News that online casinos can continue to accept players from Germany ahead of regulations coming into force next year has seen operators breathe a sigh of relief. However, that relief could have been short lived – in order to remain active in the market, they had to ensure compliance with the new rules without delay.
This roundtable looks at some of the challenges operators will face over the coming months, and how by working closely with all stakeholders they can be overcome.
CasinoBeats speaks to Rebecca Forrest, business development executive at Amber Gaming, Leon Thomas, commercial director at Microgaming, Matej Novota, head of data and complaints at CasinoGuru, Stefan Esch Schulte, a managing director for Betsson Group, and Tom Galanis, managing director of First Look Games.
CB: The progress regarding regulated online gambling in Germany has been well documented in recent weeks, to begin with what is the potential for the market? What position within the wider European ecosystem can it realistically expect to represent?
RF: Germany has the potential to play a significant role within the European market and holds a position as one of the strongest and well-established economies in the world. Historically, it has been a complex market for online gambling.
As a result, this has often made it a deterrent to a number of operators who did not perhaps have the knowledge, experience or resource to keep abreast of changes, developments and practicalities of operating in such markets.
“In time as players and operators adapt to the new regime, the market should see growth”
Introducing a clear approach to regulation makes entrance into the German online gambling market likely more attractive to those operators who will be keen to adhere and adopt such regulations so that they are able to benefit from access to such a large market.
For others, for example those who are new entrants into the gambling space, or smaller less resourced operators, it will require consideration as to whether the costs of additional regulatory scrutiny and operating in multiple jurisdictions are worthwhile.
LT: Naturally, with measures such as the €1 max bet and €1,000 monthly deposit limit being imposed, the current dynamics will change. But what the new regime will do is enable players to access content they have not had before, as some providers have left the market, and it will enable a retail crossover that hasn’t existed for a few years.
For Microgaming, there is potential to aggregate German retail slots via our platform, as well as to deliver our own targeted content. There’s always the potential to grow with our customers, and by taking a lead from the outset, we can continue to support the aspirations of those who still see Germany as a key market.
Once licences start being issued under the proposed new regulatory framework post-July 2021, there may also be opportunities for operators to market the games responsibly using traditional, above the line advertising. In time as players and operators adapt to the new regime, the market should see growth.
MN: Germany is a big nation with millions of people with a relatively high disposable income, so the German gambling market is definitely interesting for operators. At the same time, however, the new regulations seem to pose quite complex restrictions and technological challenges that operators will have to comply with to be able to participate. This makes the transition much more complicated and perhaps has a potential to slow things down for all involved parties.
“The German gambling market today is relatively crowded”
Germany is a big and important country, so it could theoretically become a strong player in terms of gambling regulation and join countries like UK or Malta, but the regulations must make sense and be reasonable for both players and operators.
SES: Germany has a population of 83 million which is the largest in the European Union. Breaking this further down, according to some studies, approximately 20 per cent of Germans participate in gambling and the estimated revenues for 2019 were €16.3bn.
Indeed, the gaming industry in Germany reports a year on year growth of five per cent, while the online segment alone grows by double digits. Extremely promising numbers, don’t you think?
With this fact at hand, one could argue that Germany has the right mix of features to become one of the most significant markets for operators, while for several others, Germany is already there.
The German gambling market today is relatively crowded, however at the same time not very mature when compared to traditional “gaming markets” such as the UK. It therefore still offers a lot of room for great opportunities to both grow and develop.
In the light of the current regulated European gaming market, it is difficult to predict what tomorrow could realistically look like. Over the years, we have seen several other European countries regulate and we all know that this has been an ongoing process. In Germany’s case, things are still at the very beginning!
“The current regulatory framework is not ideal”
TG: The German market has excited many for a long time given its size and its progressively strong ARPU, but the constraints that the regulation looks set to bring has tempered that excitement, particularly for those of us operating in acquisition marketing. In all honesty, if the measures that have been implemented hold true in the long term, we will be looking at Sweden’s Big Brother.
Given the ease and ability for operators to have operated so successfully in Germany pre-regulation, it’s difficult to imagine a black market not gaining a significant foothold through a far more compelling gambling proposition for seasoned players.
The current regulatory framework is not ideal, and I believe it needs to become more pragmatic to establish itself in the European gambling market. Having said that, I believe that once it is regulated, the German gaming market will be seen as a trusted one which will be the backbone to a solid growth as customers will have confidence in licenced operators.
CB: Despite the new rules not officially entering into force until mid-2021, stakeholders were permitted to engage with the market provided they adopt the new regulatory measures from October 15. How difficult were the new regulatory measures to implement before that date?
LT: It has certainly been a massive collaborative effort touching all areas of our business, from our compliance and markets teams to account management and publishing. Undoubtedly, the biggest challenge so far has been interpreting what is required from a regulatory perspective, and because interpretations tend to vary, understanding how different operators are approaching the new measures.
Creating the necessary solutions for our customers in Germany has been a huge undertaking over the past few months, but we’ve taken it in our stride at Microgaming and remain confident about some of the more challenging technical requirements on the horizon.
MN: Well, at Casino Guru, we only received specific requests from operators a few days before the deadline, most likely when they managed to get their websites in line with regulations and started taking a look at affiliates as well.
Given our robust system and having basically all online casino listed on our website, we really couldn’t implement the requested changes in a matter of just a few days. The only think we were able to offer to these operators is not displaying them for German visitors altogether, until we figure out what needs to be done to comply with their requests and implement the required changes.
SES: Since we have an interest in seeing the market regulate, we were following all the discussions very closely from the beginning, so this did not come as a surprise. However, the implementation was still unknown until official requirements were confirmed which was just two weeks ago!
Speaking with my peers within other operators in the past weeks, many said that they were running on full force to deliver on what is realistically doable by the deadline. In my opinion, this process, as it stands today, is highly questionable. I appreciate the fact that 16 states are involved in the process, and all hold their own different agenda.
“I honestly have my doubts whether any other industry would have accepted such short timelines”
I honestly have my doubts whether any other industry would have accepted such short timelines.
TG: When changes are required to be made post-haste to meet short deadlines, it is incredibly difficult to facilitate from an affiliate manager’s and an affiliate’s perspective.
From an affiliate’s perspective, there has been a fair amount of confusion as to whether brands are remaining active in the market, whether they’re simply switching off new acquisition or pulling out altogether. Add this to the fairly draconian copy changes that have been required and you’ll have seen many a late shift put in last week.
RF: Licensed business who are operating in the .com markets are all too aware that the international regulatory environment is complex; each market is at a different stage and has a different approach to regulating the online gambling market. As a result, there are frequent changes, updates and nuances between jurisdictions.
The difficulty some operators have faced is where they are not kept up to date with forthcoming changes. We have experienced a refreshing response from businesses who have identified and are aware of the importance of horizon scanning to ensure proactive responses to forthcoming changes.
As such, we have supported them via access to jurisdictional insights whilst working closely with local experts to help support them with the forthcoming changes in their key markets. As a result, the majority of operators have adapted to the changes and are keen to embrace regulations in good time to support ongoing business aspirations.