Germany’s online gambling industry is facing mounting challenges, with channelization rates for online slots estimated between 20% and 40%. The data, shared by local trade body Deutscher Online Casinoverband (DOCV), suggests that a significant number of players are opting for unregulated operators, raising concerns about the viability of the legal market.
Low Channelization Rates Threaten the Regulated Market
Germany’s online slot sector is in trouble. According to estimates presented at the DOCV industry networking event at ICE on January 21, the majority of players are bypassing the legal market entirely. DOCV President Dirk Quermann highlighted academic research pointing to the rapid growth of unregulated gambling platforms.
In contrast, the country’s sports betting market is faring better. Mathias Dahms, president of Deutscher Sportwettenverband (DSWV), stated that channelization for sports betting is significantly higher, hovering between 60% and 70%. This difference underscores a critical issue—while sports bettors seem more inclined to use legal platforms, online slot players are turning to offshore operators in large numbers.
The Numbers Behind the Struggle
Germany currently has 29 licensed online betting operators. Dahms provided a breakdown of the industry’s financials:
- Total stakes in 2024 reached €7.3 billion ($7.7 billion)
- Gross gaming revenue (GGR) was approximately €1.1 billion
- Despite a 4% increase from 2023, figures remain 15% lower than pre-2021 levels
What’s driving this underperformance? Many industry voices point to the 5.3% turnover tax introduced in 2021. Operators argue that this tax structure makes it difficult to compete with offshore sites that offer better odds and bonuses, effectively pushing players toward unregulated alternatives.
The Black Market Dispute
Germany’s gambling watchdog, the Gemeinsame Glücksspielbehörde der Länder (GGL), has downplayed concerns over the black market. Its latest report from 2023 suggests that only 4% of total gambling revenue comes from illegal operators.
Industry insiders, however, strongly disagree. DOCV Vice President Simon Priglinger-Simader countered that illegal online gambling alone could account for at least 20% of the market. Dahms went even further, warning that the black market is expanding much faster than regulators acknowledge.
“We are quite sure the [black market] estimates of the GGL are far too low,” Dahms said.
The Tax Problem Driving Players Away
For many in the industry, Germany’s 5.3% turnover tax is the root of the problem. Unlike a traditional revenue-based tax model, this structure taxes stakes rather than profits, making the regulated market less attractive for both operators and players.
Quermann didn’t mince words: “We are paying on the basis of stakes, which for slot games is not the right basis to tax these products.”
The concern is simple—if the regulated market isn’t profitable, operators will either exit or struggle to survive. And if legal options shrink, more players will turn to the black market.
Industry Push for Policy Changes
Industry leaders are calling for urgent dialogue between operators, regulators, and policymakers. They argue that without changes to tax policies and stricter black market enforcement, Germany’s regulated online gambling market will continue to deteriorate.
Dahms made it clear: “We have to intensify our talks with politicians and the authority on these problems we’ve already described. Otherwise, customers will continue to leave the regulated market, and operators will withdraw themselves from the market.”
The message from the industry is clear—without immediate intervention, Germany risks losing control of its online gambling sector altogether.
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