Sports betting sees a 20% decrease at BRD.
The coronavirus pandemic led to a 20% decrease in the German sports betting market in 2020, as per the German Sports Betting Association's (DSWV) report. The primary factors contributing to thisslump were the suspension of high-level sports and shuttered betting shops. However, the sports betting industry is just one of numerous sectors facing difficulties due to the pandemic. Let's take a closer look at these developments.
The gambling industry did not experience any benefits as a result of the pandemic. In fact, it faced significant challenges. In 2019, the DSWV reported record earnings for the German sports betting market, with revenues reaching €9.3 billion. But with the worldwide suspension of sports events and the imposition of lockdowns, the market ground to a halt. According to the latest report, betting turnover plummeted by 90% during the initial lockdown.
The DSWV reported a 20% drop in the German sports betting market for 2020, excluding the pre-crisis months of January and February. This caused overall revenues to fall to €7.8 billion, which is approximately 16% lower than the 2019 record. The report mainly relies on tax data submitted by the Federal Ministry of Finance.
The DSWV attributes the decline to more than just the cancellation of sports; they also point to the national closure of several betting shops during lockdowns as significant factors.
DSWV's President, Mathias Dahms, spoke out against the notion that the gambling industry benefited from the pandemic. On the contrary, he stated that the industry had almost collapsed during the initial lockdown in spring 2020 when all major leagues were forced to stop operations. There were approximately 90% fewer sports bets placed during that time, with turnover down 75% in May. Dahms argued that without sports, there could be no sports betting.
Betting shops in a dire situation
Betting shops are still struggling as a result of these events. Across Germany, 5,000 to 6,000 of these establishments remain closed or are operating under severe limitations. This impacts around 25,000 employees, most of whom are on short-term leave. The DSWV reports that employees and entrepreneurs are all worried about their financial stability. The German government has failed to provide promised pandemic relief funds for November and December. The situation calls for a quick resolution from policymakers.
DSWV's criticism of new gambling regulation
In addition to the turnover figures, DSWV criticized the transitional regulations issued in October, alongside the upcoming Interstate Gambling Treaty (GlüStV), which goes into effect in July and will legalize reputable online casinos in Germany. As a result of these stringent regulations, there's been a noticeable migration of customers to the black market, according to a survey of DSWV members. On average, this exodus represents a 54% decline in revenue.
Dahms believes that licensed online gambling providers cannot possibly compete under the current restrictions. This results in offshore operators offering superior conditions. Therefore, necessary improvements to the regulations are a priority, such as banning table games, live betting, and setting a deposit limit at €1,000 monthly.
Issues with the tax model
The gambling reform began on a positive note, with the awarding of the first licensed betting operators, but it's clear that there's now a significant distortion of competition occurring. As Dahms noted, the committee overseeing regulations has been inactive for months. This creates an untenable condition for licensed operators. It's the responsibility of politicians to maintain level playing fields, ensuring the principal goal of the new law: directing consumers to legal channels.
The DSWV is also concerned about the new tax model. It currently proposes an 8% tax on stakes on slot machines. This tax structure has come under heavy scrutiny. Research conducted by the universities of Bochum and Düsseldorf predicts that providers would have to reduce payout ratios to avoid losses under these regulations. These regulations are unusual in regulated European markets, where gross gaming revenue is typically taxed.
A stalled licensing process
The licensing process experienced some success with the awarding of the 21st betting license. However, it has since stalled, leaving around 40 applications in limbo. Dahms urged politicians to expedite their decision-making process. The stagnation is particularly detrimental to licensed providers who might suffer further as a result.
In conclusion, the DSWV highlights the need for urgent improvements to the regulations and the implementation of a fair tax structure. Such updates will help ensure the survival of the sports betting industry and allow it to recover from the significant impact of the pandemic. According to the DSWV, these measures would guarantee that responsible players are directed to legal channels, ending the need to engage in underground gambling.
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Source: www.onlinecasinosdeutschland.com
