A new study from the University of Leipzig warns that almost half of all online gambling in Germany still takes place via unlicensed providers.
The study was commissioned by the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV). The author is the economist Gunther Schnabl from the University of Leipzig.
The report states that the State Treaty on Gambling, which came into force in July 2021, fails to achieve its central goal of ensuring that all online gambling takes place on licensed websites.
DOCV and DSWV then called Germany’s Gambling Regulatory Authority (GGL) to make regulated casinos more competitive. The GGL was created through the Fourth State Treaty.
The study: in numbers
The study defines an illegal website based on several key criteria. The first is that the offer can be reached from a German IP address without using a VPN. Secondly, the offer is available in German and thirdly, the site accepts a user’s German address when registering.
According to the report, the channeling rate of players into the regulated online space was 50.7% in March 2023. For black market sites, 28.9% of traffic went to unlicensed EU providers and 19.9% to unlicensed offshore providers.
The study estimates that three quarters of online revenue is generated on the black market, resulting in hundreds of millions of euros in tax losses each year.
Lack of regulation
The report states that the popularity of the black market remains highly influential due to its easy access for players. This is further compounded by the proliferation of online advertising by unlicensed brands.
It also becomes clear that excessive restrictions on betting limits and bonuses are hurting competitiveness and players are looking for more flexible alternatives.
The findings come as German regulators continue to improve player protection measures, including limits, player bans and assistance. Last week, drug commissioner, The Federal Drug Commissioner of the Bundestag highlighted the problem of problem gambling in a separate study.
The study commissioned by the Bundestag found that 2.3% of the German population between the ages of 18 and 70 suffer from gambling injuries. In absolute numbers, this corresponds to 7.7% of all gamblers or 1.3 million people in total. This study also found that slot machines are considered the biggest factor for problem gambling in Germany. Overall, four out of ten slot machine players were found to be at risk of harm.
Based on the results, DOCV and DSWV have called for urgent measures to resolve the problem.
The action plan presented calls for a review of the current regulatory environment by the GGL. At the same time, the report also calls for greater collaboration between the regulated industry, the GGL, policy bodies and interest groups.
In addition, the report also proposes an improved tax system and more flexible regulation. It is hoped that this will make the licensed environment more attractive to players.
At the Spiegel federal gaming conference last month, participants were warned about the threat the black market poses to players. Speaking at the event, Wes Himes, managing director of standards and innovation at the Betting and Gaming Council, said the best way to tackle the illegal market was to create a “competitive regulated market”.