A University of Leipzig study commissioned by German gambling associations reveals that nearly half of Germany’s online gambling is conducted with unlicensed operators, raising concerns about the effectiveness of current regulations and the loss of potential tax revenue.
As recently reported by iGB News, A recent study by the University of Leipzig, commissioned by the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV), has raised alarms about the prevalence of unlicensed online gambling in Germany. The research, led by economist Gunther Schnabl, indicates that a significant portion of online gambling in the country bypasses licensed operators.
The State Treaty on Gambling’s Shortcomings
Despite implementing the State Treaty on Gambling in July 2021, the study reveals that its primary objective to channel online gaming to licensed sites is falling short. The DOCV and DSWV are urging Germany’s gambling regulator, the Glücksspielbehörde (GGL), to enhance the appeal of regulated casinos to combat this issue.
The Study’s Findings
The research outlines criteria to define illegal gambling sites, including accessibility from a German IP address without a VPN, availability in German, and acceptance of German talks during registration. As of March 2023, the study estimates that only 50.7% of players use regulated online spaces, with 28.9% visiting unlicensed EU providers and 19.9% accessing offshore providers. Notably, three-quarters of online gambling revenue is believed to be generated by the black market, resulting in substantial tax revenue losses.
Why the Black Market Thrives
The study attributes the black market’s popularity to easy access and widespread online advertising by unlicensed brands. Furthermore, it highlights that excessive restrictions on stake limits and bonuses in the regulated market diminish its competitiveness, driving players towards more flexible unlicensed alternatives.
The Problem of Gambling Harm
Separate research commissioned by the Bundestag indicates that about 2.3% of Germany’s population between 18 and 70 years old suffer from gambling harm. This figure represents 7.7% of all gamblers, equating to approximately 1.3 million people. Slot machines are identified as the primary contributors to problem gambling, with four out of ten slot players at risk of harm.
Urgent Actions Proposed
The DOCV and DSWV advocate for immediate measures in response to these findings. They recommend a comprehensive review of the current regulatory framework by the GGL and suggest fostering collaboration between regulated industries, political entities, and interest groups. An improved taxation regime and more flexible regulation are also proposed to make the licensed environment more attractive to players.
The Path to a Safer Gambling Environment
Industry experts stress the importance of establishing a competitive, regulated market to combat the black market’s influence. Wes Himes of the Betting and Gaming Council emphasized this approach at the Bundeskonferenz zum Glücksspielwesen, highlighting the need for regulatory reforms to protect players and recover lost tax revenues.
German Online Gambling: A Concerning Trend
The University of Leipzig study underscores a critical issue in Germany’s online gambling sector, with a substantial portion of activity occurring on unlicensed platforms. It calls for regulatory adjustments to redirect players toward the licensed market, enhancing player safety and securing potential tax benefits.