German Trade Body Warns: Slot Channelization at 20%-40%

Ask the German Gambling Regulator or Gemeinsamen Glücksspielbehörde der Länder (GGL) what the country’s channelization rate is, and you will get an idea that things are not ideal but they are moving in the right direction.

Channelization Should Be Easy to Determine – in Germany, It Is Not

Ask the private sector, however, and you get grumbling responses about what many stakeholders see as the regulator being out of touch with reality.

A recent estimate put forward by the Deutscher Online Casinoverband (DOCV), a trade body, suggests that the channelization for online slots in Germany is hovering at anything between 20% and 40%, as originally reported by iGaming Business.

Lawmakers have been upset over smaller amounts. The DOCV revealed the numbers during a networking event hosted at ICE last week. The data, argued Dirk Quermann who is the president of the trade body, was based on the estimates by academics.

Things look similarly bleak in the sports betting sector, where channelization is anything between 60% and 70%, argues Deutscher Sportwettenverband (DSWV)’s boss, Matthias Dahms.

Channelization is the metric that is used to assess how much of a country’s gambling is funnelled through its regulated market, and how much of the gambling that happens – usually online – ends up with overseas bad actors that target and offer their products to local players without seeking a license first.

According to Dahms, GGL’s estimates are simply too low to be realistic, something that the watchdog has denied time and again. For the GGL’s part, the regulator has stipulated that it simply uses a different methodology to arrive at its results, hence the difference.

The GGL for example believes that only 4% of the gambling market is held by illegal operators. This is not to say that DOCV or DSWV are looking to sour their relationship with the regulator, but representatives have argued that in order to move past the issue, stakeholders, lawmakers, and the regulator would have to find common ground.

Over-reaching Regulation Bites into Market Competitiveness

Some of the flagging channelization can be ascribed to over-reaching regulatory frameworks that have tempered the competitiveness of slot games, which have thus been found to not be appealing enough to the players they serve.

Although there have been changes in the regulatory makeup, the legacy of onerous red tape continues to bite into the competitiveness of the regulated market. Whatever the objective truth, an agreement on how to estimate the actual channelization rate in Germany can only help the industry prosper and the illegal black market to diminish.