The German iGaming Sector Is About to Skyrocket. Is Your Company Ready?

iGaming is coming to Germany – the largest economy in the EU – thanks to new legislation coming into force in July 2021. But are German iGaming operators and their underlying infrastructure prepared to take on (and scale alongside) the massive influx of players expected once iGaming regulations are loosened?

The History of iGaming in Germany

Federal state regulations regarding online gambling in Germany have long been misaligned. While online gambling is currently illegal in most of Germany, it has been regulated in the state of Schleswig-Holstein since 2011 due to the passing of the “Gambling Act”, which made it the first German federal state to pass legislation regulating online gambling introducing a licensing system. While online gambling has grown significantly in this state over the years, the unequal iGaming legislation in Germany has led to a lack of transparency and misuse of accounts in Schleswig-Holstein. For example, before entering an iGaming website, players are asked if they are currently living in Schleswig-Holstein. There are no verification or location checks, so users can simply click ‘yes’ and gain access to the platforms regardless of their actual location.

Because of this, many German iGaming providers host abroad in countries such as Malta and Gibraltar due to favorable tax laws and the introduction of such (MGA)  iGaming licenses in 1998 and to operate from Malta. The money earned by these iGaming operators stays abroad, meaning Germany does not see any revenue from the iGaming activities.

A Unique Position

However, change is on the horizon. First, a transitional change on October 15th, 2020, was introduced to tolerate such international operators to offer online gambling openly targeting the German players for a certain period until July 1st, 2021, without a license, provided that they demonstrate compliance and willingness to accept the business conditions of the new interstate treaty. As of July 1st, 2021, this new federal law (“Glücksspielstaatsvertrag”) will enter into force for all of Germany, regulating the playing and hosting of certain iGames throughout the country.

This newly aligned German iGaming treaty provides the iGaming industry a unique opportunity to benefit from the gaming market’s massive shift from offline to online. As a trend, a large part of the industry has shifted to online gaming as part of our increasingly digital society and economy. Besides streaming, eCommerce, and online education, the iGaming industry has also emerged as a massive industry as people spend more time at home and in front of their devices.

“Worldwide trends show increases in play time, session time, and in-game purchases across all types of gamers. In fact, over 40% of new gamers say that they’re likely to continue to play. Among gamers overall, one-third report that they’re likely to continue spending money on games, and 65% say they’ll play longer per session.” How the pandemic has shifted mobile gaming behaviours worldwide

This provides a unique opportunity for the German iGaming market to welcome the influx of players alongside their newly launched iGaming businesses. However, German iGaming operators will have a lot of catching up to do compared to other countries that have enjoyed a regulated iGaming status already for years.

iGaming Operators In Germany Need to be Prepared

The iGaming industry is a hyper-competitive market where price/performance ratios and high platform quality quickly determine the success of the iGaming operator. New and existing German iGaming operators and other companies in the iGaming ecosystem can prepare for the upcoming increase in business opportunities by ensuring they are registered with the required licenses (for website operators) or that they have a clear company value proposition (for iGaming platform providers).

For example, the various sales organizations at Leaseweb (including Leaseweb Deutschland GmbH (“Leaseweb”)) offer IAAS hosting services alongside a reliable and stringent KYC compliance check for all potential customers who are iGaming website operators or platform providers. Leaseweb is ready to engage with licensed operators that want to offer regulated products and services to their players – we are locally organized under the EU and conduct audit and compliance checks to ensure compliance with the new regulations for iGaming operators.

Leaseweb’s iGaming Expertise – How We Can Support

Starting a new game played by new rules also reveals unique business challenges that need to be conquered. Leaseweb’s extensive experience in the iGaming industry will help support your platform while you are adjusting to the new regulatory requirements.

Our industry experience enables us to work with your customer’s needs in mind. This includes offering services such as:

  • DDoS Protection: Leaseweb designs infrastructure setups paired with DDoS protection to secure your infrastructure against cyber attacks.
  • Redundant Data Centers: Failover setups based in our own redundant global data centers ensure your users have the best possible gaming experience.
  • Bursting: As iGaming occurs in certain time frames, peaks are absorbed with our cloud bursting functionality.
  • Hybrid Cloud: Combine your hyperscaler-hosted infrastructure with our cloud services to maximize cost savings.
  • Maintain Control: Leaseweb cloud solutions are powered by industry-leading technologies to give you ultimate scalability, flexibility, and reliability.
  • Transparent Pricing: You have the power to select services most suitable to your business strategy for low, transparent prices and no hidden costs.

These services are all connected under the secure umbrella of our own worldwide network, enabling us to offer low latency at an attractive price-to-performance ratio.

With our experience and success in the iGaming industry, Leaseweb is looking forward to officially providing its services from our global network of data centers to this growing industry. We are ready to take care of your infrastructure, so you can focus on what matters most: your business.

Looking for a reliable hosting partner to up your game? Contact our German Account Manager & Cloud Hosting Expert Joshua Ulrich at j.ulrich@de.leaseweb.com to discuss how we can contribute to your success.