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THE GAMALYZE CHALLENGE

Study Finds Half of German Gambling Takes Place on Black Market

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Recent research conducted by the University of Leipzig found that almost half of all online gambling in Germany is conducted via unlicensed operators.

The German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV) commissioned the study and it was led by economist Gunther Schnabl from the University of Leipzig.

The findings point to a shortfall in the State Treaty on Gambling's effectiveness. The treaty was introduced in July 2021 with the aim of ensuring all gambling activity took place on licensed sites. Consequently, the DOCV and DSWV have urged the German gambling regulator, the GGL, to enhance the appeal of regulated casinos.

Related: Analyzing the Rising Issue of Problem Gambling in Germany

Shocking Popularity of Unregulated Sites

For the study to consider a site illegal, it must be accessible from a German IP address without a VPN, available in German, and accept German addresses during registration.

As of March 2023, the regulated online space managed to attract only 50.7% of players. The remaining traffic was split between unlicensed EU providers (28.9%) and offshore providers (19.9%). Shockingly, the black market is estimated to account for three-quarters of online gambling revenue, leading to substantial tax revenue losses.

The Root of the Issue

The report concludes that the black market is popular as it is easy to access, well-advertised online, and does not impose the strict gambling regulations and bonus restrictions that licensed require.

German regulators are focused on enhancing player protection measures. A separate Bundestag-commissioned study highlights the problem gambling issue, with 2.3% of the population aged between 18 and 70 suffering from gambling harm.

A Campaign for Change

Following the study, the DOCV and DSWV are advocating for immediate action. They suggest a review of the regulatory framework by the GGL and greater cooperation between various stakeholders. They also propose more flexible regulations and an improved taxation regime to make the licensed environment more appealing to players.

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