The situation in Germany remains frustratingly opaque even as the regulator attempts to open up the discussion.
So to the Gaming in Germany event held in Berlin this week and an appearance by the regulator Benjamin Schwanke, the co-chair of the Gemeinsamen Glücksspielbehörde der Länder or the GGL.
To an extent, Schwanke was honest about the number one problem being faced by the regulator and the online operators with the current market – that is, the extent of the black market.
“We constantly fight violations of the law and illegal gambling online,” he told the audience in the Hotel Adlon on Unter den Linden in mid-October.
He boasted that the number of operators on the white list – that is, those that are now operating under the licensing regime launched in the summer of 2022 – is on the rise. But to outside ears, the numbers remain small by any standard – just 40 operators are now licensed for online slots operations and just 800 games.
As Schwanke said, this is a 33% increase from the end of 2022, but it really is from a small base.
He then went on to extol the centralised system that he noted “makes it possible that the data made available anonymously can be used and monitored”.
“By the end of the year almost all providers will be connected to the system,” he added.
There’s always a but…
The problem with this is the official white-listed market that is fully plugged into the central data hub misses, by most estimates, at least half (and possibly more) of the actual online gambling play involving German citizens.
Schwanke was followed on the day by a succession of speakers that gently – or maybe forcefully depending on your knowledge of German intonation – pointed to the size of the remaining black market.
Just within the iCasino space – where, remember, only online slots are allowed and table games are, to coin a phrase, verboten – Dirk Quermann, president of the Deutscher Online Casinoverband, pointed to a ‘click flow’ survey of online gambling habits showing that just under half of all traffic was to illegal casino sites.
As he said, “it is a very sobering result”, yet it was backed up by the statistics brought to the table by other speakers.
Ed Birkin, senior analyst with industry data source H2 Gambling Capital, confirmed in his own presentation that the illegal market was between €1-€2bn by GGR. This compares with a legal market in 2022 that came to €1.3bn.
Birkin went some way to explaining the numbers. Looking at the leading former grey market operator, he was also to show how Entain saw a 63% decline in net gaming revenue between the first half of 2020 and the equivalent period this year.
As he told the audience, sizing the current black market is obviously difficult – operators of black market gambling don’t tend to publish their financial results – but examination of web traffic trends offers big pointers to where the players have gone.
“I think if the legal market doesn’t become more competitive, it will not be able to function,” said Querman. “My association believes we need to take further steps. All stakeholders have an interest in having a strong legal market.”
He added that further restrictions on the legal market would be somewhat suicidal, particularly the current debate on a potential ban on advertising.
“Further restrictions for legal gaming would be poisonous,” he noted. “So everything being discussed about bans on advertising would be harmful given the already complex situation we have.”
Absurdity
This was supported by Mathias Dahms, president at Deutscher Sportwettenverband (DSWV). He noted that the current rules on advertising – where advertising on TV and the radio is restricted to late at night – meant there had been a downturn in economic activity.
He said the current debate being generated by certain politicians who were proposing an outright ban on advertising was “worrying”.
“There is a stupid political discussion about this right now,” he said. “Sponsoring and advertising is very much going down, so there aren’t the extreme levels of advertising spoken about by some politicians.
“Our products are invisible. They are not on TV. It is natural that sports betting providers should advertise around sport. We have the most restrictive advertising market in Europe.”
He went on to suggest that the calls for an outright ban were “absurd”. “Unfortunately some parts of the federal government have backed this call. The Treaty was cumbersome but political activists calling for absurd things is not helping.”
Whether the GGL or the politicians are listening is apparently another matter. The frustrations of the operators have long been evident and what they would ideally like to see is more urgency from the authorities. Until that is forthcoming, Germany will remain the largest but effectively unattractive market in Europe.
