFEU). However, Member States may impose restrictions on grounds of public interest, especially to tackle addiction, crime, and to ensure consumer protection.
Case law of the European Court of Justice
The Court of Justice of the European Union (ECJ) has repeatedly ruled that national restrictions on bookmakers may be permissible provided they are proportionate and non-discriminatory (e.g., Case C-46/08 Carmen Media). The ECJ requires transparency and consistency from Member States in the regulation of bookmaker offerings.
Bookmaker in the international context
Comparative legal aspects
In other countries, such as the United Kingdom or Malta, there are specific statutory regulations and regulatory authorities (e.g., UK Gambling Commission, Malta Gaming Authority). Different licensing and approval procedures, in part with extensive consumer protection rules, shape the legal conditions for bookmakers worldwide.
International cooperation and money laundering prevention
With regard to the prevention of money laundering bookmakers are legally obliged to observe special due diligence requirements and report suspicious transactions immediately. International agreements and cooperation between regulatory authorities are essential for this purpose.
Responsibilities and obligations of the bookmaker
Player and youth protection
Bookmakers must implement binding measures to protect against gambling addiction and to comply with youth protection. This includes identity checks, implementation of limits, exclusion lists, and providing information to at-risk individuals.
Transparency and fairness
The setting of betting odds and the administration of bets must be transparent and fair for players. Bookmakers are required to make general terms and conditions freely accessible, disclose all costs and fees, and communicate the game rules clearly.
Sanctions and regulatory offenses
Unlicensed operation
Offering bets without an official license is a criminal or administrative offense and can result in heavy fines, business closures, and criminal penalties. Third-party participation—such as providing payment services—can also be sanctioned.
Breaches of requirements
Violations of player or youth protection provisions, inadequate money laundering prevention, or incorrect tax payments regularly lead to regulatory actions, license withdrawal, and further significant sanctions.
Summary
From a legal perspective, the bookmaker is an increasingly strictly regulated provider of bets whose operations are, in particular, subject to the statutory requirements of gambling law, tax law, consumer and data protection law, as well as money laundering prevention. National and European regulations determine under what circumstances bookmakers may provide legal services. Compliance with the extensive obligations primarily serves to protect interested participants and the integrity of the market.
Frequently Asked Questions
Is offering bookmaker services in Germany legal?
Offering bookmaker services (sports betting and other gambling) in Germany is generally only legal if an official license has been obtained. With the introduction of the new State Treaty on Gambling (GlüStV 2021), there is a central licensing system that can issue licenses to bookmakers either nationwide or for individual federal states. Operators without such a license operate illegally, which can result in both criminal and administrative consequences. Authorized bookmakers are subject to stringent statutory requirements, including measures for player protection, addiction prevention, anti-money laundering, and extensive documentation and reporting obligations. The responsible authority also regularly monitors compliance with all regulations.
What obligations do licensed bookmakers have regarding player protection?
Licensed bookmakers are subject to extensive statutory requirements for player protection. These include, among others, the obligation to implement an early detection system for problematic gambling behavior, mandatory identity checks, deposit and stake limits (currently a maximum of EUR 1,000 per player per month), duties to inform about gambling addiction and contacts for support services. Furthermore, bookmakers must offer self-exclusion as well as exclusion lists, so players have the opportunity to exclude themselves (temporarily or permanently) from gambling. Violations of these requirements are prosecuted both under administrative penalty law and within the framework of license withdrawals.
What tax regulations apply to bookmakers and players?
Bookmakers in Germany are required under the Racing Betting and Lottery Act to pay a betting tax of 5.3% of the stake. The tax must be paid directly to the tax office and is usually withheld automatically by licensed bookmakers. For players, this means either the stake or the winnings are reduced by this amount. Players themselves are generally not required to declare gambling winnings in their tax returns, as long as these are derived from legal gambling and not earned in a professional capacity. For unlicensed bookmakers, especially those abroad, there may be both tax and criminal risks.
Are foreign bookmakers allowed to offer their services to German customers?
Foreign bookmakers may only offer their services to German players if they possess a valid license under German law (GlüStV 2021). A license from another EU member state (such as Malta) has not been sufficient for German law since July 2021. Advertising, offering or brokering bets without a German license constitutes a legal violation and may have criminal and administrative penalty consequences for the provider and, in some cases, for players. Additionally, winnings from illegal gambling may not be enforceable under civil law.
What legal consequences are there for unauthorized bookmaker offers?
Providers that offer bookmaker services without a German license commit an administrative offense for which significant fines may be imposed. In serious cases, criminal prosecution for unauthorized organization of gambling (§ 284 StGB) may follow, which is punishable by imprisonment of up to five years. Additional measures such as account blocking, confiscation of winnings, and withdrawal of business permits may also be imposed. Websites without approval may be blocked by German authorities or their payments halted.
How are compliance with bookmaker regulations monitored in Germany?
In Germany, compliance with legal requirements is monitored in particular by the Joint Gambling Authority of the Federal States (GGL) as well as local regulatory authorities. The GGL can not only issue and revoke licenses but also conducts regular inspections, test purchases, and IT audits. Reporting obligations and suspicious activity reports under money laundering prevention are also rigorously checked. Complaints from players may also trigger investigations and potential sanctions. Proven breaches may result in sanctions up to and including closure of the offering.
What rules apply to advertising for bookmakers in Germany?
Advertising for bookmaker offerings in Germany is subject to strict legal requirements. For example, advertising on television and the internet for sports betting is only permitted in limited time slots. It must not be directed at minors or contain misleading promises. Sponsorship in professional sports is allowed to a limited extent but must observe youth protection rules. Breaches of advertising regulations can result in significant fines and, in the case of repeated violations, measures up to license withdrawal. In addition, advertising activities generally require approval and are monitored by the GGL and the German Advertising Council.
