German gambling market in dire straits: black market continues to grow
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26 Nov 2024 •
Reading time: 2 minutes The German gambling market is in a dire situation. Strict regulations and a tax on bets are making legal gambling less and less attractive. At the same time, the black market is growing rapidly. This is the picture that experts and operators paint during the Gaming in Germany conference in Berlin. The message is clear: the sector is stuck.
Jörg Hoffmann, an experienced lawyer in the gambling industry, puts it aptly: “It’s like we’re standing still. Nothing is changing.” Since the introduction of the Interstate Treaty on Gambling in 2021, the market has made little progress. This agreement, which was a compromise between the 16 German states, now seems to be a stumbling block to real reform.
Falling revenues and an explosive black market
According to Dirk Quermann of the German Online Casino Association (DOCV), revenues in the regulated sector are plummeting. Between 2022 and 2024, the figures have fallen sharply. Large international companies are avoiding the German market because the regulations restrict them too much. The outlook for sports betting is just as bad. Turnover fell from €9.4 billion in 2021 to €7.7 billion in 2023, says Mathias Dahms of the German Sports Betting Association (DSWV).
But people are still gambling. The black market is growing precisely because of these restrictions. Quermann and Dahms agree: players are moving away from regulated providers because the illegal market is easier and more attractive.
How big is the problem?
The German regulator, the Gemeinsame Glücksspielbehörde der Länder (GGL), states that the black market only accounts for 10% of gambling activities. This seems encouraging, but independent studies tell a different story. Studies such as the Schnabl Study and reports from Yield Sec estimate that the black market accounts for almost half of gambling activities.
What is even more worrying: many players are actively seeking out illegal options. Affiliate platform iGaming.com found that there were 18,000 searches for unregulated gambling products in one month. By comparison, there were only 1,500 searches for legal options.
Small bright spots, but big questions
However, there is also good news. The DSWV is working with the GGL to expand the range of sports betting options. This year, 200 new sports markets will be added. But this progress is slow, and many companies doubt whether there will ever be a real difference.
Quermann stresses that a 5.3% tax on bets seriously damages the competitive position of regulated providers.
“Without adjustments, the German gambling market will continue to struggle.”
The big question remains: Can the regulator ever take over power from the state politicians? That could be decisive for the future of the industry.