German sports betting revenues fell sharply by 20% in 2020, largely attributed to cancelled sporting events and closures of betting shops due to the COVID-19 outbreak.
According to sports betting tax figures published by the Federal Ministry of Finance, total sales amounted to €7.8 billion, 16% lower than the industry record high of €9.3 billion in 2019.
If the months of January and February are not accounted for – as the COVID-19 pandemic was less far reaching and restrictions less severe – then the total loss slumps to 20%.
The industry reached its lowest point from March to May 2020, but recorded a noticeable increase in betting activity from June onwards as sports fixtures resumed in the summer. Revenue stabilised by September and has remained consistent since, but is still nowhere near the peak of 2019.
With regards to taxes, the national contribution made by sports betting operators fell from €464 million to €389 million.
The German Sports Betting Association (DSWW) has pointed to pandemic restrictions as the primary reason behind the losses, in particular the closure of retail betting shops and postponement of popular sporting fixtures such as the Bundesliga, resulting in a severe customer drought.
Amid the crisis, Mathias Dahms, President of the DSWV, has been forced to defend the industry against claims it has profited from the pandemic, and has called for government intervention..
“The exact opposite is true,” he began. “During the first lockdown in spring 2020, when all European leagues had ceased their gaming operations, the German sports betting market collapsed completely: in April by 90 percent compared to the previous year, in May by 75 percent. Without sport there can be no sports bet, of course.”
“During the current lockdown, all 5,000 to 6,000 betting offices nationwide are closed or have been thrown back to the reduced acceptance point operations. The approximately 25,000 employees are mostly on short-time work and fear for their jobs, the operators for their entrepreneurial existence.
“Many do not hold out much longer, also because the federal government denies betting offices the promised Corona November and December aid. We therefore need a planning perspective from politicians as soon as possible, as to how safe business operations under hygiene requirements will be possible again in the coming months.”
COVID-19 is not the only cause of the German betting industry’s financial woes, however, as illegal black market betting sites have witnessed a noticeable increase in activity.
Since the transitional regulation for virtual slot games came into force in October 2020 there has been an increase in bettors moving to illicit websites mostly registered in Asia and the Caribbean, resulting in an average slump of 54%.
Dahms continued: “It becomes clear that the strict regulations for virtual slot machine games have channelled the market away almost overnight – unfortunately in the wrong direction.
“It is unrealistic to believe that German customers will get used to the excessive restrictions of the State Treaty and come back to licensed providers as long as they can play with competitors who offer them much better conditions.
“We urgently need improvements to the regulations and a functioning enforcement against illegal offers. Otherwise, established providers willing to regulate will withdraw from the German gaming market.”
Betting operators have also struggled to obtain nationwide licences, which were approved by the federal government in October after years of political and legal debate. Although 21 have been awarded, a further 40 have yet to be approved.
Dahms argues that this situation has led to the 21 licenced firms strictly obeying the law, whilst unscrupulous betting sites ‘operate completely unmolested’ and the industry witnesses a ‘massive consumer exodus’ to the unregulated betting market.
“We therefore urgently appeal to the state governments to put an end to this untenable situation,” he concluded.
“All open concession applications must be decided immediately in order to create fair market conditions for all providers. It cannot be that the licensed providers are currently the ones to suffer.”