Fun and games

Germany’s gambling problem

gambling problem in germany
A risky bet. Source: DPA

Talk about double standards. Online gambling is illegal in Germany, and hundreds of slot machine halls have shut down since stricter rules came into force last summer. But the state’s lottery monopoly remains intact, generating €1.2 billion ($1.5 billion) in taxes and €1.6 billion for charities each year. The state also earns hefty revenues from big casinos, the classy ones that offer roulette and poker, and which are still legal.

Around the world, gambling is shifting online, from dark-windowed joints to PCs, tablets and smartphones where sports bets and virtual poker tables are just a click away. Global gambling revenues have risen to around €40 billion from €15 billion back in 2006. Many countries have recognized the change and adapted to it. Online enterprises now make up about a third of the gambling markets in Britain and Denmark. They are licensed and taxed and legal.

In Germany, by contrast, the market is bound in red tape and regional inconsistencies, not just in the rules governing gambling but in how strictly those rules are enforced. And while online gambling is illegal, that’s not stopping players from signing onto illegal sites based in Malta, Gibraltar or the Caribbean, or from taking the semi-legal route — using sports betting sites with EU licenses that German authorities tolerate.

The domestic market is being destroyed by this regulatory limbo, said Christopher Röhricht, head of marketing at Löwen Entertainment, which makes slot machines and runs 450 gambling halls. “The players don’t care. They just go illegal,” he said.

Germany’s regulated, legal gambling market generates some €35 billion in revenue per year, the Handelsblatt Research Institute has calculated. That’s more than twice as much as the pharmaceutical industry’s domestic sales. It pays more than €5 billion in taxes and employs close to 200,000 people. The grey market of German gamblers using sites licensed by other EU nations pulls in €2.3 billion annually. The black market is estimated to be worth €1.5 billion, and it’s growing.

Lower Saxony decided on an ironic method of deciding which gaming halls must close and which can stay open: a lottery.

The industry was thrown into a creeping chaos by a new set of rules aimed at combating gambling addiction. Agreed to by the country’s 16 states in 2012, they came into force last year and include requiring a minimum distance between gaming halls and schools.

The law is unfair, said Beate Mai, 67, an entrepreneur from Leipzig who has had to shut down six of her eight gambling halls. “We pay taxes, we offer standard job contracts, but we’re put on the same level with drugs and prostitution,” she complained.

It’s the same story across the country. Hundreds of gaming halls have been forced to close. The players have either gone online or are visiting unregulated “cafes” and kebab shops furnished with slot machines. In the Berlin district of Neukölln, such establishments are a dime a dozen. You won’t find a fresh cup of coffee, but you will find other ways to spend your money. They’re illegal, but Berlin doesn’t have the manpower to investigate and close them down.

The northern state of Lower Saxony decided on an ironic method of deciding which gaming halls must close and which can stay open: a lottery.

gambling problem in germany
Who's really here for coffee, though? Source: DPA

Slowly, German lawmakers are realizing that something needs to change. Regional governments are calling for new rules covering the entire industry and they plan to discuss changes at a meeting in the summer. The ruling coalition of conservatives and Greens in the state of Hesse said 98 percent of online gambling was illegal and blamed rules “that have ignored people’s gambling behavior.”

Privately, politicians are admitting that the government’s lottery monopoly can only survive if all other forms of gambling are regulated as well. They acknowledge that it won’t be possible to tackle addiction if gamblers can turn to alternative outlets. It’s no surprise that the number of addicts has remained unchanged for years; various studies estimate the rate at between 0.5 and 1.2 percent of Germans.

The gaming industry likes to claim that alcohol and cigarettes are far more addictive than betting. But it’s a fact that gambling can destroy lives. “The industry plays down the threat,” said Gerhard Meyer, who researches addiction at Bremen University. “And slot machines pose the biggest risk out of all the forms of gambling.”

In Hesse, the first state to introduce a personal ban on gambling, some 12,000 players were barred within 19 months, virtually all of them voluntarily. “Only 1 percent of the applications for a ban came from the gambling halls,” Mr. Meyer said.

The director of the German slot machine industry federation, Georg Stecker, has a vision of the “gaming hall of the future” with official certification, biometric controls at the door and trained staff. “We want comprehensive regulation covering the whole range of gambling, expressly including slot machine games,” he said.

It’s not an entirely selfless proposal. The three big slot machine makers — Austria’s Novomatic and Germany’s Bally-Wulff and Gauselmann — have all got online gaming plans and would profit from regulation.

Christian Wermke is an editor for Handelsblatt covering politics, corporate executives and lifestyle. To contact the author: wermke@handelsblatt.com

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