DOCV Disputes GGL’s Black Market Data and Warns of Regulatory Review Delays

In June, the Gemeinsame Glücksspielbehörde der Länder (GGL) published an update on the regulated gambling market in Germany, asserting that the illegal gambling market is worth approximately €600 million, which they claim represents only about 4% of the overall sector. This report is part of the GGL’s preparations for a comprehensive review of the State Treaty on Gambling, implemented in 2020 set to take place in 2026. The DOCV has raised concerns that such delays could allow the illegal market to expand significantly.

The GGL’s assertion of a 4% market share for illegal gambling has been met with criticism from various stakeholders. DOCV vice-president and Entain regulatory affairs counsel Simon Priglinger-Simader contends that this figure misrepresents the true size of the black market, particularly when compared to the entire market across all channels. Priglinger-Simader pointed out that if the illegal online gambling market is worth between €400 million and €600 million and the legal online gambling market is valued at €3 billion, the black market share would actually be around 20%.

Priglinger-Simader expressed his concern, stating, “That’s something we really think is not ideal, to be diplomatic, because the GGL could have easily said they see the black market in the online sector is around 20%.”

The GGL is expected to release updated figures soon, following a study they commissioned in December last year. This study is anticipated to provide more accurate estimates of the black market’s size and suggest methods to address it. “That’s something that we are really looking forward to hearing about because it could be an important and interesting step forward,” Priglinger-Simader noted.

Priglinger-Simader echoed the findings of a University of Leipzig study from November 2023, which was commissioned by the DOCV and Deutscher Sportwettenverband (DSWV). The study, led by Dr. Gunter Schnabl, indicated that 50.7% of players were engaging with the regulated online sector, while 49.3% were gambling via unlicensed EU providers or illegal offshore sites.

“There’s always a bit of politics. It’s easier for them to share a number for the online black market [in comparison] to total market,” he added.

The DOCV is preparing to release updated figures on channelization rates next month, utilizing data from Entain and audience data specialist Nielsen. This is a pressing issue as the black market continues to pose a significant challenge for licensed operators in Germany. The GGL is facing difficulties enforcing IP blocking rules against illegal operators due to various legal challenges, which led to the cessation of IP blocking earlier this year.

The GGL’s final evaluation of the German market, initially expected towards the end of 2026, is likely to be delayed. The DOCV anticipates this final report may not be available until 2027, considering the June update took six months longer than planned. Priglinger-Simader warned that further delays would allow the illegal market to flourish unchecked. “We expect this [final report] not to come before 2027, which means for some of the measures, they will definitely have to find a way to implement those earlier on, because it will be three more years for the illegal market to thrive without having any consequences,” he stated.

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Priglinger-Simader acknowledged the difficulties faced by the GGL, including insufficient staff, resources, and funding. “We acknowledge that the GGL has been fully active now for only one year, it’s not easy for them to set up the whole regulator and also try to implement it all,” he said.

He also highlighted the economic challenges within the regulated market, noting high tax rates, restrictive regulations on slots, and the requirement for games to be certified for each operator as significant hurdles. These issues have contributed to a 38% decline in tax revenue from online slots between 2022 and 2023. “Everyone can see that the legal market numbers have been decreasing over and over, which just shows that it’s challenging,” Priglinger-Simader concluded.

Source:

DOCV dismisses GGL black market data, warns review of German gambling regulations faces delays, igamingbusiness.com, July 12, 2024.