Tax revenue from online slots down 38%! But more black market players than expected?

The Federal Statistical Office has just published the tax revenue from games of chance for 2023. In a ten-year comparison, there was an overall increase of 51 percent, which is undoubtedly more than respectable. However, explosive details can be found further in the background: Virtual slot machines, online poker and sports betting, for example, were down in tax terms - and significantly so. Slots even saw an incredible 38 percent drop! How can such a drastic slump be explained?

On Tuesday, January 14, the Federal Statistical Office (StBA) published a press release under the heading "Number of the week" with the headline "51.5% more tax revenue from gambling in 2023 than ten years earlier". The summary reveals some very interesting figures.

That all sounds pretty good for the tax authorities and the 2021 State Treaty on Gambling (GlüStV), doesn't it? The financial potential of the market can finally be fully exploited. However, there is actually one sticking point that is mentioned in passing:

• The quite considerable tax amount of €2.48 billion for 2023 is in fact a far from insignificant 3.6% lower than a year earlier. This means a loss of more than 89 million euros. What's more, according to the communication, the figures had previously risen steadily for a long time and only started to fall in 2023.
• The more the StBA goes into detail, the trickier it gets. First, however, something positive again: lottery is still the number one game of chance in Germany. In 2023, a whopping 1.77 billion euros were collected via the popular lotteries. This represents an increase of a good 5.8 percent compared to 2022. BUT: taxes on sports betting, slots and online poker are falling, in some cases massively. The high point - or rather low point - is in the area of virtual slot machines, which are down by an impressive 38.5 percent.

Especially as sports betting, slot machines and casino table games such as poker (land-based or online) are clearly among the top 5 most popular and therefore most used games of chance among Germans, according to data from the latest gambling survey. According to data from Statista, online casino turnover in Germany is also expected to grow from the current figure of around 1.97 billion euros to 2.36 billion euros by 2029. Overall , German online gambling is expected to grow from around 5.55 billion to 6.57 billion euros. A drop in tax of more than 38 percent for slots within one year seems rather strange.

StBA: "Less tax revenue than in the previous year from sports betting, virtual slot machines and online poker"

This headline is hidden in the middle of the Federal Statistical Office's report. However, the fact that it is comparatively low down in the report makes it all the more explosive for the German gaming market. Tax revenues from central segments of digital gambling are declining - in some cases extremely - a development that is likely to raise questions for the industry, the tax authorities and, not least, the regulatory authorities.

The facts in a nutshell

• Sports betting: The decline here is still limited (at least comparatively). Tax revenues fell by 5.2 percent from around 430 million euros in the previous year to 409 million euros in 2023. At first glance, this sounds like a problem - and yet revenue has grown considerably over the years. Compared to 2013, when the then new sports betting tax brought in just 189 million euros, this represents an increase of 116.8 percent. In the long term, this model therefore appears to be a winner.
• Virtual slot machines: But this is where the alarm bells start ringing! With a drop of 38.5 percent compared to the previous year, revenue has plummeted. In 2022, slots still brought in a whopping 430 million euros, in 2023 it was only 264 million euros.
• Online poker: The figures for this niche are also in decline, although the loss of 7.5 percent seems almost modest compared to slot games. Revenue fell from a generally relatively manageable 33 million euros in 2022 to 30 million euros in the following year.

With the introduction of the new GlüStV in July 2021, the goal was clear: to bring order to the digital gambling market, push back illegal offers and fill the state coffers in the process. However, the current figures raise doubts as to whether this strategy is actually working. Such a significant drop in taxes so soon after the start of regulation can certainly be seen as a cause for concern.

Critics have been warning for some time that the German market is tipping into the illegal sector

Industry associations and many critical players have suspected for some time that the restrictions on licensed online gambling offers in Germany in particular are contributing to the migration of numerous users to the black market.

• In this context, we recently reported in December 2024 that industry representatives at the Gaming in Germany conference in Berlin criticized the "standstill" in the German gaming market.
• In the spring of 2024, the German Online Casino Association (DOCV) criticized the effectiveness of the GlüStV, with a strong tax return on slots already being mentioned.
• Shortly before this , the German Sports Betting Association (DSWV) also openly called for a change in the country's gambling regulation policy.

In all three examples, concerns were expressed that the local market could - as the DOCV 2024 put it during a major industry trade fair - "tip over into the illegal sector". The main reason for this, according to the consensus, is the comparatively low attractiveness of the local offerings. This opinion is also frequently expressed in the contributions of the GambleJoe community.

So are the assessments, forecasts and warnings coming true in the current figures? Or are there perhaps other reasons?

What else could be behind the huge slump in taxes on virtual slot machines?

A drop in tax revenue of a whopping 38 percent for virtual slot machines - that's more than just a small hiccup in the statistics. Of course, we do NOT want to jump on the "migration to the black market" bandwagon here without investigating further.

Are there any other possible reasons for the slump?

Perhaps the strict regulations are simply causing people to gamble less?

Customers of online casinos licensed in Germany are indeed confronted with a particularly large number of restrictions. Sports betting and online poker are also strictly regulated, but this still seems to be within reason for a relatively large number of users. In casinos, the following points are particularly annoying.

• 5-second rule: There must be a pause of at least five seconds after each spin, which significantly slows down the pace of play.
• Low RTPs: To compensate for the gambling tax, the payout ratio of slots (return-to-player, RTP for short) is significantly reduced in online casinos.
• 1 euro maximum bet: A maximum of one euro may be bet per spin, which makes high wins more difficult.
• Limited game selection: Many popular slots and other games are not available, which reduces the appeal.
• Extensive data requests: Players have to disclose a lot of personal information, which can be off-putting.

However - and let's not forget this here - licensed online casinos also offer significant advantages!

• Outstanding technical security: Players can rely on the protection of their data.
• Guaranteed payouts: Wins are paid out reliably.
• Fast transactions: Deposits and withdrawals are made quickly.
• Legal protection: Customers are protected by legal contracts.

Nevertheless, a tax decline of more than 38 percent remains a massive cut: especially in light of the fact (worth mentioning again) that slot machines are still among the most popular games of chance in Germany and that the digital casino market is also forecast to grow strongly until 2029.

Economic influences: A decisive factor?

The only alternative or further reason for the decline is the persistently difficult economic situation. Rising living costs caused by ongoing inflation could lead to Germans spending less money on gambling overall. However, this development does not seem to affect all segments equally. Lotto, for example, remains highly popular.

However, this can be explained quite simply:

1. While there is naturally more of a tendency towards continuous gambling with correspondingly large bets in slot machine games, lotto is - at least for most players - a more ritualized experience with longer or weekly intervals and low costs.
2. Moreover, lotteries are absolutely established and practically ubiquitous in Germany. Almost every day you can find reports in the press about lucky players who have been able to cash in at least a few tens or hundreds of thousands of euros. In a generally poor financial situation, this can have a downright stimulating effect.
3. In contrast, there are at most warnings about slot machines, sports betting or poker.

Conclusion

Source of the image: https://pixabay.com/vectors/thirty-eight-number-38-rounded-38554/

Central text sources: https://www.destatis.de/DE/Presse/Pressemitteilungen/Zahl-der-Woche/2025/PD25_03_p002.html, https://www.isd-hamburg.de/wp-content/uploads/2024/03/Gluecksspielsurvey_2023.pdf, https://www.isd-hamburg.de/wp-content/uploads/2022/03/Gluecksspiel-Survey_2021.pdf