Gambling Regulation in Germany: Structural Challenges and a High Black Market Share
By Dr Fabian Masurat, Taylor Wessing, Lawyers, Hamburg, Germany
German gambling regulation has faced criticism for years.
Whilst the 2021 State Treaty on Gambling (ISTG 2021) aimed to establish a legal, safe, and attractive market, recent figures from the German Regulator (GGL) have indicated that this goal has, so far, only been partially achieved, particularly with respect to the black market.
Not surprisingly, the German Sports Betting Association (DSWV) has recently renewed its call for urgent reforms to the country’s gambling laws.
High Share of the Black Market
According to the most recent assessments of the German Regulator, a significant portion of gambling activity in Germany continues to take place with unlicensed operators. Officially, the authority estimates that this share is around 25%.
Other studies suggest that the black market may account for more than 50% of the total.
For example, the number of illegal German-language sports betting websites in 2023 increased from 281 to 382, whilst illegal online casino and virtual slot sites rose from 732 to 838.
Product Restrictions as a Competitive Disadvantage
The reasons for this are multifaceted.
On the one hand, efforts to combat the black market remain insufficient.
On the other hand, licensed operators face constraints, such as betting limits, slow game approvals, limited product offerings, and restrictive advertising rules.
Illegal operators exploit these limitations, offering betting options without limits or broader product ranges, giving them a competitive edge over licensed providers.
Structural Challenges
Even several years after the ISTG 2021 came into force, a clear structural problem persists.
Licensed operators must comply with highly bureaucratic requirements, yet these rules have so far failed to create an attractive legal market.
At the same time, illegal activities remain difficult to curb effectively.
As a result, the current legal regulatory framework has yet to fully achieve its objectives of player protection, market channeling, and market attractiveness.
The Need for Reform
From both a legal and practical perspective, sustainable improvement requires, amongst other things:
- More attractive conditions for licensed operators, balancing appealing offers with player protection.
- Stronger measures to combat the black market, particularly through technical restrictions that prevent access to illegal platforms.
Only by making the legal market more attractive can it fulfill its intended steering function and sustainably reduce the influence of the black market.
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