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Newsletter - Is Germany's regulated online market shrinking? ...and more!

Meet Gaming in Germany at ICE 2023

Like everyone else, we are getting ready for ICE 2023, which will take place February 7-9, 2023, at the ExCel Centre London.


Please join us on February 8 for our Gaming in Germany Breakfast, where you can meet colleagues, industry peers, and other gaming professionals involved in the German gambling market.


As places are limited, please send us an email to reserve your seat at rsvp@gamingingermany.com.


ICE Event: Regulatory developments in Germany's and Austria's online gambling market

Another ICE 2023 event that may be of interest is “Outlook 2023: Regulatory developments in Germany's and Austria's online gambling market,” cohosted by German and Austrian trade associations DOCV, DSWV, and OVWG.


The event's speakers, Dr. Dirk Quermann, President of the DOCV; Mathias Dahms, President of the DSWV; Claus Retschitzegger, President of the OVWG; and Dr. Jörg Hofmann, Senior Partner at Melchers Law Firm, will assess which developments are expected to take place in the German and Austrian online gambling markets during the coming year.


The event will take place on February 8 at 3PM in South Gallery 15.


Separate registration is not necessary. All ICE attendees are welcome.


Gemeinsame Glücksspielbehörde der Länder (GGL) takes over

After 18 months of preparation, the Gemeinsame Glücksspielbehörde der Länder (GGL) took over all gambling regulatory tasks previously performed by individual federal states within Germany from January 1, 2023.


This includes issuing new gambling licenses as well as investigating and combating illegal gambling.


Almost all of the 78 applications for virtual slots and poker licenses that have been received by the GGL have now been approved. However, many approved licensees have yet to pay the mandatory security deposit and are therefore not yet included in the official whitelist.


The current whitelist also includes Sächsische Spielbanken as a licensed virtual slots operator. Sächsische has thus become the first state casino operator in the country to secure an online slots license.


Combating illegal gambling offers remains one of the regulator's key priorities, GGL Co-Chair Benjamin Schwanke said.


Since taking over responsibility for combating illegal gambling on July 1, 2022, almost 150 enforcement procedures against illegal gambling operators, and almost as many against advertisers of illegal gambling offers, have been launched. Around 1150 individual websites were checked.


In addition to operators, the GGL must also approve the games provided by each operator. Of

the 3,500 individual game permit applications, the GGL has almost approved 600 by the end of 2022.


The need for regulatory approval for each individual game is, however, creating another bottleneck for Germany's regulated online market.


Mecklenburg-Vorpommern first state to forego online casino licensing

Although virtual slot games are subject to a treaty among all 16 of Germany's federal states, the regulation of virtual bankholder games, such as online roulette, blackjack, etc., is to a large degree left to the individual states.


Mecklenburg-Vorpommern has become the first state to announce that it would issue not a single license for online bankholder games. As a result, its inhabitants will not be able to legally participate in such games in the future.


IGB Affiliate publishes largest affiliates by country

IGB Affiliate and DeepCI have published their joint Affiliate Traffic Dashboard, which lists the largest affiliate websites by vertical (betting or casino) and country.


Upcoming events

The following event(s) may be of interest to the Gaming in Germany community.

  • The University of Hohenheim's annual Glücksspielsymposium is scheduled to take place on March 14-15, 2023.


Is Germany's regulated online market shrinking?

Germany's unfavorable tax regime and stringent online gambling regulations – including the need to acquire regulatory approval for each individual game – appears to have had negative impact on the size of Germany's regulated online market, Paul Leyland, Co-Founder of Regulus Partners observes:

“[A] shrinking market is implied from the data: the monthly average tax revenue in H1 2022 was €36m, in the last three months to November it was down nearly 20% to €30m. Unless December turns out to be a big tax month as operators catch-up their returns, implied annualized revenue for Germany has fallen from c. €900m to c. €700m.”

Enforcement action alone is unlikely to reverse this trend. “Black market enforcement against specific operators can only ever be a drop in the ocean. […] direct prosecution is whack-a-mole,” Leyland continues.


Although some remedies remain – for instance, resolving the game approval bottleneck – the restrictive nature of the current Interstate Gambling Treaty is likely to keep the domestically licensed German market constrained relative to its potential.


In the absence of additional reforms, the regulated German market may continue to shrink.


Perhaps even more dramatically than most observers would be inclined to expect:


“Germany’s transition to regulated online gaming demonstrates the lesson of an old stockbroking adage: a share which has fallen 90%, first fell 80% and then halved. The point of the parable is there is a natural expectation that an initial big shock is a position from which to rebuild, but even the aftershocks can be devastating to rebased expectations.”

Read the full analysis here.

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