German Study Highlights High Usage of Unlicensed Gambling Sites Despite Regulation

German Online Gambling: Urgent Reforms Needed as Study Shows High Black Market Usage

A recent study by the University of Leipzig has raised alarms about the state of online gambling in Germany, revealing that nearly half of all online gambling activity still occurs on unlicensed sites.

Commissioned by the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV), this comprehensive study, led by economist Gunther Schnabl, indicates that the State Treaty on Gambling, effective since July 2021, is falling short in its goal to channel online gaming exclusively to licensed platforms.

The findings have prompted the DOCV and DSWV to urge the German gambling regulator (GGL) to create a more competitive environment for regulated casinos to entice players away from black market sites. This call for reform aims to curb the loss of significant tax revenue and ensure a safer gambling space.

In light of these revelations, there is an immediate need for a reassessment of Germany’s current gambling regulations to address these challenges and protect players effectively.

Criteria for Identifying Illegal Sites: The study outlines specific criteria to classify a site as illegal: accessibility from a German IP address without a VPN, availability in German, and acceptance of a German address during registration.

Channelization Rate and Black Market Share: The channelization rate towards regulated online spaces stood at 50.7% as of March 2023, with 28.9% of traffic directed to unlicensed EU providers and 19.9% to offshore providers. This suggests that about three-quarters of online gambling revenue is generated by the black market.

Impact of Restrictive Regulations: The study points out that current restrictions, such as stake limits and limited bonuses, make unlicensed sites more appealing due to their flexibility and ease of access.

Problem Gambling in Germany: A separate study by the Bundestag’s Federal Drug Commissioner reveals that 2.3% of the population suffers from gambling harm, with slots being a significant contributor.

Proposed Action Plan: The DOCV and DSWV have put forward an action plan calling for a review of the regulatory environment by the GGL, improved taxation, more flexible regulation, and enhanced collaboration among industry stakeholders.

Addressing the Black Market Threat: At the Bundeskonferenz zum Glücksspielwesen, Wes Himes emphasized the need to establish a competitive regulated market as the most effective way to combat illegal gambling activities.

Conclusion:

The University of Leipzig’s study highlights a critical issue in Germany’s online gambling sector – the persistence of a significant black market presence despite regulatory efforts. This situation underscores the urgent need for regulatory reform to make the licensed gambling environment more attractive and safer for players. The proposed action plan offers a roadmap towards achieving a more effective and competitive regulated market, ultimately protecting consumers and maximizing the industry’s potential in Germany.