German sports betting sales declined significantly by 20 percent in 2020, mainly due to the COVID-19 outbreak due to postponed sporting events and closures of betting shops.
Total revenues amounted to EUR 7.8 billion, 16 percent below the industry record high of EUR 9.3 billion in 2019, according to sports betting tax estimates released by the Federal Ministry of Finance.
If the months of January and February are not accounted for, as the pandemic of COVID-19 was less far ranging and less extreme constraints, then the overall loss slumps to 20 percent.
From March to May 2020, the industry hit its lowest point, but reported a significant rise in betting activity from June onwards as sports fixtures resumed in the summer. Revenue stabilised by September and has since remained stable, but is still nowhere near the 2019 high.
As far as taxes are concerned, the national contribution of sports betting operators dropped from EUR 464 million to EUR 389 million.
As the key reason for the losses, the German Sports Betting Association (DSWW) pointed to pandemic restrictions, in particular the closure of retail betting shops and the postponement of common sports fixtures such as the Bundesliga, resulting in a serious drought for customers.
In the midst of the crisis, DSWV President Mathias Dahms was forced to defend the industry against allegations that it had gained from the pandemic, and called for government action.
He said: “The exact opposite is true. 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.”
Illicit black market betting sites
However, COVID-19 is not the only source of the financial woes of the German betting industry, as illicit black market betting sites have seen a noticeable rise in activity.
There has been a spike in bettors heading to illegal websites primarily registered in Asia and the Caribbean after the transitional regulation for virtual slot games entered into force in October 2020, resulting in an average slump of 54 percent.
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 national licenses that, after years of political and legal controversy, were approved by the federal government in October. While 21 have been awarded, an additional 40 have yet to be accepted.
Dahms claims that this situation has contributed to the strict obeyance of the law by the 21 licensed companies, while unscrupulous betting sites operate entirely unmolested and the industry experiences a ‘massive consumer exodus’ to the unregulated betting sector.
“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.”