Gamification Components as Trigger for Gambling Licensing Obligations

When distributing goods and services, companies regularly have to get creative. It must be made as easy as possible for potential customers to buy or use the goods or services on offer. In addition, offers sell much better if the conclusion of the contract is fun for the customer. Numerous companies are therefore increasingly relying on gamification components in sales. The term gamification generally stands for the integration of playful elements into non-game environments. Such a non-game environment can also be a click path for the conclusion of a contract, for example for the purchase of a product, the booking of a service or the making of an investment. In this respect, small puzzles, games of skill or collecting games are used, among other things, through which the attention of potential customers is to be attracted in order to ultimately conclude a transaction. From a legal perspective, companies must not only ensure that customers are aware that they are entering into a legally binding contract with the company despite the gamification aspects. Rather, in individual cases and depending on the nature of the specific design of the gamification components, it may also be questionable whether the sales measure is subject to authorization under gambling law in Germany and whether a gambling license from the Joint Gambling Authority of the Federal States (GGL) is required in accordance with the German Gambling Regulation 2021.

Gambling License Only for Paid and Chance-based Elements

A game of chance within the meaning of the German Gambling Regulation 2021 requires that a fee be charged within the scope of a game for the acquisition of a chance to win and that the decision on the win be wholly or partially dependent on chance. Gamification components that are accessible free of charge and that do not require the player to pay a fee in any way are therefore not problematic under gambling law and do not require coverage by a gambling license from the GGL. In individual cases, however, gamification designs can be problematic if, for example, a paid membership or one-time payment is already required for access to the game, or if a fee is demanded subsequently, for example in such a way that a fee is only demanded after the game for the information of the game result and thus for information on the decision on winning or losing. In such cases, it is irrelevant whether the fee is to be paid in money or other assets. What is required, however, according to the gambling definition of the German Gambling Regulation 2021, is that the chance of winning is entirely or partially chance-based. In the case of straightforward puzzles or games of skill, or in the case of games in which the player can only win, the required element of chance is generally lacking.

Use of Gamification Should be Evaluated with Respect to Gambling Law

Companies that use gamification in their sales activities should always check the use of gamification elements with a lawyer with regard to gambling law. If a gambling license is required in an individual case, the obligation to obtain a gambling license can be avoided in many cases by making minor adjustments to the design. If, on the other hand, a gambling license is required for a specific gamification measure in an individual case and the company in question does not possess this gambling license, severe sanctions may be imposed. On the one hand, unauthorized gambling constitutes a regulatory offense that is prosecuted by the GGL under supervisory law. Furthermore, the GGL is authorized to demand that the company operating the unlicensed gambling immediately terminates the unlicensed gambling. Also relevant in this context is that the organization of public gambling without a required official license constitutes a criminal offense in Germany, which can be punished with a prison sentence of up to two years or a fine. It is therefore advisable in any case to check gambling law aspects of gamification measures in sales with a proficient law firm in advance.

The competent lawyer for questions regarding gambling law and for the application for a gambling license in our law firm is Attorney Lutz Auffenberg, LL.M (London).