Germany reports massive sports betting revenue losses amid COVID-19 pandemic
It comes as no surprise to anyone as Germany’s sports betting revenues have reportedly fallen by a colossal 20% last year. The cause behind this drop is none other than the closure of betting shops and cancellation of sports events because of the COVID-19 pandemic.
The Federal Ministry of Finance published the country’s sports betting tax figures, in which was revealed that the total sales came up to about €7.8 billion, which is 16% lower than the industry’s record high in 2019 of €9.3 billion. Not taking January and February into account, since the COVID-19 pandemic was not really as widespread back then, then the total loss slumps to 20%.
The industry attained a really low point in March which continued on until May of last year. Despite that, it also saw a slight increase in betting activity starting from June which lasted the whole summer. The revenue then became stable during September and has stayed that way ever since then. When it comes to taxes, the national contribution made by sports betting operators fell from €464 million to €389 million.
The German Sports Betting Association (DSWV) has stated that the main reason the country recorded such losses was largely due to the COVID-19 pandemic and the restrictions it brought along, such as the closure of betting shops and cancellation of major sports events such as the Bundesliga, which ended in an awful customer drought.
Mathias Dahms, President of the DSWV, has had to stand up for the industry against claims that it has been making profit off of the pandemic, and has asked for the government to interfere:
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.
Despite the pandemic, the virus is not the only reason that the German betting industry is suffering, since illegal black market betting sites have been spreading throughout the country and have amassed a large number of customers. The transitional regulation for virtual slot games came into effect back in October, and because of that, there has been a sharp increase in bettors transferring to illegal websites that are registered in the Caribbean and Asia, which ended up in an average collapse of about 54%.
Moreover, betting operators have been having a hard time acquiring nationwide licences, which were approved by the federal government in October after many stressful years of political and legal debate. Even though 21 have already been awarded, an additional 40 have not yet been approved.
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. We therefore urgently appeal to the state governments to put an end to this untenable situation. 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.