The decision specifically allows people in the state to use gambling websites, and also opens up the market to operators who will be able to apply for online betting licenses as of next March.
The full implications of the decision which was taken earlier this week are only now beginning to become clear – observers believe it could herald a trend in Germany that sees other states begin to deregulate online gambling.
Peter Reinhardt, the head of Betfair.com's German operations told the British newspaper the Financial Times that the new law “would benefit consumers” as well as the state government.
Up to 60 million is expected to be generated in tax revenue as a result of the move.
Germany has long had among the most restrictive internet gambling laws in Europe, largely in order to protect state lottery schemes from competition. There has also been concern that allowing more open gambling could create social problems, although millions of Germans already have quasi-legal accounts with offshore gambling websites.
But last year, the European Court of Justice ruled the German states were protecting their monopolies too aggressively and that the system had to be liberalised. The question is now how far Germany has to go in order to allow more competition in the market, with many state legislatures extremely uncomfortable about what to do next.
The decision in Schleswig-Holstein exemplified that discomfort – it passed the state parliament by just one vote, with supporters emphasising that the new system would not create a gambling free-for-all.
“We're not liberalising, but creating rules,” said Wolfgang Kubicki a leader of the pro-business Free Democratic Party (FDP) in the state parliament.
Other state leaders have said they wanted to take a slower approach to changing online gambling rules than Schleswig-Holstein, by creating an experimental project that would allow limited internet betting over a five year period beginning in January.