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The German Gambling Authority Has Failed The Online Casino Community
By Shane Addinall Nov 27, 2023 IndustryA disturbing report by University of Leipzig economist Gunther Schnabl shows that in the last four years, illegal gambling has destroyed the market's channelisation rate, with 50% of all gambling taking place at unlicensed offshore casinos.Despite the institution of the German Interstate Treaty on Gambling in 2021, the newly empowered German regulator Gemeinsamen Glücksspielbehörde der Länder (GGL) has been slow in allowing international offshore operators legal access to the country.
By June 2022 the Join Gambling Authority had only approved three additional gambling websites. Fast forward to November 2023, and according to the Whitepaper found on the GGL website, only forty-one gaming companies are allowed to provide Online Slots and virtual games of chance in Germany.
Gambling Companies Poll the Market
Despite assurance by the GGL that the market is doing well, local gambling associations felt that a lot was being left unsaid. To get to the bottom of this ill feeling, the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV) engaged the services of economist Gunther Schnabl from the University of Leipzig to provide an unbiased review of the market.
Far from the robust gambling market on the brink of growing in strength, Schnabl's study proved quite the opposite. According to his findings, the legal German online gambling market is in sharp decline, with market channelisation dropping from its 2017 high of 70% to an all-time low 2023 of 50%.
In a weak defence of how it has managed the market to date, the German regulator argued against the notion that black market casinos are gaining traction, stating that residents can only access around 900 unlicensed casinos, an improvement over last year.
Realistically, it is nothing to brag about when your pool of illicit online casinos outpaces your licensed offshore operators by more than 20x. It also does not help the local market compete with its black market peers when the regulator tacks an additional 5.3% gross gaming revenue tax on online slot providers.
GGL Needs to Stem the Losses, Fast!
Not only is it very concerning that half of Germany’s online gambling community is playing at unlicensed casinos rather than regulated ones, but there is a good chance that this number could be underreported.
A review of the associated financial impact of this market weakening shows that more than €500 million is leaving the country and filling the coffers of international regulatory jurisdictions. This creates a massive local income deficit, which will hurt community projects, safer gambling research, and other critical areas of development.
In response to this dire update, the DSW and DOCV have called on the GGL to address the following areas of concern:
- Accelerate the licensing processes of the gaming authority GGL to prevent black market activities.
- Increase the competitiveness of the legal market.
- Consistent enforcement of the advertising ban for illegal providers.
- Maintain the advertising opportunities for legal offers
- Improve cooperation between industry, GGL, politics and interest groups.
- Review of the provisions of the Interstate Gambling Treaty to achieve the objectives mentioned above.
- Amend the taxation of online gambling offers in the Racing Betting and Lotteries Act.
The two gambling associations have committed to maintaining a constant review of the illegal gambling situation in Germany. Their mission is to make it a big enough public issue that the GGL is forced to take meaningful action, thereby bringing much-needed correction to the ailing marketplace.
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