German Supplier Warns Restrictions Aid Black Market

June 8, 2023
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Restrictions on slot games make German gambling operators so uncompetitive that channelisation may be as low as 30 percent, according to the head of a games supplier.

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Restrictions on slot games make German gambling operators so uncompetitive that channelisation may be as low as 30 percent, according to the head of a games supplier.

Marketing slots games are challenging, with €1 stakes and €1,000 monthly deposit limits, and mandatory five-second delays, making offering free spins less appealing than they might be elsewhere, executives said.

Bonuses are limited to €100 per year and taxes are above 5 percent on stakes, not gross gaming revenue as in most countries.

The unattractiveness of the offer means that pressuring suppliers not to work with unlicensed operators may only have limited effect, as working with the black market may be more lucrative, said Robert Lenzhofer, chief executive of Hoelle Games, at iGaming Germany in Munich.

“If you’re a games supplier in Germany, and you have to choose between 70 percent and 30 percent [of the market], many will pick the 70 percent,” he said.

Lenzhofer said games can be designed to mitigate the impact of the five-second delay and the lower return to the player necessitated by the tax, but there is no blunting the effect of the €1,000 monthly limits.

Industry officials have scoffed at the Joint Gaming Authority of the Federal States' (GGL) estimate that sports betting is 95 percent channelised, with the German Sports Betting Association reckoning that channelisation of online slots could be as low as 50 percent.

The first day of iGaming Germany on Tuesday (June 6) found panellists exploring the scope of often complicated regulations and figuring out how to address them.

But the final day on Wednesday, with panels on how to innovate and capitalise on opportunities, found participants feeling a bit low.

One consultant, Frank Hesse of sportcampo said he thought a key factor in pushing players to the black market was the “annoying” five-second delay between spins.

A key goal of the interstate treaty that legalised online gambling in Germany — ensuring gambling stays with the legal market — may fail in an important sense, Hesse said.

The majority of German players are not price sensitive or huge bonus hunters compared with more mature markets such as the UK, he said.

But the big spenders are, and they have been leaving in search of better odds and bonuses, Hesse said.

“I still think we can channel 80-90 percent of the players, but can we channel 80-90 percent of the revenue?” he said. “I don’t think so.”

Alex Wicén of Unibo was unhappy with the policy on online table games like roulette and blackjack, which have been reserved for the states.

Only two of 16 so far plan open licensing, and none have yet launched, leaving most operators with only online betting and slots.

“Germans love roulette, Germans love table games, or they will go elsewhere,” he said.

There are just over 30 betting licences, 37 slot licences and five poker licenses.

But online poker licences may not be very appealing, as there are so far no plans for sharing liquidity, said Jochen Biewer of Chevron Group, a consulting firm.

If there are not enough poker tables available at a given time, it will not be appealing to players, he said.

With a limited pool of players, money-laundering concerns could also arise, if players working in concert end up playing in the same game, Biewer said.

After online legalisation, France realised the problem, he said. It eventually joined an international poker pool, which now includes players from Italy, Spain and Portugal.

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