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Germany's rising black market activity is a warning to the UK

Germany's rising black market activity is a warning to the UK
Paul Clare
by Paul Clare Last updated:

With the UK gambling industry’s legislative overhaul underway, and stake limits on slots high on the agenda, it's a helpful barometer to see how similar restrictions in other countries have influenced behaviour. What might we expect if similar limits were to be introduced in the UK?

Unfortunately, if Germany’s 2021 Interstate Treaty on Gambling (ISTG) is anything to go by, the introduction of a slot stake limit may push significant numbers of players towards the black market.

The German legislation

Germany has a large gambling industry experiencing similar issues to the UK, including problem gambling. The 2021 ISTG legislation limits slot wagers to a maximum of €1 per spin, and a maximum of 1 spin per 5 seconds.

Other restrictions laid out in the ISTG include a €1,000 monthly deposit limit, as well as an outright ban on autoplay functions, progressive jackpot slots, live casino games and live sports betting. 

Additional legislative changes around advertising, ID verification, and operator taxation were also included in the reform.

Since January 2023, deviations to the new slot stake limit can be approved by the German gambling authority, but it reviews applications with strict conditions in mind and only rarely authorises exceptions.

Current trends in Germany

Since the new regulations came into play two years ago huge numbers of players in Germany have turned to illegal, unregulated online casinos. Prior to the introduction of the ISTG, the German gross revenue per player averaged €141. 

Estimates in August 2023, suggest this has halved to €73. Additionally, average deposits have dropped by 80%, and, as a spokesperson from one German licence-holder wryly noted, “they haven’t stopped gambling and found another hobby.”

This indicates a significant rise in illegal gambling. Prior to 2021, studies anticipated the new limitations could drive as many as 40% of players to gambling offshore. In reality, this number appears to be more like 80%, particularly as far as slots are concerned.

How black market casinos operate

With no regulations, it’s easy to see why offshore or black market casinos might appeal to players unhappy at the imposition of a stake limit.

Other practices – currently banned in the UK – which are used in these casinos include sound effects giving the impression of a win when the amount paid out is less than the actual stake, plus autoplay and rapid play functions, which enable players to wager through their bankroll much faster. 

These unlicensed casinos are already popular in Britain. One report, commissioned by the Betting and Gaming Council, found the number of British players using unlicensed sites had more than doubled in just two years, with illegal gambling now a multi-billion-pound industry in its own right.

And there are serious economic implications to this. Unregulated casinos are unlikely to pay taxes, and therefore won't contribute to the British economy in the way regulated gambling sites do. Policy makers need to consider the potential losses to UK government coffers if large numbers of players turned to illegitimate casinos. The effects would likely be felt nationwide.

What to expect in the UK

While we can probably expect some players to take to the black market, the trend in the UK might not follow Germany’s lead in quite the same way. The €1 limit is very low, but the current UK reforms under consideration aren't anything quite as strict – even for more at-risk age groups. 

By comparison, limits currently being discussed in the UK include a maximum of £2 per spin for those aged between 18 and 24 and a £15 maximum for those aged 25 and over. Gamcare, though, has voiced support for an all ages limit of £2 per spin.

The post-regulation patterns seen in German demonstrate clearly that, if players can’t get what they’re looking for legally, then many will likely take to unlicensed online casinos. This is despite the risk of being scammed, receiving little or no customer service, and having no comeback if winnings are not paid out.

It seems that introducing a slot stake limit, particularly a harsh one, may not be in the best interest of players after all. Those taking part in the reform consultations should allow their decisions to be informed by trends observed elsewhere and ensure that, in their efforts to protect players, they don’t inadvertently isolate them.

Paul Clare
by Paul Clare Last updated:

Paul spent plenty of time in arcades up and down the UK discovering all of the best fruit machines and watching them grow into the incredible online slots we see today. He still loves the basic format but also has a soft spot for games with big bonus rounds that progress as you play. Immortal Romance is one of his favourite slots of all time.