Lower Saxony Decides to Block Payment Services from International Provider to Combat Illegal Gambling Activities

The German state of Lower Saxony (Niedersachsen) has issued a blocking order for an international payment service provider. The decision is a part of the state’s strategies and efforts to completely eliminate illegal iGaming businesses from the market. The company whose name remains unknown…

…has been restricted from doing business with all the operators offering online casino, poker and lottery betting in . All the listed products are banned under the State Treaty on Gambling.

The Message Was Sent

The operator, which has not been named, may also face further sanctions from the Niedersachsen Ministry of the Interior. Though the state’s Minister for Home Affairs and Sports Boris Pistorius stated that he aimed to “send a message” with the ruling, the company failed to comply with the prohibition on working with unlicensed gaming businesses set out in the State Treaty. As he pointed out:

“[The] pressure is now on other payment providers to reorganize their businesses processes related to illegal gambling if they have not already done so. Online casino is no trivial matter. [It is] banned by the State Treaty on Gambling and [offering such products is] a criminal offense. In the meantime, however, it remains a billion-Euro market.”

An Effective Approach

The Ministry noted that aside from issuing the blocking order, it has sent warnings to the number of other payment service providers over links to illegal gambling. The response already came from several companies, which have ceased to power transactions for offshore websites. According to Pistorius:

“The successful interactions with some payment service providers shows that our approach is quite effective.”

The State Treaty of Gambling clearly prohibits all service providers from cooperating with offshore iGaming suppliers. However, it was originally left to these companies to comply. Though things were heading in a positive direction, the Niedersachsen Ministry of the Interior assumed the responsibility for implementing payment blocking controls. The orders are now effective across all of .

Liberalization Gains Momentum

The issuance of further prohibition orders is on the docket, as the Ministry is eager to extinct illegal activity. According to the most recent figures available, from 2017, such activities ed for around 22% of the country’s €14.2bn gambling market. Nevertheless, efforts to establish a liberalized regulatory framework for ’s iGaming market…

…seem to be in a rapid phase of development at the time being. While the restrictive State Treaty has been reissued, it will only be in effect until June 30th, 2021. This will be considered the deadline for a new, revised framework, as the growing number of states advocates the idea of opening up the market to all product verticals.

Source:

“German state issues first federal payment blocking order”, igamingbusiness.com, June 17, 2019.