Market Update: Germany – Dr. Joerg Hofmann (Melchers Law Germany)

Mr. Hofmann, thank you very much for accepting this interview. I read in your CV that during your impressive career you have been awarded with several very prestigious awards for your work. You are ranked as “Leading Individual” in Gaming & Gambling by Chamber Global since 2011 and you are the only German lawyer listed among “Germany’s Best Lawyers” in the category “Gaming Law” by Handelsblatt and Best Lawyers since 2014. In 2015 you received the award “Gaming Law”-lawyer of the year in Germany-2015 from Global Law experts. You have also been listed in Who’sWhoLegal for sport and entertainment in Germany. I would like to congratulate you for this successful career and I would like to ask you: What is the price or what is the secret of such an impressively successful career?

First of all, let me thank you for your kind words. I am very much looking forward to the Central and Eastern European Gaming Conference and appreciate you asking for this interview.

When I think about my career and what has driven me to pursue this career and strive to success, it, for me, always comes down to quality of work, the people I meet who inspire me and the exciting projects I get to work on which are of core relevance. In a way, they might be described as the “secret”. I am also a strong believer of the fact that, in order to succeed in this global industry, it will be conversations with other experts and stakeholders around the world, the exchange of knowledge that comes with it, and “knowing what you are doing”, which will bring you further. In terms of price – being a lawyer who travels a lot to maintain and cherish already established contacts and to create new connections, it will definitely be the time spent away from home. Still, I find this time to be well spent and know how to appreciate the time I spend with my family and friends back home. And finally, it’s the wonderful team of capable and committed colleagues and friends in the Gaming and Betting Practice of my firm that enables me and our firm to be successful.

Currently you are the group leader of the Melcher’s Gaming & Betting Law Practice and Immediate Past President of the International Masters of Gaming Law (IMGL), the pre-eminent global gambling law networking and educational organization shaping the future of gaming law. Tell us please more about the projects you have worked on and about the difficulties and successes you have experienced.

Gosh, there have been so many. If I told you about all of them, we would be busy for a while – not least since the German market is a very interesting and demanding market and there are so many aspects stakeholders have to be aware of and the gaming industry (and technology) is ever-changing. In fact, German regulation as such is, and likely will continue to be, a bit of a challenge in itself, in particular since it is crucial for operators to find ways how to navigate through its complexity and uncertainties, ensuring viable and compliant business operations. And then there is, of course, the broader picture. In particular, since I started working in an international environment and joined the International Masters of Gaming Law (IMGL), I have learned to appreciate how important it is to look outside the box, learn from the mistakes and successes of others (in particular with regard to regulatory models) and to stay connected.

What is your personal opinion about the gambling industry in general in Europe or in the countries you know better?

I, personally, enjoy that the industry, continues to be innovative, is growing and the dialogue between stakeholders in the industry and regulators seems to be – slowly but surely, improving. In terms of regulation, I think we can clearly notice a trend towards regulation, in particular in the online space. Most European countries have moved from very restrictive or monopoly-driven regimes to more open markets or are in the process of doing so. The US is also undergoing exciting changes at the moment with some markets potentially opening up more and more to online gaming and discussions on new markets such as DFS, esports and how to revamp traditional casino operations becoming more and more prominent.

Please tell us more about the German gambling industry, the challenges of the German market, the German laws and regulations and their acceptance by the public.

Germany has always been an attractive market to operators, but also one which raises many challenges due to its many uncertainties and questionability under EU law. Gambling, in my opinion, is perceived and accepted very diversely in Germany – however, one thing all opinions seem to have in common is that consumer protection has to be of core relevance to both operators and regulators. This is where Germany still has a lot of work to do. Whilst there is a strong awareness of the potential risk of gambling in the public opinion, the public is extremely misinformed about the regulatory landscape, the lack of sufficient and EU-law compliant licensing opportunities and the need to take action. Unfortunately, traditionalists among Germany’s policy makers seem to turn a blind eye on this in an attempt to protect the state monopoly on lotteries without taking into account the broader picture or learning from other EU Member States’ experiences. Most recent developments, namely Schleswig-Holstein’s intention to seek a viable solution to resolve the non-EU-compliant regulatory situation by (re-)introducing licensing opportunities for sports betting, online casino and poker, however, provide for interesting opportunities to reinitiate dialogue between the German states. In any case, operators active in the German market or interested in the German market will be advised to closely monitor the current developments.

What advice would you give for those investors who are planning to set up a business in this sector in Western Europe and Eastern Europe?

It, again, comes down to navigation skills – investors will have to try to gain an understanding of what exactly they are getting themselves into and where regulation in the relevant markets is heading. It will be handy to have a crystal ball nearby. And if this cannot be done – it will be crucial to seek expert advice in the respective jurisdictions they are interested in to stay on top of relevant developments and make an informed judgement on the risk involved with the business in the respective territories and to better assess which risk-mitigation strategies should be considered and implemented.

What do you think which are the biggest challenges of the German gambling industry and how will these be solved in the future?

One of the biggest challenges will be to educate regulators and policy-makers in order to improve the overall regulatory landscape long-term. I consider lobbying to be very important. This is also one of the reasons why my team and I e.g. strongly supported and helped establish the German Online Casino Association (DOCV) recently. It will be important to continue the dialogue between the industry, legislators and regulators

There are important legal developments in the gaming industry all over Europe. Which ones do you consider the most important and why?

At the moment, and alongside the issues arising in the context of licensing, I think the implementation of compliant AML structures and procedures and dealing with the General Data Protection Regulation (to enter into force on 25 May 2018) will have to be considered highly important from an operator’s perspective. Further, marketing rules and regulations as well as the potential liability risk for operators e.g. in the context of affiliate marketing should be taken seriously. Liability has been an important issue for a long time now, but as you will know is currently receiving a lot of media attention as a result of operators cancelling affiliate programmes and/or introducing new measures in an attempt to raise standards and ensure valuable partnerships.

If you could change anything in the world of gambling what would that be?

Gambling regulation in Gemany.

Who is your favorite actor or actress?

Colin Firth and Penélope Cruz

Where would you travel the most in Central Europe?

 To almost every place where you can find nice beaches, blue skies, excellent restaurants and splendid company.

 Which are those places in Central Europe that you are not interested in and you would not like to visit them?

Such places do not exist.