German regulator’s legal victory against foreign payment provider

Garance Limouzy October 15, 2024

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German regulator’s legal victory against foreign payment provider

The Gemeinsame Glücksspielbehörde der Länder (GGL), the German regulatory body, won a case before the Administrative Court of Halle concerning the use of payment blocking to curb illegal gambling activities. The court upheld the GGL’s decision to prevent a Swiss payment service provider from facilitating transactions related to unauthorised gambling services. This ruling extends beyond specific known gambling platforms, prohibiting the provider from participating in any unlicensed gambling operations, a rare and broad-reaching enforcement approach, explained the regulator.

According to the GGL, this decision demonstrates the effectiveness of payment blocking as a tool to enforce German gambling laws across borders. “This further success with payment blocking shows that national boundaries are no obstacle to enforcing gambling law. We do not tolerate uncooperative behaviour from payment service providers,” said GGL board member Ronald Benter, following the court’s 2 October 2024 ruling. He stressed that companies that violate regulations should expect to face the consequences.

The GGL also issued a strong appeal to all payment providers to comply with legal requirements and cooperate with the regulatory authority, warning that non-compliance would lead to further legal actions. The ruling represents a significant step forward in GGL’s efforts to tackle illegal gambling activities, not just domestically but internationally as well.

Payment blocking

According to the GGL’s 2023 activity report, payment blocking has proven to be particularly effective in the war against illegal gambling. By the end of 2023, most unauthorised gambling operators were no longer able to process transactions through major and well-known payment service providers. The GGL pointed out that while payment blocking may not directly force illegal operators out of the German market, it does make their business significantly less attractive by limiting their ability to offer common payment methods.

The GGL also highlighted that many payment providers have become more aware of their legal obligations and now regularly check to prevent unauthorised transactions. Technical processes have been adjusted to avoid involvement in illegal gambling payments. However, for those that remain non-compliant, administrative actions and penalties, including fines, have been enforced. The GGL has already imposed a fine of €25,000 in one such case.

The international use of payment blocking to combat illegal gambling is not unique to Germany. Regulatory bodies in countries such as Denmark, Finland, the Netherlands, and Hungary have also implemented payment blocking to sever financial ties between unlicensed gambling operators and their customers.