PayPal to Withdraw from Unlicensed German Online Gambling Market

PayPal has announced that – from October 21st – it is withdrawing its payment processing services for unlicensed online gambling operators in Germany.

From the end of October, many online gamblers in Germany will find it even harder to get money on and off unlicensed online gambling sites following PayPal´s announcement yesterday it is withdrawing its payment processing services from sites that are operating illegally. The announcement was made in light of new regulations scheduled to take effect at the end of the year.

The announcement will affect players on site´s such as PokerStars, 888Poker, and Bet365 Poker, who have a license to operate in the state of Schleswig-Holstein, but nowhere else within the seventeen-state nation. Interestingly, some online poker sites owned by GVC (i.e. Bwin Poker) stopped accepting PayPal deposits and processing PayPal withdrawals last December.

Not Really a Surprise Considering PayPal´s History

PayPal has always been twitchy about online gambling. It was the first payment processor to pull out of the U.S. market in 2003 when the Department of Justice first started looking into whether online gambling was in breach of the Wire Act; and although it quietly returned in 2015 to provide a service to the regulated U.S. market, elsewhere the company is definitely stepping back from online gambling.

In 2016, the company ended payment protection for online gambling transactions. This means that if you funded an online poker account using PayPal, and the online poker site did a runner with your cash, PayPal won´t be responsible for refunding your loss. This condition of use even applies in the U.S. regulated market, where player funds are supposed to be kept separate from operating funds.

PayPal Not the First Processor to Withdraw from Germany

Although PayPal may be the biggest payment processor to withdraw from the German online gambling market, it´s not the first. In 2017, Neteller and Skrill pulled the plug on a number of countries including Germany to avoid being involved in “gray market transactions”. The co-owned companies more recently said it would not process gambling transactions for residents of Brazil either.

Previous to that, Western Union had pulled out of processing gambling transactions worldwide after being stung with a $586 million fine by the U.S. Department of Justice for failing to implement effective anti-money laundering policies; and the situation could get worse before it gets better, as many credit card providers have taken it upon themselves to decline credit card deposits at online poker sites.

What Options Remain for German Online Gamblers?

The options for getting money on and off unlicensed online gambling sites in Germany are not only getting fewer, but there may be fewer sites operating in Germany come the New Year. Earlier this week we reported on how German regulation was likely to drive players offshore to online gambling sites that accept players from unregulated markets – part of the reason being that the new licensing regime is for sports betting only, and operators will be unable to apply for online casino or online poker licenses.

Most offshore gambling sites gives players the option of funding their accounts in Bitcoin and other cryptocurrencies – a service not currently offered by the likes of PokerStars, 888Poker, and bet365 – and cryptocurrencies may soon be the only option available for online poker players in Germany. We don´t know for sure how the situation in Germany will play out once the new regulations take force. The only thing we know for certain right now is that German players who use PayPal will have to find an alternate funding source before October 21st.