The German gambling market finds itself at a crossroads. Since the Interstate Treaty on Gambling 2021 came into force, the legal sports betting market has experienced declining tax revenues and stakes, bucking international trends. Looking into 2026, will it turn this around or continue to flounder?

The evaluation reckoning

An interim report to determine whether regulatory measures are doing their job was submitted in June 2025, with a summary report due by 31 December 2026. Early findings are discouraging, with the number of illegal German-language sports betting websites surging from 281 in 2023 to 382 in 2024. That’s compared to 34 legal websites. The GGL (the German regulator) estimates unauthorised offerings comprise around 25% of the overall online market, though the German Sports Betting Association (DSWV) puts the actual black-market share significantly higher at 30-40% for sports. 

The situation for virtual slots is even worse. Recent analyses by H2 Gambling Capital assume a black-market share here of up to 80%. Germany’s restrictive approach is failing the channelling test. 

IP blocking: A digital arms race 

A new legal basis for IP blocking needs to be established soon. The current regulation on IP blocking has met various legal obstacles that restrict its application. An amended Section 9 of the Interstate Treaty on Gambling 2021 now references the Digital Services Act, directly applicable across EU Member States since 17 February 2024. 

However, these measures alone are insufficient, as blocks can be quickly circumvented. It’s a digital arms race the regulators are struggling to win. As I always say, the best – and probably only – efficient tool to combat the black market is the sufficient attractiveness of licensed offerings. 

Section 22c: Regulatory nonsense 

Section 22c of the Interstate Treaty on Gambling 2021 regulates the licensing of online casinos, and it is important to understand that this doesn’t include slot machine games, which are called virtual slots in Germany. So, licences for games like roulette and blackjack can be offered by individual Federal States either by a state monopoly or through a private operator. So far, only two of the 16 Federal States have considered licensing private operators: North Rhine-Westphalia and Schleswig-Holstein. While Schleswig-Holstein has already issued such licences, North Rhine-Westphalia is still working on the tender process. The other Federal States have so far either not made use of this option or decided against it entirely. 

Bavaria has gone down the state-owned route but, otherwise, anyone wanting to play online roulette in Germany inevitably resorts to the black market in at least 14 Federal States. Player protection? Below zero! This represents disastrous legislative failure that is also likely to be contrary to both European and constitutional law. A state monopoly can only be justified if it is clearly established that only the state is suitable for achieving the objectives, or if there are other significant reasons for excluding private companies. However, if – as in Section 22c of the Interstate Treaty on Gambling 2021 – both state-owned and private companies are simultaneously considered suitable, there is no justification for a state monopoly.

The demand is clear: this section must be deleted. Licences for games like online blackjack and roulette should be merged with the virtual slot machine licence, under the more internationally recognised definition of online casino. 

Taxation: The competition killer 

The current taxation of effectively 5.03% on stakes has carious effects on channelisation. Following neighbouring countries’ example and implementing gross gaming revenue taxation would be the only right way. Current taxation deprives licensed operators of any competitiveness against illegal competition. 

Italy, over 10 years ago, faced a comparable situation and drew the consequences, eventually moving away from stake taxation towards gross gaming revenue and allowing more demand-oriented gambling offerings. Italy’s channelisation success proved them right. An initiative by the Federal states in the Bundesrat is needed to achieve change here. 

Looking ahead 

As 2026 dawns, the industry watches nervously. Will Germany learn from Italy’s success and embrace pragmatic reform? 

Or will regulatory rigidity continue driving players towards illegal operators? The new year will provide answers – and they’ll determine the German market’s trajectory for the next decade.