Is the black market’s share of online gambling in Germany really only around a quarter? In contrast to other estimates, which put this figure much higher, new numbers – at the lower end of the scale, so to speak – are now being put forward for discussion. With its recently published study, commissioned by the Joint Gambling Authority of the German federal states (GGL), researchers at the Blockchain Research Lab have entered the legal and policy debate surrounding the German online gambling market.
According to its findings, around 77% of the market volume is accounted for by licensed operators. The black market’s share is therefore estimated at only around 23%. This sounds like good news for advocates of the regulatory framework of the current 2021 Interstate Treaty on Gaming (IST 2021). Earlier surveys of the black market had assumed a significant share, ranging from 30% for sports betting and as high as around 80% for online slots.
So, what is different about the Blockchain Research Lab study? To begin with, let’s examine the methodology, scope and validity of this survey. The study is based on an online survey of 2,000 people conducted in November 2024 via a German panel provider, all of whom had used at least one high-risk form of online gambling in the previous 12 months. For example, sports betting, online slots, online casino games or online poker. The classification of the operators mentioned was based on the GGL whitelist (as of April 2024) and a supplementary list of unlicensed platforms.
Open to criticism
From a total of 4,027 operator mentions, the authors determined the monetary shares of regulated and unregulated platforms. This self-reporting approach is methodologically interesting but also open to criticism. Notably, the study itself points out that retrospective recollections of average monthly figures from the previous year are prone to misjudgements, rounding errors and cognitive fatigue. Added to this are potential classification errors with similar sounding operator names or changing domains, as well as statistical instability in cases involving small sample sizes of individual unregulated platforms.
A key methodological limitation, which the authors themselves openly acknowledge, deserves particular attention, too. They expressly point out their study is not a representative panel survey. No weighting was applied based on demographics or gambling prevalence in the population, and the results cannot be generalised to the population as a whole. Panel surveys structurally tend to over-represent more experienced and active players, reflecting the operator preferences of this segment, but not necessarily those of the market as a whole. This limitation is crucial for regulatory and legal policy conclusions.
Anyone who has followed the debate in recent years will be rubbing their eyes in disbelief. Other estimates in Germany arrive at far higher share for the black market. For instance, the frequently cited 2023 analysis by Taiki Murai and Professor Gunther Schnabl reported a channelling rate of only approximately 50.7% for March 2023. According to this, the proportion of licensed and unlicensed operators would be almost equal in terms of traffic.
Channel hopping
Estimates for the sports betting channelisation rate are, in some cases, around 80%, while for online slots the black market’s share being over 30% are being discussed. Recent analysis by H2 Gambling Capital arrive at similarly high figures. The authors of the new study explain these discrepancies by the fact that clickstream data also captures very brief or unintentional visits, whereas self-reported data focuses on conscious and actually used operator preferences. In other words, fundamentally different phenomena are being measured.
This explanation is plausible, but it does not resolve the discrepancy. Clickstream and survey data are complementary, not competing, tools. The authors themselves therefore recommend triangulation – that is, the combination of multiple methods, data sources, theories or research perspectives – to shed more a comprehensive light on a research topic. This would, they say, increase the validity of the results, emphasising that no single methodology can, in isolation, provide a complete picture of the black market. Market participants should not regard the 23% figure as a confirmed lower limit, but rather as a methodologically specific data point.
Another limitation has particularly significant implications for the practical application of the law and policymaking: the black market’s share of approximately 23% identified in the study is an aggregate total across all high-risk forms of online gambling covered. The study does not provide a reliable sectoral breakdown, such as separate black market rates for sports betting, online slots, online poker or live casino products.
It is therefore not possible to determine from this study to what extent the shares of unlicensed operators in the German online gambling market vary. Precisely because the regulatory debate – for instance on betting limits, advertising restrictions – is conducted on a very sector-specific basis.
A welcome addition
Nevertheless, the new study is a welcome contribution to the methodological diversity of black market research and, for the first time, provides survey-based expenditure data. Based on this data, the authors estimate a non-licensed market volume of around €547m for 2024. This figure was calculated on gross gaming revenue in the licensed market for 2023, reported by the GGL, amounting to approximately €1.56bn. According to the study, this corresponds to a share of 77.03% for licensed companies.
However, market players, public authorities and legal practitioners should bear in mind the study’s explicitly limited representativeness and the lack of segmentation. This study is noteworthy, at least insofar as it is based on a survey. It may not be representative of the German market and, as such, does not seek to compete with other surveys.
However, it provides addiction researchers, who study gamblers’ behaviour empirically, with insightful, first-hand behavioural data. It must be understood and appreciated as such. The assessment of the black market remains – despite and alongside this study – a task that must be continued by other means. However, this does not prevent GGL from regarding the findings of its study as convincing.
On the authority’s website, the chairman is quoted as saying: “The scientifically calculated channelling rate confirms our previous assumptions regarding the scale of the black market. The findings support the approach of fact-based regulation under the 2021 Interstate Treaty on Gaming.” If that doesn’t lead to false conclusions…
Dr Joerg Hofmann is head of the Betting and Gaming Group of Melchers law firm in Germany and a past president of the International Masters of Gaming Law (IMGL). He has been consistently ranked as a “leading individual” in gaming and gambling by Chambers Global and listed among “Germany’s best lawyers” in the gaming category by Handelsblatt and BestLawyers. Hoffman also frequently publishes articles in international professional journals and regularly speaks on leading gaming law conferences. He also lectures in gambling law at the University of Heidelberg and at Bucerius Law School in Hamburg.
The post Opinion: Is Germany’s regulator underestimating the scale of the black market? first appeared on EGR Intel.
Lawyer Joerg Hofmann questions whether the GGL’s recently published study claiming the black market accounts for almost 23% of the German market is a realistic figure
The post Opinion: Is Germany’s regulator underestimating the scale of the black market? first appeared on EGR Intel.