Germany’s black market is far bigger than the country’s regulator claims, the Deutscher Online Casinoverband (DOCV) argues, as it lobbies for an accelerated review of the State Treaty on Gambling.
The Gemeinsame Glücksspielbehörde den Länder (GGL) published an update on Germany’s regulated gambling market in June. This claimed that while the illegal market was worth €600m, it only represented around 4% of the overall sector.
It comes as the GGL prepares a review of the success – or failure – of the State Treaty on Gambling, implemented in 2020, which opened up the regulated market for sports betting, online slots and poker for the first time. This is due to take place in 2026, something the DOCV warns could give the illegal market years to grow.
The note prompted a backlash from the sector, with various stakeholders dismissing this estimate as laughable, and the DOCV believes this misrepresented its true size, especially by comparing it to the entire market across all channels.
“The GGL stated the [black market] market share of around 4%. You would have €400m to €600m in illegal online gambling and €3 billion of legal online gambling, which would be a 20% market share for the black market,” DOCV vice president and Entain regulator affairs council Simon Priglinger-Simader told iGB.
“That’s something we really think is not ideal, to be diplomatic, because the GGL could have easily said they see the black market in the online sector is around 20%.”
The regulator may soon update its figures, however. A study commissioned by the GGL in December last year is due for release, which is expected to set out updated estimates for the size of the black market, and how it can be tackled.
“That’s something that we are really looking forward to hearing about because it could be an important and interesting step forward,” Priglinger-Simader concluded.
German channelisation still at around 50%
Priglinger-Simader echoed the findings of a University of Leipzig study released in November 2023, commissioned by the DOCV and Deutscher Sportwettenverband (DSWV). The study, authored by Dr Gunter Schnabl, suggested 50.7% of players were gambling in the regulated online sector, with 49.3% of players gambling either via unlicensed EU providers or illegal offshore sites.
“There’s always a bit of politics. It’s easier for them to share a number for the online black market [in comparison] to total market,” he said.
The association is preparing to release updated figures on channelisation rates in the market next month, based on data provided by Entain and audience data specialist Nielsen.
Doing so is pressing as the black market remains the most pressing challenge for licensed operators in Germany, Priglinger-Simader said. In particular the GGL is struggling to enforce IP blocking rules for illegal operators, due to “various legal challenges”. IP blocking was stopped earlier this year amid legal challenges.
Final GGL evaluation will likely face delays
The GGL is expecting to release its final evaluation of the German market under its control towards the end of 2026. However the DOCV expects this to be pushed back, after June’s update took six months longer than planned to be published.
“We expect this [final report] not to come before 2027, which means for some of the measures, they will definitely have to find a way to implement those earlier on, because it will be three more years for the illegal market to thrive without having any consequences,” Priglinger-Simader warned.
Sympathy for the regulator
He is sympathetic to the challenges faced by the regulator, including a lack of staff, resources and funding. “We acknowledge that the GGL has been fully active now for only one year, it’s not easy for them to set up the whole regulator and also try to implement it all.”
When asked about regulatory headwinds often noted by operators in their financial earnings, Priglinger-Simader said, “it’s just not easy to make money [in Germany]”. High tax rates, unnecessarily restrictive regulations on slots such as minimum spin speeds, not to mention the need to have games certified for each individual operator, are holding the market back.
This is reflected in a 38% decline in tax revenue from online slots between 2022 and 2023. “Everyone can see that the legal market numbers have been decreasing over and over, which just shows that it’s challenging,” he said.