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The German Sports Betting Association (DSWV) has called for an overhaul of Germany’s current gambling regulations, citing their stringent nature as a major contributor to the rise of illegal offshore gambling.

Due to the strict regulations, legal providers are struggling to keep up with demand for attractive sports betting products, leaving consumers to seek out unregulated alternatives, the DSWV warned.

Urgent action is needed to revise these regulations and prevent the growth of the black market, according to the DSWV.

The DSWV stated there was a massive decline in the regulated market in 2022. Gaming stakes dropped from €9.4bn in 2021 to around €8.2bn last year, despite the World Cup.

State revenues from sports betting tax were also correspondingly lower than in the previous year, at €433m.

The DSWV stated that the disappointing World Cup and Germany’s early exit only contributed to a small extent to the overall decline in gaming stakes.

Instead, the main reason for the market decline can be found in the restrictive regulations in Germany. The association stressed that customers are still gambling, but are turning to unregulated options.

DSWV President Mathias Dahms (pictured) commented: “For most customers, whether a provider has a permit from Germany is secondary. They are looking for the most comprehensive offer, the best odds, uncomplicated payment processes and interesting bonuses. That’s where the legal offers have a hard time.”

Rise in unregulated websites

In February 2023, the DSWV conducted a market study and discovered a 65% increase in active illegal gambling and sports betting offers compared to the previous year.

Among the 1,500 websites checked without a German licence, 840 illegal websites were accessible to German players, and 723 of these sites allowed account registration.

Germany’s whitelist of approved sports betting providers currently features 31 companies, and they face difficulties due to excessive regulation, the DSWV said.

DSWV CEO Luka Andric: “Illegal providers from third countries do not care about German regulations, and many deliberately advertise on the internet and allow blocked players to play.”

Additionally, there are still too many unauthorised betting opportunities in betting shops, with some rejected providers continuing to operate locally and online, the DSWV claimed.

“Here, too, the local authorities must step up controls and take action,” the DSWV said.

In addition, the DSWV pointed out that the enforcement measures of the German gambling regulator, the GGL, against the black market are not effective, as evidenced by the recent curbing of IP blocking by three court rulings.

Alternative approaches are needed, including strengthening the legal market by providing attractive and broad offers and re-evaluating strict advertising and offering restrictions.

Ad bans benefit black market

The DSWV further stated that marketing restrictions and advertising bans only benefit the black market.

“Advertising is used to guide all those who are already interested in sports betting towards the state-controlled, and thus safe, market,” said DSWV CEO Luka Andric.

He added that providers must meet numerous player protection criteria to obtain a sports betting licence in Germany.

“Illegal providers from third countries do not care about German regulations, and many deliberately advertise on the internet and allow blocked players to play.

“This type of advertising needs to be urgently prevented, and the advertising possibilities of legal providers need to be strengthened,” he concluded.

Yesterday (9 March), Entain CFO Rob Wood described Germany as a very challenging market for compliant operators.

In 2022, Germany accounted for just 5% of Entain’s online net gaming revenue (NGR), compared to 13% two years ago.