Reason for withdrawal
PayPal has announced its intention to stop supporting payments to and from online casinos in Germany as of October 21, 2019.
The case dates back to June, when the state of Lower Saxony, Germany, issued a warning to an anonymous international payment service provider about processing illegal transactions in online casinos.
issued a warning to an anonymous international payment institution about the restoration of illegal transactions in online casinos
Although the processor in question was not named, many people thought it was PayPal.
PayPal was quick to update its German terms of use to reflect this change. Their policy for activities not currently covered includes: “offers that are not legal in your respective places of residence, including certain online gaming offers”.
Many illegal online casino platforms use PayPal as a banking method allowing players to add and withdraw funds from their accounts. This includes offshore platforms that host German residents although they are not allowed in the country.
Online gambling in Germany
The only state that currently offers online casino licenses in Germany is Schleswig-Holstein.
These licenses expired at the beginning of 2019 and it was only in June that they obtained a temporary extension of their license. Licensees are required to offer their services only to residents of Schleswig-Holstein.
Some online casinos have previously stopped offering PayPal as a payment method for their German customers. For example, Bwin stopped offering PayPal in the German market for its online casino offering in December 2018.
There are 16 states in Germany and they plan to deploy online sports betting licenses in January 2020. Those looking for licenses are not allowed to have links to online casinos targeting the German market.
A new federal treaty on gambling is being drafted and they hope to have it ready by the end of June 2021.
A new framework for gambling is currently under consideration. It includes a ban on non-sports betting products and the prevention of in-course betting. There would be a 5% tax on betting turnover and users would only be able to spend up to €1,000 per month.
Other restrictions include the obligation for operators to obtain a separate license if they want to advertise their offer in the country. It is hoped that these are only temporary measures and that the federal treaty of 2021 will be much more attractive to operators and users.