Gambling Laws Backfire in Germany

When Germany introduced laws to prevent foreign gambling companies operating within their borders in 2008, they didn’t expect the idea to backfire as a new study reveals.

The German State Treaty on Gambling which was approved and made law in 2008 set out to regulate the country’s own licensed gambling companies along with the state run system while outlawing online gambling for unlicensed, foreign operators. The good intentions that went into the law made no provision for the real life situation as online gambling as an industry has seen huge market growth in the last few years.

A new study conducted by Goldmedia, the Berlin-based firm of consultants and analysts entitled “Betting and Gambling Market Germany 2015” which delves into the gambling industry in that country has revealed some unsavoury home truths. It seems the 2008 Treaty is backfiring spectacularly in terms of the way revenue is generated and collected. It has shown that an increasingly larger share of the revenue generated by the Gambling market in Germany is being taken by unregulated foreign based online casinos. The resulting drop in funds is certainly being felt by the government.

The study highlighted certain facts, amongst which were that the unregulated sector of the gambling industry was already taking a 20 percent share of the market and this was predicted to rise to 33 percent by within five years. The gross revenue produced by the gaming market in Germany which includes that created by all providers whether regulated or not is estimated to be €10.3 billion. Of that, gross revenue from Internet gambling in Germany, which has grown steadily by around 30 percent every year, now stands at around €1 billion. Goldmedia estimates that €2.4 billion has been lost by the German government since 2005 because of the lack of proper regulation of the industry.

Also in the Goldmedia report is data showing that a significant percentage of market shares which varies among segments of the industry is being captured by some of the foreign operators. Sports betting is one sector that is costing the German market dearly with a huge 94 percent of all sports betting carried out with foreign operators. German sports books generated only €490 million out of the €3.9 billion this area of the industry generates, which is almost half of the total €7.8 billion generated from all forms of gambling.

A ray of light exists on Germany’s gambling horizon, however. There is an upcoming renewal of the State Treaty on Gambling scheduled for 2011 which provides the opportunity for certain corrections to be made to the law to reverse its current undesirable effects on the revenue generated by this industry.

It seems that while other states are busy tracking down and raiding illegal online gambling operations in Internet cafes and other establishments, New Hampshire have gone in the opposite direction. They have found a way to generate some state revenue from people gambling at home on their computers.

Gambling Laws Backfire in Germany

While New Hampshire has already pushed this legislation through, other states are also investigating the possibility of introducing larger versions of gambling over the Internet in the near future. Lawmakers in New Jersey are considering the regulation of online poker. Both Florida and California have legislators pressing for the regulation and legalisation of certain forms of online gambling.