Gaming arcade turnover declining - criminals profit

Since the new Interstate Treaty on Gambling (GlüStV) came into force, gambling in Germany has been meticulously regulated both online and offline. The state not only stipulates possible losses and winnings, but also sets guidelines regarding playing time and the range of games on offer. The result: many gambling fans are turning their backs on the legal offer and playing on the black market instead.

The player protection regulations in Germany are now extremely strict. In a stationary gaming arcade, there are precise regulations on how many gaming machines are allowed in a room, the distance they must be from each other, the maximum amount of money that can be lost and won per hour and the minimum duration of a game. Added to this is the not inconsiderable tax burden.

It is not uncommon for players to be put off by the extensive regulations and then (unfortunately) decide to play on illegal slot machines with criminals. But can this be an acceptable alternative? And what must the state do now to convince players to return to legal gambling?

Organised crime benefits from strict player protection regulations

While the state in Germany continues to try to regulate the legal gambling sector, organised gangs on the other hand offer an apparent "land of milk and honey". Here you can usually play without a minimum playing time, win limit or loss limit. This illegal offer is particularly dangerous for players with problematic and pathological gambling behaviour, as they are hardly protected at illegal slot machines.

The less attractive the legal gambling offer is, the greater the temptation for players to choose a provider on the black market. However, anyone who takes a seat at an illegal slot machine in the back room is often also supporting criminals with connections to the rocker and clan milieu. In addition, some of these illegal machines are manipulated and therefore do not guarantee a fair game. Unfortunately, many players do not realise this.

Gaming arcades and businesses with gaming machines generate around 5 billion euros per year

According to Statista, legal gaming arcades and establishments with gaming machines generated a turnover of around 5.1 billion euros in 2022. According to Statista, there were a total of 5,100 taxable companies in this sector. In the "coronavirus years" of 2020 and 2021, the annual turnover generated in this sector totalled just €3.5 billion and €2.66 billion respectively, partly due to the strict contact restrictions and lockdowns.

Experts now assume that the illegal share of the business is almost as high as the legal share. In concrete terms, this means that the illegal gambling sector will also generate a turnover of up to 5 billion euros per year. Back in September 2023, we at GambleJoe reported that a pensioner made a profit of 192,000 euros in one year with three illegal gaming machines.

Just a few days ago, WELT also reported on the topic and even quoted an analysis by the North Rhine-Westphalia State Office of Criminal Investigation, which stated that the market is extremely attractive for criminal protagonists.

Have politicians gone too far in regulating gambling?

In view of the flourishing illegal gambling market, politicians have to accept the question as to whether they have perhaps been a little over-ambitious with their regulation. Many players are annoyed by the legal offer, as the player protection regulations are perceived as too strict and the game is often no longer fun. Accordingly, the new gambling regulation could turn out to be an economic stimulus programme for organised crime.

The Institute of German Business, which is close to employers, came to the conclusion that between 2017 and 2022 alone, there was a decline in turnover of around 25 per cent for legal placement companies. The Managing Director of Löwen Entertainment, Daniel Henzgen, told WELT that this turnover is now being generated on the illegal market. Not even the German vending machine industry considers its own offering to be attractive.

According to industry estimates, there are currently around 50,000 illegal gaming machines in Germany alone. It is also interesting to note that not even the German government knows how many legal gaming machines there are in Germany.

LKA NRW: Illegal gambling is difficult to detect

The problem with illegal gambling is that it is particularly difficult to prove. The investigating authorities not only need comprehensive concepts to combat it, but also technically skilled experts and the appropriate equipment.

As the justice system is also overstretched in some cases, the North Rhine-Westphalia State Criminal Police Office has already recommended focusing on tax offences that are usually associated with the operation of illegal gaming machines for reasons of efficiency. It is easier to provide evidence here and the expected penalty is higher.

Image source: https://pixabay.com/de/photos/gangster-kriminell-bande-gefährlich-2902625/