The German iGaming market has been slow to develop following the introduction of gambling reforms a few years ago, leading to a significant amount of activity taking place through black market sites, according to a new study. The findings by Gunther Schnabl, an economist from the University of Leipzig, suggest that the German gaming market is far from being stable, with around 50% of online gaming activity taking place through unregulated sites.
The study, sponsored by the German Online Casino Association and the German Sports Betting Association, shows that the number of online gamblers using licensed platforms has decreased from 70% in 2019 to 50% currently. This decline is attributed to the substantial presence of a clandestine online black market that lures in players with enticing offers and relentless promotion.
The German regulator, Joint Gambling Authority of the Länder, disagrees with the study and asserts that there are around 800-900 unlicensed gambling sites accessible from Germany, accounting for around 3% of the total market and worth €500 million. However, the unlicensed market poses risks to state governments in terms of tax losses and player safety.
Licensed iGaming operators in Germany are also at a disadvantage compared to their offshore counterparts due to tax reforms that led to a 5.3% tax on all stakes for betting, online poker, and online slots.
In response to the study, the German Sports Betting Association is demanding a swift expansion of licensing, increased competition, effective regulation of advertising, and tax reforms. The regulator has attempted to introduce mandatory ISP blocks of websites, but a court ruled that this is illegal.
The German iGaming market may be experiencing growing pains, but the German Sports Betting Association is pushing for enhanced collaboration among various sectors in the gaming industry and a review of the gambling framework. However, this may face resistance from states with a gaming monopoly. Thuringia and others are unwilling to consider changes that could jeopardize their positions.