German 2022 Unlikely To Be As Horrible As 2021, Analysts Say

January 24, 2022
​​​​​​​A Morgan Stanley report is mildly optimistic about the German gambling scene in 2022, at least compared with a disastrous 2021, but it concludes that much is unclear about the future.


A Morgan Stanley report is mildly optimistic about the German gambling scene in 2022, at least compared with a disastrous 2021, but it concludes that much is unclear about the future.

Tough restrictions on sports betting probably will not get worse and licensing of online slots and poker, expected in the first half, will open the door to marketing, analysts from the brokerage wrote.

The picture, although hardly cheerful, is brighter than last year, when many companies recorded 50 to 80 percent drops in online casino revenue, due to a need to drop online table games and the need to start adhering to strict transitional rules that would let them apply for nationwide slots and poker licences.

The 36 sports-betting licensees may also be getting used to a punishing 5.3 percent tax on stakes and the market’s tough licensing conditions, except for the most significant one — a €1,000 monthly player deposit limit, which is being held up in court, the Morgan Stanley analysts said.

Plans for a central database that connects all players across operators, called cumbersome and unwieldy by some, could also be challenged, analysts wrote.

It is good news for the online industry that Germany’s largest state by population, North Rhine-Westphalia (NRW), is one of two states that have declared plans to open online table games for state-by-state licensing and it could encourage other states to hold open licensing, according to Morgan Stanley.

NRW is roughly the same size as the Netherlands in population, although it is less affluent on a per-capita basis.

Still, there has been very little recent movement in launching regulation of table games such as roulette and blackjack since NRW and Schleswig-Holstein announced their intentions last August.

NRW has also discussed tax rates of 30 percent to 55 percent in drafts, the analysts wrote.

Although four states of 16 have said they plan to have online table game monopolies, one attorney has said the other states may be waiting until a nationwide regulator is fully operational in January 2023 to take action.

The slight optimism for 2022 seemed to be echoed in Entain’s earnings report last week.

The parent of Bwin, Ladbrokes and PartyPoker said it recorded double-digit online revenue growth last year in all markets except Germany and the Netherlands, where operators were asked to shut from October 1.

But the company hopes to get Dutch online poker and slots licences in the first half of this year and has “lapped” the transitional clampdown, according to chief financial officer Rob Wood.

That is, the crackdown is more than a year in the past and, therefore, quarter-on-quarter comparisons will improve.

Wood also noted that sports-betting restrictions have not tightened.

The company has said it expected a £110m EBITDA impact from Germany in 2021, and up to £20m for 2022, before efforts at mitigation.

Flutter Entertainment may not get that same slim rebound, as its German revenue is largely poker, where tax impacts are harder to mitigate, the analysts wrote. Still, it gets a smaller percentage of revenue from Germany.

The analysts based most of their opinions on an interview with Thomas Talos of Vienna-based Brandl Talos law firm.

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