In April of this year, the interior minister of the federal state of Lower Saxony, Boris Pistorius, called on payment service providers and financial institutions to prevent transactions with gambling companies. According to a report from the Handelsblatt news magazine, there is now initial resistance from the financial sector.
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According to the said communication from the Minister of the Interior, companies in the financial sector are expected to review and, if necessary, terminate their cooperation with operators of illegal gambling in order to meet their responsibilities. If this does not happen, the ministry will be forced to take action itself.
An industry executive responded with criticism of the ministry’s request, commenting: In this manner, state policies convert agencies into surrogate agents for the observance of non-functioning law in gaming.
Payment service providers and banks under pressure
The representatives of the financial sector feel they are under increasing pressure from the Minister of the Interior’s demands and the threat of possible sanctions. An injunction on the part of the authorities could damage the reputation of the company, commented a top manager of a payment provider.
The ministry’s statement also states that such an order has already been issued against an internationally operating provider. More are in preparation and are expected to follow.
In June of 2019, the Lower Saxony Ministry of the Interior declared that a service agency was restricted from dealing with gambling firms. It afterward surfaced that it was PayPal (payment provider).
The company replied by reconstructing its policies and banning ventures to non-regulated gambling firms. PayPal withdrew entirely from the gambling and gaming industry (at least in Germany).
Gambling: Regulatory chaos in Germany
But not only the authorities are putting increasing pressure on the financial institutions. Especially after the publication of the “Paradise Paper” in 2017, according to which German financial institutions enriched themselves with illegal gambling, the chaos in the gambling legislation seemed perfect.
Some lawyers discovered possible loopholes in the law and explained on relevant platforms how gamblers could allegedly get back the money they would have lost while gambling.
However, the Munich Regional Court then decided in its judgment of February 28, 2018, that participants in gambling activities could not simply evade their responsibility to the banks. The court further argued that it is not possible for financial institutions to verify the legality of a gambling offer.
It, therefore, remains to be seen that the new State Treaty on Gaming will be passed in the coming year. Sports betting and gambling companies could then apply for a license for their offers. This would allow financial service providers whose business practices are currently being denounced by the Lower Saxony ministry to move within the legally legal framework.