German Trade Groups Urge Flexible Regulation To Fight Illegal Gambling

November 22, 2023
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​​​​​​​German gambling industry trade groups are calling for “flexible regulation” as a method of beating the black market, citing a new study they commissioned which suggests half of all playing time is spent on illegal websites.
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German gambling industry trade groups are calling for “flexible regulation” as a method of beating the black market, citing a new study they commissioned which suggests half of all playing time is spent on illegal websites.

About three quarters of German online gambling revenue is generated in the black market, according to a University of Leipzig study commissioned by the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV).

In March 2023, the channelisation rate for gambling was only 50.7 percent, with about 29 percent of business going to unlicensed European Union operators and 20 percent going to unlicensed offshore providers, the trade groups said.

But the regulator, the Joint Gambling Authority for the States (GGL), responded to the trade groups’ announcement on Tuesday (November 21) by defending its previous estimates that the illegal market is only 2 to 4 percent of the total market, or about €300m to €500m.

The GGL said it rejects the claim that it is inflexible in collecting data on the size of the black market.

“Collecting data on illegal online gambling is very complex because the black market is constantly changing,” the regulator wrote.

“Regardless of the data collection model, it is an estimate and a snapshot. A regulatory authority will always assess the data situation conservatively, while the gaming industry tends to assess the competitive situation due to the illegal market as greater.”

The regulator said it was in contact with the industry in hopes of finding “a common position on how to measure the illegal market”.

The DOCV and DSWV argue leakage to the black market is costing the government hundreds of millions of euros.

The two groups called for the GGL to use powers to increase stakes for virtual slots and add to the list of approved sports bets, to boost the appeal of regulated operators.

Stakes for virtual slots are limited to €1 per spin, and the DSWV has argued that many popular sports bets are so far not allowed.

The groups also called for speedier regulatory approvals, better enforcement of bans on advertising illegal gambling and a review of gambling regulations.

“The restrictive approach of the State Treaty on Gambling in the areas of gaming offerings and gaming processes limits the channelisation rate,” said DOCV president Dirk Quermann. “Online gambling is a dynamic market and dynamic markets need dynamic regulation.”

The study by economist Gunther Schnabl of the university used consumer panels from Nielsen Media Germany.

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