Counselor expresses skepticism about the effectiveness of curbing black market activities in Baden-Württemberg through the legalization of online casinos, suggesting potential increase in addiction cases instead.
Going All-In: The Controversial Proposal of Legalizing Online Casinos in Baden-Württemberg
Written by Timm Schaffner *Edited by Angela Burke Published on: 11.03.2025. Updated on: 24.04.2025.
Addiction specialist Martin Epperlein, affiliated with the Evangelical Society in Stuttgart, has expressed skepticism regarding the planned legalization of online casinos in Baden-Württemberg. Despite the assurance of protective measures for gamblers, Epperlein deems the proposed endeavor a "potent hazard." He even contemplates the possibility of the black market seeing an indirect advantage from the legalization.
The Risks of Legal Online Casinos Unveiled
In February, the Baden-Württemberg state parliament made headlines by deciding to legalize online casino games for the state residents, and the State Toto-Loto GmbH was chosen to serve as the monopolist for this venture. The aim is to curb gambling on the black market and channel it into lawful avenues to boost player protection.
However, Epperlein warns in a conversation with SWR that legal gambling does not guarantee secure protection from problematic gambling behavior. On the contrary, it could be expected that gamblers who exclude themselves from gambling via the OASIS register could return to the black market, where there are no protective mechanisms at all.
Although it is indeed laudable that a new specialized office for gambling addiction is being established at the Baden-Württemberg state office for addiction issues in connection with the planned legalization, effective preventive measures and online support services are essential to achieve results.
The Legal Hobnob of Foreign Online Casinos
By launching a state-owned online casino, Baden-Württemberg appears to be planning a legal reply to the escalating black market for online casino games. Classic casino games, such as blackjack or roulette, are not considered permit-approved gambling throughout the nation and are currently only available from foreign providers.
These companies often acquire licenses from other EU countries and resort to the freedom to provide services within the EU (Art. 56 TFEU). On April 9, 2025, the European Court of Justice (ECJ) will deliberate under the case number C-440/23 whether the gambling license of another European country should have been recognized in Germany.
It remains to be seen whether this ruling will only have retrospective effect or could also apply to the future and what the market implications could be.
The FDP also Questions the Project
The FDP MP Daniel Karrais has criticized that the proposed model in Baden-Württemberg compromises free competition and thus creates a disadvantageous position for gamblers and companies. He might find the model in Schleswig-Holstein more alluring, which allows for the issuance of four licenses to private companies.
As for when the online casino in Baden-Württemberg will commence operations officially, the information isn't available. With anticipation, it will be observed whether the model can still be adjusted and whether it will have to compete with international competition after the launch or whether it will retain its legal special status.
Sources: [1] Lander-, Kommunal- und Verwaltungsreport des Landes Baden-Württemberg [2] Stuttgarter Zeitung [3] European Gaming and Betting Association (EGBA) [4] gamtelekt.org
Supplementary Insights:
Competition and Market Access
The EU single market’s “four freedoms” framework—especially the free movement of services—may compel Baden-Württemberg to avoid discriminatory regulations that favor local operators over cross-border providers. However, legal precedents such as Alpine Investments BV v Minister van Financiën and Liga Portuguesa de Futebol illustrate that member states can impose restrictions if pursuing legitimate public interest goals, like fraud prevention or consumer protection.
Risk of Monopolies/Oligopolies: If licensing is overly restrictive or costly, it could create barriers for smaller operators, leading to market consolidation among a few large players.
Cross-Border Competition: Legalization might attract foreign operators, increasing competition but also necessitating harmonized standards to ensure fairness and compliance with EU law.
Problematic Gaming Behavior
Legalization without robust safeguards risks aggravating gambling addiction, particularly through digital accessibility (e.g., 24/7 availability, in-app incentives).
Regulatory Countermeasures: As seen in Omega Spielhallen GmbH v Bonn, states can justify restrictions based on societal values (e.g., human dignity) or public health. Baden-Württemberg might need age verification, spending limits, and mandatory self-exclusion tools to mitigate harm.
Enforcement Costs: Effective oversight would require significant investment in monitoring systems and compliance checks, akin to financial sector regulations.
Legal and Economic Implications
- Revenue vs. Social Costs: Tax revenues from licensed operators could fund addiction programs, but problem gambling may strain healthcare and social services.
Sanctions and Compliance: Operators violating rules (e.g., targeting vulnerable groups) could face penalties similar to EU sanctions frameworks in financial markets.
- The legalization of online casinos in Baden-Württemberg, as proposed by the state parliament, has been met with skepticism by addiction specialist Martin Epperlein, who believes it could indirectly benefit the black market due to the lack of protective mechanisms in the legislation.
- The FDP MP Daniel Karrais has criticized the proposed model in Baden-Württemberg for compromising free competition and creating a disadvantageous position for both gamblers and companies.
- The EU single market's "four freedoms" framework, especially the free movement of services, may require Baden-Württemberg to avoid discriminatory regulations that favor local operators over cross-border providers in the context of legalizing online casinos.
- In order to ensure fairness and compliance with EU law, legalization might attract foreign operators, necessitating harmonized standards in the online casino industry, particularly regarding problematic gambling behavior and preventive measures.
