Study Reveals Regulatory Gaps in Germany's Online Gambling Industry, Urgent Reforms Needed

A recent study commissioned by the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV) has cast a spotlight on the significant challenges facing the regulation of online gambling in Germany. Economist Gunther Schnabl from the University of Leipzig conducted the study, revealing troubling statistics that indicate nearly 50% of online gambling activities in the country are still taking place on unlicensed platforms, despite the implementation of the State Treaty on Gambling in July 2021.

Schnabl's report underscores the accessibility of these illegal sites, emphasizing that they can be easily accessed from a German IP address without the need for a VPN. Moreover, these platforms operate in German and accept German documents during the registration process. The study reveals a concerning distribution of player traffic, with only 50.7% directed towards licensed online gambling spaces, while a substantial 28.9% flows to unlicensed EU providers and 19.9% to unlicensed offshore providers.

The consequences of this widespread unregulated activity are severe, with the study estimating that the black market generates three-quarters of the revenue, resulting in the loss of hundreds of millions of Euros in tax revenue annually. The disparity in market share is attributed to various factors, including aggressive advertising campaigns by unlicensed brands and the perceived flexibility provided by these platforms due to fewer restrictions on stake limits and bonuses compared to their licensed counterparts.

In response to these alarming findings, the DOCV and DSWV are calling for immediate and comprehensive action. They propose a thorough review of the existing regulatory framework by the German gambling regulator (GGL). Additionally, they advocate for strengthened collaboration between regulated entities, political bodies, and interest groups to create a more appealing licensed gambling environment that can compete with the allure of unlicensed alternatives.

Despite efforts by the German regulator to enhance player protection measures, a recent Gambling Atlas report reveals a concerning rise in gambling-related harm. 7.7% of Germans over the age of 18 experienced social, financial, or health distress related to gambling addiction. The data further indicates that 3.3 million German adults are susceptible to gambling addiction.

Industry stakeholders have been sounding the alarm on this issue since September, urging the German government to take swift and decisive measures. The proposed solution involves a revamped taxation regime, more flexible regulations, and stricter penalties for unregulated operators. These measures aim to ensure the industry's sustainability and provide robust protections for players navigating the online gambling landscape in Germany. The urgency of addressing these regulatory deficiencies is paramount to safeguarding both consumers and the long-term viability of the industry in the country.

By fLEXI tEAM