Regulated Market
Gaming law in Germany differs between states, though relevant legislation has been passed by way of an Interstate Treaty bringing some uniformity. In Germany, the relevant state treaties have been lined up since 2008, while the last one in its current form entered into force on 1 July 2021. Since then, the range of permissible games of chance has been expanded from sports betting and exceptions for lotteries and horse-race betting, which are of minor relevance to private operators, to virtual slot machine games and online poker.

Online casino games form an exemption, as these are subject to a numerical limitation, where online casino licences are only issued to a limited extent per state. The number varies between 0 and 5, depending on the number of casinos in the respective province (sec. 22c (1) No. 2 Interstate Treaty on Gambling 2021 – IST 2021). Before the new state treaty came into force, the heads of government of the federal states had agreed on a so-called transitional regime in order to be able to draw important conclusions from market and consumer behaviour and pave the way to legality for active online gambling operators.

Since November 2020, this transitional regime has provided that illegal services could already be made available on the market under the protective umbrella of a sort of toleration, in which regulatory enforcement was waived provided certain rules were adhered to by the operator. Large parts of the industry have made use of this. Under the new regime of the Interstate Treaty on Gambling 2021, the majority of them have filed applications for the granting of the corresponding licences and quite a few operators have been issued one. With the complete transfer of responsibility to the new Joint Gambling Supervisory Authority on 1 January 2023 the transitional regime ended.

Market Size
German players show interest in online slots, casino games and online betting. The current market size is estimated at EUR 10.1bn (on basis of GGR) and has thus lost about 6% compared to the years of the pandemic. The share of sports betting in the German gambling market is just under 15%, making it – also with regard to the amount of the bets – one of the most important sectors in the German gambling market. With regard to slot games, the share of stationary slot games is still larger than that of virtual slots (about 80% to 20%, which, incidentally, also more or less corresponds to the relation between online and land-based gambling), but the share of virtual slot games has recently increased by 3%, which is probably due to the progressing legalisation including advertising. The GGL assumes that the black market in Germany only accounts for about 7%. Whether these figures are correct is difficult to verify. However, by centralising enforcement to the GGL, it is probably true that the black market has been further pushed back.

Competitive Landscape
The Interstate Treaty 2021 requires the competent authority to publish on the internet an official list of operators and brokers of games of chance who hold a licence or concession under the Interstate Treaty 2021.The so-called whitelist comprises of all licence holders, including relevant information on each licence holder, in all sales forms (i.e. online and terrestrial) as well as including all permissible games of chance.

Localisation
Gambling in Germany takes place both online and terrestrially. In the online sector, payment is made with non-anonymous means of payment; in the terrestrial sector, payment in cash is also possible. In principle, gambling is allowed, but is subject to varying degrees of restrictions to protect young people and addicts. The degree of restrictions depends on the degree of dangerousness to minors and addicts/players. As a result, slot machine games and poker games, both terrestrial and online, tend to be restricted more than sports betting and lotteries.

Top Key Attractions and Challenges
Attractions

• Still expanding regulated market in country with a wealthy population.
• Evolving regulation: Relaxing regulations as time goes on (e.g. deviation from the EUR 1 stake per spin for virtual slot games as well as deviation of the monthly deposit limit for virtual slot games and online poker up to an amount of € 30,000 since beginning of 2023 from 2023).
• In general a supportive regulatory authority.
• Advertising (with limitations) is possible for licenced operators.

Challenges

• In the online sector (sports betting, virtual slot machines, online poker): difficult market entry due to high security deposit required (at least five million EUR) and burdensome compliance with regulations for licensing procedures.
• In the case of online casino games, the number of licences per federal state is also very limited.
• Partially high technical requirements, especially for the connection to the central files (cross-provider deposit and activity file).