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The German online gambling industry debated "sobering" prospects while its top regulatory official questioned why the industry is so pessimistic.
Industry revenues are falling, with executives seeing no sign of a reversal.
Betting tax collections have been gently declining since 2021, while slots tax collections have declined precipitously, according to the German Sports Betting Association (DSWV).
Betting tax fell 5.4 percent in 2023 over 2022.
The steep decline is “really worrisome”, said DSWV president Mathias Dahms.
The biggest perceived problem is the size of the black market, with the regulator and the industry touting wildly different estimates.
One data collector presented a case that supported industry claims.
German land-based per capita spending on gambling, at €93 per year, is almost exactly in line with European averages for comparable markets, said Josh Hodgson of H2 Gambling Capital.
But online gambling spending is only €23, or about a quarter of the average for comparable markets, which suggests a substantial online black market, he said.
“It’s difficult to see how online gaming companies can operate profitably,” Hodgson said.
The Joint Gambling Authority of the States (GGL) claims the online black market is less than 10 percent, while the DSWV last year estimated the black market to be 50 percent.
Ronald Benter, co-chair of the GGL, did not directly defend the authority’s market estimates, saying only that the differing assessments “were all justified in their own way”.
He said he was there to discuss the “tension” between regulatory requirements and the development of the online market.
He declared regulation a “success story” with the GGL having been created “as an instrument of the legislature to ensure sustainable regulation and to create a stable, secure market for all players”.
Benter said there are 25 active online sports-betting licences, 31 slots licences, five poker and five race betting licences, with three new licences granted this year.
“As long as there are active companies entering the German market, there is not a doom-and-gloom scenario,” he said.
The industry gloom could be reflected in the fact that companies have hit the regulator with about 200 lawsuits, with issues including restrictions on bonusing and kinds of sports bets.
Benter called the barrage of lawsuits, “a way of delaying the solution” and a “diversion of resources”.
He suggested the industry “limit themselves to what’s really important”.
“Why are you so pessimistic?” he asked of the German industry, in response to questions from former Danish regulator Birgitte Sand. “Because I’m not.”
Some operators may have found their gross gaming revenue or earnings before interest and tax expectations dashed, Benter said.
“That new companies can enter the market, that tells me they think they can make a profit,” he said.
Benter was speaking in Berlin on Tuesday (November 5) at the annual Gaming in Germany conference. He spoke in German and had simultaneous translation into English.
Over the next two years, the interstate treaty on gambling will be evaluated, and three studies on player protection, gambling advertising and channelisation of players to the legal market will guide future policy, Benter said.
But Dirk Quermann of the German Online Casino Association (DOCV) suggested that Benter’s optimism about three new licensees was misplaced.
There are not three new licensed operators, three existing operators added new domains, he said.
The fact that some licensees are not active is “sobering”, Quermann said.
He called for the GGL to be “more ambitious” in making the market more appealing to players and less imposing for operators.
The industry needs maximum stakes higher than the current €1 per spin, faster approval of slots games and loosened restrictions on spin times, he said.
In sports betting, the industry is pressing to be allowed to offer more kinds of bets.
Christian Vorhauer, managing director of Betkick Sportwettenservice, said the menu of sports-betting events licensees are allowed to bet on in Germany is 30 percent to 40 percent of those allowed in Greece, Romania, Ontario and Brazil.
Another perceived drawback of the German market is that although online sports betting, poker and slots are nationwide licences, table games such as roulette, blackjack and baccarat are reserved for licensing by the state.
So far only two of 16 states have approved the online table games and one, Bavaria, only allows a state casino monopoly.
One quirk of the German online market is that the common term “online casino” is effectively banned.
The problem is, that many gamblers search for “online casino” because they want to play slots, even though that term is forbidden, said Andreas Ditsche, chief executive of iGaming.com, an affiliate website.
The correct term, from the regulatory point of view, is “virtuellen Automatenspiele”, he said.
But almost no one searches for online gambling sites using that term, the executive said.
Ditsche said he found that 19 of the top 40 Google search terms use the word “casino”.
More typical searches use phrases such as online gambling “with EU licence”, “without deposit limits” and “without five-second pause”, he said.
Searches for illegal sites outnumber searches for legal ones by more than 10-1, Ditsche said.
And searches seeking to determine the difference between legal and illegal sites are dwindling in number from 2021 when online gambling was legalised, he said.
“For the most part, people don’t care that much, they just want to play,” Ditsche said.
In closing the conference, Dahms of the DSWV said the grim statistics from H2 could be seen as cause for optimism, with a loosening of restrictions, the German online gambling market could have “huge potential”.
“It is totally underdeveloped,” he said.
