The German states hold a monopoly over online gaming. Only state run sports betting and lotteries are permitted to operate. In December 2006, ministers from each of the country's 16 states met to discuss online gambling regulations and agreed (with one dissenter) to extend the states' monopoly on gambling until 2011. The measures forbid non-authorized betting operators from offering wagers in Germany and would also prohibit private and foreign lottery operators from selling tickets over the Internet.

By mid-December 2007, all 16 German state legislatures voted to approve new online betting laws which ban online gambling and preserve the country’s state monopoly through 2012. According to the rules, the states would require Internet service providers to block illegal betting websites and banks to halt money transfers to these sites. In addition, advertisements for online gambling both on the Internet and on television would be prohibited.

The ban began its initial phase on January 1, 2008. As of January 1, 2009, all private German lottery companies, which had experienced a grace period, ceased operations in Germany.

In October of 2009, one of the 16 German states that ratified the treaty, demanded its cancellation and a replacement with new regulation. The leader of the Liberal Party (FDP) said that if the German states fail to reach an agreement on new regulation, then the coalition would try to introduce an intrastate licensing system.

Germany was already under investigation by the European Commission due to the country’s strict gaming monopoly and it was expected that the European Court of Justice would take action to oppose the ban. In January 2008, the EU requested information from Germany, explaining the new law. As of April 2009, no formal action has been taken against Germany’s Interstate Gambling Treaty.