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German gambling market thrives despite regulatory challenges

German gambling market thrives despite regulatory challenges

Germany has a long history of gambling. The first land-based, legal casino in the world opened in Baden, Germany in 1765. The next, Kurhaus Baden-Baden opened in early 1824. Since that time, the quantity of casinos in Germany has continued to grow.

 

Land-based casinos and sports betting shops are legal in Germany. In fact, there are over 70 cities in Germany boasting 81 land-based casino and sports betting facilities. The largest gambling city in Germany is Berlin hosting five gambling facilities with 17 table games, 770 gaming, slot, and video poker machines. The largest casino in the entire country of Germany is Spielbank Do-Hohensyburg, which is located in Dortmund. Spielbank Do-Hohensyburg has 34 table games, 10 poker tables, 368 gaming and video poker machines.  Forbes rates the oldest German casino Baden-Baden among the top 10 best casinos in the world. Half of the German land-based casinos are state-owned; the rest belongs to private enterprises.

 

Unlike many other European countries, almost all of the German casinos have a dress code, and, many do not stay open 24/7.No one under 18 is permitted to gamble, and some casinos charge an entrance fee or ask you to sign a debt guarantee note before allowing players to start gambling.

 

German land-based gambling industry is regulated by a mix of state laws.  Land-based casinos, bingo, and lotteries are regulated by respective state laws, and their licensing is generally overseen by the Ministry/Senate of Interior of a respective state, with the exception of national lotteries that are subject to licensing and supervision by Ministry of the Interior of Lower Saxony. When it comes to sports betting, licensing and overseeing of bookmakers’ compliance is vested with the Council of Darmstadt. Horseracing associations are also licensed and supervised by the Regional Ministries of Interior in a respective state.

 

Statistics reveal

 

According to the Handelsblatt Research Institute data, in 2018 Germany’s gross gaming revenue amounted to  €14.2bn.

Out of this amount, €10bn. accounts for revenue from land-based casinos, gaming machines, and lotteries.

Over €3bn of revenue comes from a growing unregulated online gambling market.

According to Reeckmann estimates, the volume of the illegal gambling market, which mainly attributes to the online gambling market, is estimated between €4bn to €22bn.

Between 2015-2017, the growth of the German gambling market was estimated at CAGR (Compound Annual Growth Rate) was +4.2%.

Up to 200,000 people worked in the gambling industry in Germany in 2018.

 

 

Online gambling challenge

 

Online gambling and betting in Germany is, however, a complicated issue and the existing regulations are making lives somewhat difficult for online casinos and bookmakers.

 

Up until 2008, online gambling was unregulated in Germany. The laws at the time did not concern the internet in any way. Things changed with the enactment of so-called Glücksspielstaatsvertrag – the Interstate Treaty on Gambling (ISTG) in 2008, which essentially banned all forms of online gambling.

 

Initially, all 16 German states joined the Treaty, which induced much criticism from the European Gaming and Betting Association, arguing that the current online gambling legislation in Germany was violating the European Union rules. In 2010, the European Court of Justice acknowledged that the gambling industry in Germany was monopolized and not in line with the European standards on competition, as well as impressed upon Germany to revise its Interstate Treaty to allow for liberalization.

 

The ruling stirred up a little movement in terms of liberalization of German state laws for online gambling. Private companies were permitted to apply for licenses to offer and broker sports betting in all 15 German federal states. Further, private companies were also allowed to apply for a license to advertise their services online.  However, the number of licenses was restricted to twenty. In addition, the imposition of five percent state tax on the online wager was introduced.

 

The state of Schleswig-Holstein went further ahead of the rest of the 15 states in its online gambling liberalization efforts, and in 2012, Schleswig-Holstein withdrew from the Interstate Treaty.  Schleswig-Holstein has always been the state that has leaned towards more liberal gambling laws.  Online casino operators were given the opportunity to apply for a license in the state.  The state even issued online licenses to about 3 dozen operators, including Poker Stars and 888.  However, that change did not last long. The move was reversed just a year later when the new state government was voted in the office and the new governor took over. Thus, in 2013, the state parliament voted in favor of joining the Treaty, which made all the 16 states part of it again.

 

Nevertheless, the operators that went through the trouble of getting the license in 2012 retained their 6-year licenses and were able to provide online casino games as well as poker to players inside the state of Schleswig-Holstein until 2018.

 

Despite the EU Commission frequent criticism of Germany’s exceptionalism concerning online gambling, in 2014, the European Court of Justice in Luxemburg confirmed Germany’s right to regulations that differ from EU law.

 

Earlier in March 2019, Minister-Presidents of Germany’s 16 federal states ratified the third amended Inter-State Treaty on online gambling. The amended Treaty did not legalize online gambling, but it gave a green light for operators to apply for sports betting licenses from respective German states, while Schleswig-Holstein would be allowed to run its own, liberal regulatory regime again.

 

The amended Treaty also removed the limit on the number of operators that can be licensed, which was 20 until then, and introduced a 5% on online operators’ turnover. The new operators’ licenses are expected to come into force from January 1, 2020, and run until June 30, 2021.

 

This ratification may turn out an effective step forward to overhaul Germany’s online gambling regulations by 2021.

 

German punters would not back down

 

Nevertheless, none of these legal contradictions decreases German citizens’ enthusiasm for online casinos. Unsurprisingly, Germans are now increasingly searching to play online. These online options are offered by two kinds of operators: those based in Germany that do not hold a German online license, and those based in other countries offering gambling opportunities to citizens in Germany

 

Many big-name international casinos and bookmakers such as Betfair, 888sport, BetOlymp operate in Germany being convinced they could safely offer their products to German punters without risking fines or being banned.

 

Germans like to wager in many different ways. The most popular of those are sports betting sites, casinos and poker. The online preferences among German online players reported by Business Matters Magazine are as follows:

 

Sports betting (38%)

Casino entertainment (34%)

Poker (24%)

 

Germany has a culture in which gambling and betting, and in particular sports betting, is very popular. It is considered a great leisure time for many Germans, and this prompts a significant growth in German betting culture.

 

When it comes to sports betting in Germany, football is the unrivaled king of sports.

 

Germany is a nation that has won the FIFA World Cup 4 times in its history, took the silver medal another 4 times, and also ended up third 4 times. No wonder, football is the most popular sport in the country, as well as the most preferred type of sport to bet on both in bookshops and online.

 

Other popular sports in the country that players love to wager on are horseracing, tennis, ice hockey, handball, and basketball.

 

Inbet Games presents a great range of sports betting products for players to choose from: our Sportsbook comprises 50 sports types with 30 000 live events and 50 000 pre-match events to bet on. Our fantastic sports-themed online games such as Virtual Football, Penalty Kick,  Match Point, Velodrome, Bet on Horses and others feature fantastic graphics and animation, and will undoubtedly bring the most exciting sports betting experience to German punters.

 

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Whether or not the German online gambling regulation will be overhauled in line with the generally accepted EU standards remains to be seen, but meanwhile many online operators working in German market offer their players a great deal of options to wager on, and this is not likely to stop.

 

 

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