April 1, 2024

  • Karin Beumer, Client Director, EM Group, Netherlands

A fresh breeze through the German online gambling market? – New options for EUR 5M security explored

The regulation of online gambling in Germany has undergone significant changes with the establishment of the Gemeinsame Glücksspielbehörde der Länder (GGL) in 2021[1]. Despite efforts to create a more uniform regulatory framework through the German Interstate Treaty on Gambling (ISTG) 2021, challenges persist, particularly concerning the stringent security deposit requirements imposed on operators by the GGL. This article examines the challenges faced by online gambling operators in meeting these requirements, including the disproportionate financial burden placed on smaller companies and the current lack of flexibility in deposit options.

In response to these challenges, a novel approach is proposed, combining a third-party funds foundation with a bond insurance product to provide operators with a more cost-effective and efficient means of fulfilling their regulatory obligations. This innovative solution aims to enhance the security of player funds while reducing the financial strain on operators and promoting regulatory compliance.

A forthcoming practical case study will demonstrate the feasibility and effectiveness of this approach, providing valuable insights into its potential to address the challenges of online gambling regulation in Germany. Through collaboration between industry stakeholders and regulators, this innovative solution has the potential to pave the way for a more inclusive, sustainable and responsive regulatory framework for the German online gambling industry.


In 2021, the German Interstate Treaty on Gambling (Staatsvertrag zur Neuregulierung des Glücksspielwesens in Deutschland) (ISTG) 2021 was introduced as the fourth version of the German online gambling treaty. Before this, each Federal State of Germany had its own regulation. Despite being in place since 2012, the previous treaties failed to unify all German states, leading to uncertainty among both players and operators. With the Gemeinsame Glücksspielbehörde der Länder (GGL) now regulating since January 2023, a more consistent landscape is being persued, however, some argue it added confusion. For example, each state can still decide whether or not they will provide licenses for the provision of casino games, or if this type of license will remain exclusively in state hands[2]. Consequently, while regulation has become more uniform, exceptions to the rules have made navigating the German online gambling landscape a challenge for operators.

Rethinking Security Deposits

On top of the labyrinthine regulatory environment, when it comes to the licensing process, operators face another challenge. ISTG 2021 requires all license applicants to provide a security deposit of EUR five million or higher (up to EUR 50 million) to the GGL[3].

GlüStV 2021 (translated) states: “The granting of the permit requires that the applicant provides security in the form of an unlimited, self-liquidating bank guarantee from a credit institution located in the European Union or in a contracting state of the Agreement on the European Economic Area, to ensure payment claims of the players and state payment claims. The security deposit amounts to five million euros. It may be increased by the authority granting the permit up to the amount of the expected average turnover for one month, but no more than 50 million euros.”

The security deposit is required despite the fact that, during the application process, operators are already thoroughly vetted as to their financial stability. As such, having to deposit EUR 5 million or more to the GGL seems excessive, while outstanding player amounts can be secured in more effective ways. Insisting that all companies, no matter their size or financial position, pay a uniform deposit creates an unfair advantage for larger companies over smaller ones that may not have access to such large amounts of cash.

Furthermore, the security is required to cover state payment claims, not just player protection. In that case, one might wonder why such a high level of background research is involved in the application process when an applicant could simply put forward cash. Germany claims that its regulation, similar to other regulated jurisdictions, aims to guide players away from the black market towards the regulated market. Unfortunately, the current numbers on the German market do not show much progression in that regard, a situation that is caused in part by a limited number of licensed operators and a less attractive offer for players[4].

Practical Case Study

Frustration at the current challenges of operating in the German market have drawn criticism. Despite this, the GGL, in contrast to many other regulators, has shown that they are willing to listen to the industry. When a joint group of industry professionals and lawyers presented the GGL with a new method for providing the security deposit, they found that the regulator was open to discussion and showed a keen interest.

The method presented to the GGL entails a new form of guarantee, designed to be proportionate for all companies, big or small, which combines a foundation for the safeguarding of player funds with a bond insurance product. This combination allows operators to provide an additional layer of security to the German regulator, which should enable them to obtain their online license backed by a bond issued by an approved insurance company. This bond represents a promise to pay a specific amount of money in the future when called upon, effectively placing the insurer in the position of financial guarantor and fulfilling the EUR 5 million requirement set by the GGL.

Using third-party funds to provide sufficient guarantees to players is an approach that is already tried and tested in the Netherlands, although without being combined with an insurance product.  The Dutch regulator accepts the foundation to be sufficient security for the player funds and does not require security to cover any statutory fines. By combining the Dutch approach with the insurance provided by a bond, a secure and affordable solution has been created which allows all market players to meet the requirements of the GGL.

As expected, when player funds are guaranteed by means of a third-party funds foundation, insurance companies found that their risks are substantially lowered, thereby opening up the possibility to provide insurance for less than one fifth of the costs of putting up a EUR 5 million guarantee. The GGL seems to recognize this as well, and an interesting case study will be moving forward to demonstrate to the regulator how this method will work in practice. A group of operators who already hold licenses (for which they have provided security in the form of a cash deposit) will submit a change to their financial security arrangements. This will trigger a formal response from the GGL will decide whether to approve or deny this new method of providing the security.


The innovative approach of combining a foundation for the safeguarding of player funds with a bond insurance product presents a promising solution to the challenges faced by operators in meeting the strict security deposit requirements set by the GGL. This method not only enhances the security of player funds, but also provides operators with a more cost-effective and efficient way to fulfill their regulatory obligations.

By leveraging the proven concept of third-party funds foundations, coupled with the addition of insurance coverage, operators can achieve compliance with the GGL requirements while minimizing their financial burden and risk exposure. The combination of (Dutch) third-party funds foundations with insurance elements offers a reliable and secure mechanism to safeguard player funds.

Furthermore, the forthcoming practical case study will provide concrete evidence of the effectiveness of this approach, demonstrating to the GGL how the combination of foundation and insurance can offer a viable alternative to traditional cash deposits. This case study will offer valuable insights into the operational feasibility and regulatory acceptance of this innovative method, paving the way for broader adoption within the German online gambling industry.

The approach not only addresses the challenges posed by the current security deposit requirements but the way it has been designed, presented to and received by the GGL shows the potential for collaboration between industry stakeholders and the regulator to drive innovation and foster a more favorable regulatory environment for online gambling in Germany.

1 Gemeinsame Glücksspielbehörde der Länder (2024). Wir regulieren den länderübergreifenden Glücksspielmarkt in Deutschland. [online] gluecksspiel-behoerde. Available at: https://www.gluecksspiel-behoerde.de/de/.

[2] Hofmann, J., Spitz, M. and Hamburg, M. (2023). Gambling Laws and Regulations Germany 2024. ICLG. Global Legal Group. Available at: https://iclg.com/practice-areas/gambling-laws-and-regulations/germany.

3 Staatsvertrag zur Neuregulierung des Glücksspielwesens in Deutschland 2021, 4c.3. Available at: https://www.gluecksspiel-behoerde.de/images/pdf/201029_Gluecksspielstaatsvertrag_2021.pdf.

[4] Deutscher Sportwettenverband (2023). New study: State Treaty on Gambling misses targets. DSWV. Available at: https://www.dswv.de/neue-studie-glucksspielstaatsvertrag-verfehlt-ziele/.