Betting shops in the northern German city of Bremen have just about a week to prove they are not involved in money laundering and avoid being shut down for good, reported The Guardian.
Prove Funding or Face Closure
The city is planning to close down all betting shops and has already rejected betting license applications from 32 small gaming establishments in the country’s smallest city-state, deeming all bets placed on their premises illegal.
Betting shops in Germany, unlike those in the UK, are not operated by the large gaming companies but rather by smaller firms via franchise agreements with the large companies.
Approached by the authorities in Bremen to provide written evidence of the source of funding of the starting capital of their franchise holders in the past few months, four of the large betting companies failed to produce the evidence and failed to convince authorities that their franchise holders are involved in money laundering, the city-state’s interior senator outlined.
Emphasizing the need to check the reliability of operators, Bremen’s senator for internal affairs Ulrich Meyer stated that the main argument in favor of the decision was to “guarantee that no money from dodgy businesses like drug dealing or human trafficking” is allowed to enter into legal money flow cycles.
Betting shop operators can still avoid being shut down if they provide a reliable source of funding within the deadline, August 5, or legally challenge the rejections.
Many States May Follow Suit
The city authorities also believe that their actions are now closely monitored by other German states that are still hesitant to act decisively and waiting to see the outcome.
According to a 2019 report from the finance ministry and the federal police, betting shops were identified as potential targets for acquisition by criminals who were not only looking to use legal gambling operations to facilitate money laundering but directly invest and outright buy the establishments.
The authorities reported back then that in some cases the whole betting activity was “simulated” to create a front for money laundering operations and legalize profits from illegal activities such as drug dealing and human trafficking.
The decision to reject license applications and shut down betting shops was heavily criticized by the president of Germany’s Sports Betting Association Mathias Dahms, who called the actions by the city’s authorities “legally questionable,” disproportionate and politically motivated.