Germany’s new federal gambling treaty was approved on Thursday by its 16 states, lifting the cap on the number of sports betting licenses in the country.

The new State Treaty on Gambling, which is due to take effect on January 1, 2018, opens the door to the possibility of an expansion of the federal republic’s sports betting market.  In addition to lifting the controversial cap, the new treaty also outlines plans for more stringent enforcement against unauthorized operators.

The country’s 16 states, which include three city states; the capital city of Berlin, plus Hamburg and Bremen, announced in October last year that they had reached an agreement for the creation of the new treaty after legal challenges derailed the previous treaty. The 2012 treaty capped the number of sports betting licenses at 20.

In October of 2015, a number of suggestions including lifting the arbitrary license cap were proposed by officials in the state of Hesse for bringing the federal treaty into compliance. Twenty sports betting licenses were awarded by Germany in September 2014, but due to legal challenges by failed applicants, none of these licenses were activated.

Each of the 16 states’ legislatures still need to ratify the new treaty, although that seems unlikely, considering the country’s history of stalled gambling regulations and the treaty being heavily criticized by the European Commission (EC). Earlier this month, the EC said that the new treaty did not provide a “viable solution” to the problems posed in the failed 2012 treaty.

German Sports Betting Association (DSWV), a trade group formed in 2014 comprised of a mixture of both domestic and international operators, called the approval a “small step in the right direction.”

Meanwhile, mybet Holding SE (XMY:Xetra),  one of the original 20 license recipients offered provisional permits in the fall of 2014, said that it “welcomes the efforts to regulate the German market in total”. In a statement, the Germany-based gaming company added, “As a member of the DSWV the company supports the offer by the association to start a dialogue with politicians to develop a mutually satisfactory sustainable solution” as reported by iGaming.

In related news, a new law making match-fixing and betting fraud illegal was passed by Germany’s lower house of Parliament, Bundestag, on Thursday. The new law makes it illegal to conspire to fix sporting events, and coaches, referees, or players found guilty of such activity face between three to five years in prison based on the seriousness of the case.

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