Slowly closing the present year, here's a longread for you: Germany's 🇩🇪 gambling market issues. A journey into history, analysis of the legal and illegal segments, comparison with England🇬🇧 – everything we love.

Slowly closing the present year, here's a longread for you: Germany's 🇩🇪 gambling market issues. A journey into history, analysis of the legal and illegal segments, comparison with England🇬🇧 – everything we love.

➡️ Preamble. The government took on the regulation of the gambling market in 2008; however, it became clear from the start that the measures taken would lead to prohibition⛔️ rather than liberalization. Therefore, online gambling was banned until recently – just like traditional sports betting, which the European Court declared illegal in 2012.

Later, the legislation was slightly softened, and in 2020, the regulator lifted the license restrictions for bookmakers; however, they limited the German market to only 20 operators. Since 2021, the industry has been operating within the framework of the so-called "Interstate Treaty on Gambling". It was thanks to this treaty that a comprehensive online betting and gaming market was created. However, in early 2023, the central regulatory body - the Joint Gambling Authority (GGL) - started its operations.

➡️ In fact, the amble: against the backdrop of intensified regulation, the black market flourished (no surprise there). The regulated segment of the German gaming market can be considered underdeveloped (based on tax revenues, it is estimated at around €4.8 billion) - especially when compared to the UK (€12.05 billion). And yet, the population of Germany is much larger: 84 million people compared to 65 million.

➡️ Currently, there are 800 to 900 websites offering illegal online gambling. The regulator (representatives of GGL) believes that the market volume of these operators accounts for €300-500 million (see the section "Fight against unlicensed market"). This is approximately 2-4% of the "white" market.

➡️ The above doesn't quite match the calculations from the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV): recently, Yield Sec recorded an 11% growth of the illegal market in Germany, resulting in a 47% share of the total online betting and gambling market compared to 53% of the legal market. The study was conducted by experts from Leipzig University, who used 3 key criteria to determine the "illegality" of a website:

🚷 access to the game is possible from a German IP address without using a VPN.

🚷 the game is available in German.

🚷 during registration, the website accepts a German user's address.

➡️ Taxes are a real challenge. Under the "Interstate Treaty on Gambling", the tax is based on the stake for online operators, rather than the gross gaming revenue (GGR). It is clear that under such conditions, licensed operators face tough competition from unlicensed ones.

➡️ In turn, the revenues generated by illegal operators are usually 2-3 times higher per player than on the regulated market.

Restrictions for operators:

➡️ Licensing conditions are quite strict – there is a whole list of several pages and dozens of rules just for advertising. For example, a ban on online and television advertising from 21:00 to 6:00, restrictions on showing sports clips in advertisements, as well as a ban on working with sports personalities and other influential individuals. There is no licensing for B2B suppliers and game developers in general. This means that each game must be individually licensed for each operator, even if it has already been approved for another operator.

➡️ Another serious problem for operators is the draconian scheme that limits the types of sports available for betting............... but we will tell you more about it in the next post.

To be continued...

#Europe #gambling #betting