Julia Lensing: “The core objective, channelizing players into the legal market, has not been achieved“

In this exclusive interview with Casino Guru News, Julia Lensing, Managing Director of the Deutscher Online Casinoverband (DOCV), breaks down the persistent challenges facing Germany’s regulated iGaming market. As licensed operators struggle to improve the country’s channelization rate, and the regulator and trade body continue to disagree on how to measure it, one fact is impossible to ignore: the offshore market is gaining ground. Lensing outlines what must change to protect both players and the long-term health of the legal market.

Q: Julia, we have seen the DOCV repeatedly sound an alarm over the role the unregulated gambling market is playing in Germany. Has anyone changed for the better over the past year?

The 2021State Treaty on Gambling was a necessary step towards establishing a regulated online gambling market, but the core objective, channelising players into the legal market, has not been achieved since then. Also, within the last year, the illegal market continued to grow and remains easily accessible. While regulation has formally acknowledged that excessive restrictions are counterproductive, implementation has not followed through. The upcoming 2026 evaluation must therefore focus on whether the Treaty’s measures are truly reducing the black market and adjust them accordingly.

Q: A while back, DOCV published a study indicating that half of gamblers in Germany are turning to illegal options. Do you have any idea if this has improved since the survey was published?

According to a study by Professor Gunther Schnabl and Taiki Murai from the University of Leipzig, more than 50% of total online playing time takes place on illegal sites. The Joint Gambling Supervisory Authority of the Federal States (GGL) estimates that illegal operators account for around 25% of the total online gambling market according to their Annual Report 2024. From the industry’s perspective, this assumption is inaccurate. Given the higher stakes and faster gameplay typically offered on the black market in virtual slot and online casino games, it can be assumed that the share of gross gaming revenue generated illegally is significantly above the identified share and thus underrepresents the problem. H2 Gambling Capital puts Germany’s channelisation rate at just 36%, meaning that 64% of players use illegal sites, which is far below the European average channelization rate of 79%. In a nutshell, the channelization has not improved since the study by Professor Schnabl.

The GGL acknowledges the scale of illegal operators and is actively working to tackle the black market. In a hearing before the Saxony-Anhalt state parliament’s Committee on Home Affairs and Sport, GGL Chair Ronald Benter reported that the authority had initiated 231 prohibition orders and used IP blocking to take 200 websites offline. He further explained that the GGL is making particular use of the Digital Services Act at the EU level in this context and has so far filed around 200 criminal complaints.

In addition, illegal operators maintain their visibility through technical workarounds, notably ad cloaking and concealed landing pages. They register adverts under harmless pretences (for example, as a bicycle shop) to bypass search engines’ advertising rules, so that ordinary users are shown targeted ads for illegal gambling while review systems see only neutral content. After a user clicks on the advert, a "bouncer script" on the linked website analyses data such as IP address, user agent, referrer, fingerprinting, and JavaScript/cookies to decide whether to redirect them to an innocuous page or an unlicensed gambling site, effectively shielding illegal content from search engine checks and regulatory authorities.

Search engines such as Google must be held accountable to prevent these technical workarounds.

Q: In other well-regulated markets, such as the Netherlands, channelization has been very high - around 90-94%, but 50% of the gambling spending is going to the offshore/unregulated market. How would you comment on this?

The key difference lies in the regulatory framework. Germany implemented pretty unique regulations that no other EU country has, such as a stake limit of 1 Euro per spin and a 1000 Euro deposit limit. The Netherlands applies market-oriented, less restrictive rules: there is no stake limit, advertising is proportionate, and taxation is based on gross gaming revenue. These factors make legal offers more attractive and competitive and help to channelise in the legal market. In contrast, Germany’s 1 Euro stake limit, 5.3 % turnover tax, 1000 Euro deposit limi,t and strict advertising ban between 6 a.m. and 9 p.m. make the legal market less attractive, less accessible, and thus, push players toward illegal offers that provide higher payouts, faster gameplay, and broader product variety.

Q: In light of what we have already discussed, do you think the regulated gambling market can ever become a satisfying enough option for people looking to gamble, or essentially be a more attractive option for gamblers?

