In Germany, a warning has been issued to gambling consumers that ‘social betting platforms’ are not permitted under the laws of the Fourth Interstate Gambling Market (GlüNeuRStv). 

A stern warning was issued by Glücksspielbehörde (GGL), the Federal Authority of German Gambling, in response to what it described as an influx of national media reports about an increasing number of “entertainment-type bets” placed on the outcome of the Ukraine war.

The disputed wagers reflect “event contracts” offered by prediction based trading platforms, such as Polymarket that are not licensed under the GGL’s regime.

What are event contracts?

Wagers on news and entertainment markets can be placed as ‘event contracts’, and the GGL has been forced to remind consumers that such offers are not applicable with GlüNeuRStv laws. Bans and restrictions are further applied to social betting platforms, which use tokens to wager on outcomes. 

In the US, contracts are offered by companies like Polymarket and Kalshi. Players can trade them as shares that represent the likelihood of real-world event outcomes. 

Such events can range from anything like political elections, economic fluctuations, sport results, and geopolitics.

Treated as a completely separate concept from betting, event contracts are overseen by the US Commodity Futures Trading Commission (CFTC) – the regulator of derivatives markets. 

Polymarket is re-entering the US market through the $112 million acquisition of QCEX, a CFTC-licensed derivatives exchange. The deal will allow Polymarket to operate under QCEX’s license and list its contracts as tradable derivatives.

However, across the pond the GGL has now put all event contracts that are not sports-related under the “illegal betting” graph.

Due to the volatility of any real-world event that is not sports-related, the GGL clarified that event contracts are not eligible for approval under the Gambling State Treaty 2021 (GlüStV 2021). 

“Such formats are particularly susceptible to manipulation, as they are often based on unclear, subjective or controllable events,” the GGL said in a statement.

“The legislator has only allowed bets on defined sporting events with verifiable results and clear rules as eligible for approval.”

GGL warned that those found to be participating in or facilitating such types of bets will be viewed to be in breach of GlüStV 2021, which is punishable by law.

Illegal market remains top concern for Germany

The latest casus only goes to show how nuanced the gambling sector can be, with something completely legal in one place being scrutinised elsewhere. But the biggest threat remains in the face of the black market, and Germany has been taking significant strides against it as of late.

August marked the first month since the federal regulation of the market when the GGL released a quarterly report on the market’s size.

Composed of data sets from licensed operators on the value of cross-state bets on lottery and ‘high-risk’ games, the regulator hopes that the quarterly reports will provide a more realistic picture of player trends, therefore allowing for preemptive actions against the black market.

The black market in Germany remains a disputed topic, though, with the GGL and the German Sports Betting Association (DSWV) clashing over its size on more than one occasion.

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