Germany’s Illegal Gambling Market Worth €600m in 2023

Germany’s gambling regulator has reported that the country’s illegal market was valued between €400 million and €600 million in gross gaming revenue (GGR) for 2023. This highlights the significant challenges in regulating and curbing unlicensed gambling activities.

The Joint Gambling Authority of Germany (GGL) emphasized that their enforcement actions against the illegal market have been impactful. Payment blocking has emerged as a particularly effective measure against illegal providers. In 2023, the GGL processed 438 suspected illegal gambling or advertising cases, checked 1,864 websites, and initiated prohibition proceedings in 133 cases. As a result, 63 black market operators either ceased their services or halted their advertising.

Criminal charges were filed in 104 cases, and the GGL noted that numerous illegal offers, especially regarding illegal advertising, were stopped following advisory letters. Despite these efforts, IP blocking was not used due to legal developments. Board member Ronald Benter acknowledged the difficulty of addressing illegal providers, given their international operations.

In contrast, the regulated market’s GGR saw a 2% increase, reaching €13.7 billion in 2023, with €3 billion generated from online gaming. The GGL’s regulated segment accounted for approximately €3.5 billion, or 26% of the total market. Sports betting, including horse betting, constituted the largest share with a GGR of €1.8 billion, reflecting a €400 million growth from the previous year.

The black market recorded between €400 million and €600 million in GGR, which is defined by the GGL as player losses. The legal market’s total for the year was €13.7 billion. Of this, €3 billion was generated online, with sports betting making up the bulk at €1.8 billion. Contributions from online slots and poker were significantly lower at €400 million.

During the year, the GGL inspected 1,864 websites and blocked operations in 133 cases, 87 of which were related to illegal gambling services and 46 to black-market operators’ advertising. The regulator processed a total of 438 cases of suspected illegal gambling or advertising. Following prohibition orders or hearings, 63 black-market operators ceased their services or advertising.

The GGL’s enforcement efforts included imposing two € 50,000 fines each for breaches of prohibition orders related to illegal gambling and advertising. The regulator was involved in 117 lawsuits initiated by various online gambling providers across different verticals. In the previous year, 157 instances of illegal gambling and advertising were identified, resulting in 68 prohibition proceedings.

Despite these enforcement actions, industry stakeholders have criticized Germany’s regulatory process as unfriendly to commercial operators. Some sources suggest that the black market issue is more extensive than the regulator’s figures indicate. A study by Gunther Schnabl of the University of Leipzig, commissioned by the German Sports Betting and Online Casino Associations, estimated that around 48.8% of players still gambled via offshore sites, with up to three-quarters of online revenue generated offshore.

The German Sports Betting Association (DSWV) has described the current regulatory framework as “the most restrictive in the world,” highlighting the difficulties faced by the industry in navigating these regulations.

Top Poker casinos

Overall Rating

96

Visit Casino Read Review

Overall Rating

92

Visit Casino Read Review

Overall Rating

92

Visit Casino Read Review

Looking forward, the GGL is considering adjustments to the application processes for individual games in the virtual slot machine game vertical. Ronald Benter mentioned that involving game manufacturers and development studios directly in the application process could expedite approvals.

The German gaming regulation, established by the 2021 Interstate Treaty on Gambling, created a comprehensive online betting and gaming market. The GGL, as the central regulatory authority, commenced operations at the start of 2023. Despite the challenges, the GGL continues refining its processes to regulate the market better and address the persistent issues of illegal gambling.

Source:

Germany black market accounts for up to 4% of GGR in 2023, GGL claims, igamingbusiness.com, July 1, 2024.