PayPal Helps Germany Block Online Gambling Transactions

Founded in 1998 as Confinity, PayPal was one of the earliest web wallets to reach mainstream recognition. Their successful IPO (initial public offering) in 2002 gained them so much value, and media attention, that mega online shopping site eBay purchased them within the same year.

PayPal would eventually gain enough momentum that by 2005 it had purchased the prestigious digital security and authentication service, Verisign, and by 2007 would announce a partnership agreement with MasterCard which resulted in the creation of the PayPal Secure Card service.

While only accounting for less than 10% of their overall revenue in the early 2000s PayPal was a popular deposit mechanism for online casino players. A position which would see them come under fire in the USA for processing “illegal gambling transactions” and ultimately paying a hefty $10 million settlement.

✓Germany Loves To Roll The Dice

Since those early Wild West days, the online gambling industry has matured as jurisdictional and legislative oversite has improved, opening up the right to gamble online in most major centres. While others have become more stringent, setting in place clear bans of the online hobby.

One of the regions which have seen a boost in gambling advertising but do yet not have a conclusive stance on the practice, is Germany. Approximately 80% of all gambling advertising in the country is aired on television, with a budget which peaked in excess of €400 million!

Much like the USA, Germany has both a federal and state-based law system. In fact, making a stand for their right to self-regulate the state of Schleswig-Holstein moved ahead with their own gambling regulation. Choosing to forego the federal regulatory framework that had been issued to all states.

✓Once Bitten, Twice Shy

Choosing not to get embroiled the do’s and don’ts of online gambling politics PayPal have made proactive amendments to their policies regarding online gambling transactions in Germany.

The update in question can be found in their User Agreement, under section 9 Prohibited Activities, and reads as follows:

“Use of the PayPal Services in connection with offers that are not legal in your respective whereabouts, including some online gambling offers. If you are unsure as to whether or not a specific offer at your place of residence is legal, you must ensure that you are legal before using the PayPal Services in connection with the offer”

Given that at present the state of Schleswig-Holstein is the only one to offer regulated online casino entertainment in Germany this move effectively bans players in all other 15 remaining states from transacting via the payment processor.