Unlicensed, online gambling is sapping a major European industry. By Eugene Gerden
Germany’s government is considering ways to reduce of the share held by the illegal sector in the domestic gambling industry. Unlawful gambling has significantly increased in recent years, following liberalization of online sector. According to the German Gambling Atlas of 2023,
30 percent of the people in Germany participate in gambling. This means that the sector has a strategic importance for the country’s national economics. In recent years, however, the state’s tax revenues from the gambling sector have significantly declined. This has sparked serious concerns from the German federal government. The biggest worries are related to online casinos.
Taxes in Decline
Online gambling in Germany has been legal since 2021, through the adoption of the Interstate Treaty on Gambling (GlüStV). That means that gambling providers, operating within the territory of Germany,
have been licensed by the Joint Gambling Authority of the German states.
Still, despite such legalization, tax revenues from online casinos have declined over the past two years. According to data of the German Federal Statistical Office, the decline was about 50 percent in recent years. The figures for sports betting were less severe, with a decline of collected taxes of only 5.2 percent and 7.5 percent in the case of poker. One of the reasons for these declivities is that up to half of gambling activities in Germany — primarily in the online segment — are managed by unlicensed providers, most of whom are registered abroad. At present, the annual revenue of online casinos in
Germany is in the range of €3.3 billion to €3.5 billion … a significant part of which is not a subject of any taxes.
An earlier investigation conducted by the Südwestrundfunk, a regional public broadcasting corporation serving the southwest of Germany, the federal budget loses hundreds of millions of euros every year at illegal casinos (mainly those operating online). This is mainly due to numerous loopholes
in the existing legislation, regulating the domestic gambling sector.
Lotteries to the Rescue
As revenues from online gambling activities are declining, the hopes of the German federal government and the authorities of major states are on the lottery segment. At present, the situation in this segment is much better. In terms of structure of the market, traditional lotteries dominate in Germany, with a significant part of the local population participating regularly. In 2024, state-run gambling companies belonging to the Lotto-Toto bloc generated €8.6 billion in revenue.
The highest revenue comes from the classic “Lotto 6 aus 49,” which is played on Saturdays and Wednesdays in Germany. The official results for 2025 have not yet been announced. However, most local analysts expect revenue to exceed the €9 billion mark.
Don’t Forget Casinos
In recent years there has been a significant growth in the revenues of land-based casinos in Germany, which are permitted to offer the full range of casino games (compared to online casinos, which are limited to slot machines and online poker). There are a total of 63 casinos in Germany, 53
of which offer table games. The largest casino is located in Baden-Baden. Regulations vary by state; the minimum age for entry is 18, except in Baden-Württemberg and Bavaria, where the minimum age is 21.
Despite increasing competition from online casinos, land-based casinos experienced significant growth in recent years. At present the annual number of players, who visits these establishments exceeds seven million people, with annual growth rates of up to 20 percent.
Many casinos used the forced closures during the Covid-19 pandemic to optimize their facilities and expand their gaming offerings. After the lockdown ended, this attracted not only existing customers but also interested new customers from across society.
At the same time the number of establishments with slot machines, including restaurants and clubs has significantly declined in Germany in recent years. This is mainly due to tightening of state restrictions in this field and the rise of rents, which led to the outflow of part of gamblers to land-based casinos.
It is planned that most of the measures to combat the illegal segment of the market will be included in the Interstate Treaty on Gambling. This is one of the most important legal acts, as it will regulates gambling activities in Germany. A new version should be adopted by 2028.
