DOCV rejects GGL black market data, warns review of German gambling laws delayed – Regulation

The Glücksspielbehörde den Länder (GGL) published an update on the regulated gambling market in Germany in June. It claimed that while the illegal market is worth €600 million, it only accounts for around 4% of the entire sector.

It comes as GGL prepares to review the success – or failure – of the State Gambling Treaty, which came into effect in 2020 and opened up regulated markets for sports betting, online slots and poker for the first time. It is due to come into effect in 2026, which DOCV says could give the illegal market years to develop.

The memo has sparked a negative reaction from the sector, with various stakeholders dismissing the assessment as ridiculous. DOCV believes that these estimates do not reflect the true size of the sector, especially when compared to the overall market across all channels.

“GGL said the (black market) market share was around 4%. You would have €400-600 million in illegal online gambling and €3 billion in legal online gambling, which would be a 20% market share of the black market,” DOCV vice president and Entain regulatory affairs counsel Simon Priglinger-Simader told iGB.

“In our opinion, this is not an ideal solution in terms of diplomacy, as GGL could easily determine that the black market in the online sector is around 20%.”

The regulator could soon update its figures, however. A study commissioned by GGL last December is due to be published and is expected to provide updated estimates of the size of the black market and how to tackle it.

“This is something we are really looking forward to because it could be an important and interesting step forward,” Priglinger-Simader concluded.

The level of sewage in Germany is still around 50%

Priglinger-Simader echoed the findings of a study by the University of Leipzig published in November 2023, commissioned by DOCV and Deutscher Sportwettenverband (DSWV). The study, authored by Dr. Gunter Schnabl, suggests that 50.7% of players gamble in the regulated online sector, with 49.3% of players gambling via unlicensed EU providers or illegal offshore sites.

“There’s always a bit of politics. It’s easier for them to divide the number for the online black market (versus) the overall market,” he said.

The association is preparing to release updated data on market channel metrics next month, based on data provided by Entain and audience data specialist Nielsen.

Doing so is urgent, as the black market remains the most pressing challenge for licensed operators in Germany, Priglinger-Simader said. In particular, GGL has struggled to enforce IP blocking rules for illegal operators, due to “various legal challenges.” IP blocking was halted earlier this year due to legal challenges.

Final GGL assessment likely to be delayed

GGL expects to publish its final assessment of the German market under its control at the end of 2026. However, DOCV expects this to be delayed because the June update was published six months later than planned.

“We don’t expect (the final report) to be published until 2027, which means that for some of the measures we will certainly have to find a way to implement them earlier, because the illegal market will be able to develop for another three years without any consequences,” Priglinger-Simader warns.

Sympathy for the regulator

He is sympathetic to the challenges the regulator faces, including a lack of staff, resources and funding. “We recognise that GGL has only been fully operational for a year, it is not easy for them to set up an entire regulator and try to implement everything.”

Asked about the regulatory headwinds that operators often see in their financial results, Priglinger-Simader replied: “it’s just not easy to make money (in Germany).” High tax rates, unnecessarily restrictive slot regulations such as minimum spin speeds, not to mention the need to certify games for each individual operator, are holding the market back.

This reflects a 38% drop in tax revenue from online slots between 2022 and 2023. “Everyone sees that the number of legal games on the market is constantly decreasing, which only shows how challenging it is,” he said.