Yes, but only if the political will exists to reform the current framework. The 2026 evaluation is a crucial opportunity to adjust key elements that make the legal market unappealing. That includes introducing a fully digital licensing portal to offer new games faster within the legal market, allowing players to set their own cross-operator deposit limits, increasing the maximum stake per spin, revising the 5-second rule, and easing over-restrictive advertising and terms for marketing purposes. Combined with a shift to GGR taxation, these reforms would significantly improve competitiveness and help the legal market meet player expectations while maintaining high protection standards.

Q: What are the current regulatory hurdles that DOCV sees as counter-productive and going against the grain of a player-focused market?

In addition to the obstacles just mentioned, the deposit limits of 1000 Euros, the 1 Euro stake per spin, the 5-second rule, the restrictive advertising and terms for marketing and complex application as well as approval procedures, a central flaw is the fragmented licensing system for online casino games (like Roulette, Baccara, and Blackjack). While virtual slots and poker are regulated nationwide, the federal states retain discretion over casino licences, choosing between a state monopoly or a limited concession model. This has created a patchwork that ignores the borderless nature of the internet. To date, virtually no online casino licences have been issued, while the illegal market continues to flourish unchecked. Bavaria operates a single live roulette table with English-speaking croupiers, Schleswig-Holstein’s few licences are not jet usable, and no other federal state has issued any. As a result, nearly all players turn to illegal operators. There is an urgent need for a fundamental revision of the paragraph governing online casino games.

Q: Why are popular verticals such as slots struggling to achieve better channelization? DOCV reported in January this year that the slot channelization was see-sawing anywhere between 20% and 40%.

The turnover-based taxation model of 5.3% in Germany is the main reason. Unlike in other EU Member States, where gross gaming revenue (stakes minus winnings) is taxed, licensed operators in Germany are forced to lower their payout ratios to offset the tax burden of 5.3% and to establish an economically viable business model at all. As a result, on the black market, players can play almost twice as long with the same stake. Legal slots thus return roughly 88% of stakes to players, compared with around 95% on illegal sites, making the legal ones far less attractive. Consequently, a large share of players migrates to unlicensed offers. At the same time, the turnover tax, even after payout reductions, leads to an effective tax burden of 45–60% of gross gaming revenue, since each individual spin and re-staked winnings are taxed, resulting in a disproportionate overall load. Despite overall market growth, tax revenues have stagnated, with 2024 levels roughly equal to 2021. An empirical analysis by the German Institute for Economic Research (DIW Econ) from 18 European countries shows that each one-percent rise in effective taxation reduces channelisation by 0.82 percentage points.

The GGL is aware of the negative impact of the current tax model on channelisation. In the hearing before the Saxony-Anhalt state parliament’s Committee on Home Affairs and Sport, GGL Chair Ronald Benter explained that the existing tax structure reduces the return to player to 88.3 %, whereas in the black market, depending on whether tax is actually paid, payout ratios range from about 93 % to 96 %. As a result, players receive lower winnings and can therefore play for a shorter period, meaning that the overall duration of play is reduced.

Q: DOCV has repeatedly clashed over facts with the GGL. Where does this discrepancy stem from?

The disagreement concerns the size of the black market. Based on its 2024 Annual Report and statements made by its Chair, Ronald Benter, before the Saxony-Anhalt state parliament’s Committee on Home Affairs and Sport, the GGL estimates a black market of around 25%. Analyses such as the study by professor Schnabl and H2’s assessment point to lower channelisation rate and bigger black market. Both sides have acknowledged that the black market is definitely too large and that this issue needs to be addressed. We are very willing to work together with the GGL on solutions that help bring more players into the protected legal market.

Q: If there was one thing DOCV could change right away about how gambling is regulated in Germany, what would it be?

The first and most effective change would be to replace the turnover tax with a GGR-based model. This would bring Germany in line with all other EU jurisdictions, reduce the price gap between legal and illegal play, and make the regulated market more competitive. It would not only safeguard the player through strong player protection in the legal market but also create a more stable revenue base for the states while.

Followed by increasing the maximum stake of 1 Euro per spin, revising the 5-second rule, allowing players to set their own cross-operator deposit limits, and easing over-restrictive advertising and terms for marketing purposes. Combined with a change to a GGR-based system, these reforms would significantly improve competitiveness and help the legal market meet player expectations while maintaining high protection standards.

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