Nearly Half of German Players Still Engage in Unlicensed Online Gambling, A Study Reveals
University of Leipzig Study Highlights Persistence of Unlicensed Online Gambling in Germany
Almost half of German players in the country’s betting and gaming market participate in illegally obtained services, a recent study of the University of Leipzig, German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV) underscore. This revelation has raised questions about the effectiveness of the State Treaty on Gambling, which was introduced in July 2021 with the goal of channeling players toward licensed operators. Despite these efforts, unlicensed gambling continues to thrive, prompting calls for regulatory adjustments to address the issue.
German Players in Grey Zone: State Treaty on Gambling One of the Reasons
The State Treaty on Gambling, which came into effect in July 2021, was designed to ensure that all online gaming activities in Germany would be conducted exclusively on licensed platforms. However, a recent report authored by economist Gunther Schnabl of the University of Leipzig suggests that this target has not been met. The report, commissioned by the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV), indicates that a substantial portion of online gambling still takes place with unlicensed operators. In response to these findings, the DOCV and DSWV are calling upon Germany’s gambling regulator (GGL) to reevaluate the competitive landscape and consider measures to bolster regulated casinos.
Examining the Study’s Key Findings: Understanding the Black Market’s Influence on German Players
The study conducted by the University of Leipzig defines illegal online gambling sites based on specific criteria influencing German players. These criteria include accessibility from a German IP address without the use of a VPN, availability in the German language, and acceptance of a user’s German address during registration. The report reveals that the channelization rate, directing players toward regulated online platforms, was only 50.7% in March 2023. Black market sites accounted for 28.9% of traffic to unlicensed EU providers and 19.9% to unlicensed offshore providers. This alarming trend has led to substantial losses in tax revenue, with the black market estimated to generate three-quarters of online gaming revenue.
Consequences of Failing Regulation: The Impact on Tax Revenue and Player Protection
The study’s findings highlight the persistent popularity of the black market due to its accessibility and extensive online advertising. Furthermore, restrictive measures on stake limits and bonuses have reduced competitiveness, driving players toward more flexible alternatives. This situation has far-reaching consequences, with the black market estimated to generate a significant portion of online gaming revenue. Consequently, Germany faces a substantial loss in tax revenue annually. The urgency of addressing this issue is underscored by the need for player protection and responsible gambling measures.
Urgent Calls for Action: Proposals to Address the Unlicensed Online Gambling Issue in Germany
In response to the concerning findings, the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV) have issued a call to action. Their action plan emphasizes the importance of reviewing the current regulatory environment by the Germany Gambling Regulator (GGL). Additionally, collaboration among the regulated industry, the GGL, political entities, and interest groups is essential. The report also advocates for an improved taxation framework and more flexible regulation to make licensed online gambling more appealing to players. As the study underscores the gravity of the issue, urgent measures are required to combat unlicensed online gambling effectively.