Key takeaways:
- Germany’s Interstate Treaty for Gambling (GlüStV 2021) review is underway and must be completed by 31 December 2026. The key question is whether strict rules have achieved their goals.
- Tight regulations and a 5.3% stake tax have driven players to the black market. Subsequently, policymakers are now reconsidering the framework following weakened channelisation.
- Major reform is unlikely. But targeted changes could signal to other struggling European markets that change, in favour of the sector, is possible.
Germany’s gambling market may finally be turning a corner. After several years of strict rules, falling channelisation and mounting concern about the black market, policymakers are beginning to listen more closely to the industry. The ongoing review of the Interstate Treaty on Gambling, GlüStV 2021, requires a comprehensive evaluation report by 31 December 2026, and this will assess whether the law is achieving its goals – especially when it comes to channelisation and player protection.
Luka Andric, managing director of the The German Sports Betting Association DSWV, tells iGB the review is clearly moving from a purely formal exercise into a substantive debate about whether the 2021 framework is achieving its core objectives in practice. It should be a real reality check for the current regulation, he says. “From our perspective, this must lead to a clear consequence: rules that have proven ineffective – particularly in terms of channelisation – need to be revised or removed.”
The balance has tipped
The original ambitions of the GlüStV 2021 were clear: create a harmonised national framework, impose stringent player protections and ensure that legal operators could compete effectively with the black market. But the reality has been more complicated and, after several years of rigid rule-making, German authorities now seem to be listening more closely to industry concerns.
“The regulator and industry have been moving closer together and entering a dialogue on an eye-to-eye level,” says Michelle Hembury of German law firm Melchers Rechtsanwälte. She attributes this to a mix of legal, practical and institutional factors.
Legislation was introduced to create a tightly regulated market that would attract players away from unlicensed operators. Instead, the balance tipped too far. Strict player protection measures – including €1 maximum stakes on slots, mandatory five-second spin delays and a €1,000 monthly deposit cap – limited the appeal of licensed products. At the same time, a 5.3% tax on stakes reduced operator margins and made it harder to compete with offshore providers.
Why it matters:
- Germany’s experience shows that strict rules intended to protect players can push them toward unregulated sites instead. But policy makers are willing to listen to the sector’s struggles to meet in the middle.
“What has changed is a growing awareness that the current framework is not fully achieving one of its central objectives: creating a sufficiently attractive legal market. Only a competitive legal market can keep players in a regulated environment and ensure effective protection,” Andric adds.
The result has been a persistent black market. For Simon Priglinger-Simader, vice-president of the German Online Casino Association (DOCV), this outcome reflects a structural problem. “The main lesson is that overregulation and excessive taxation do not lead to positive outcomes,” he says. “Instead, they tend to drive players toward the black market.”
Dr Gabriele Stark-Lütke Schwienhorst, senior associate at law firm CMS, notes that even a well-constructed framework can fall short if it does not work in practice. A regime, she says, can be coherent but still commercially ineffective if it fails to steer demand into the licensed market.
German Interstate Treaty review expected on time?
The current review of the Interstate Treaty is extensive. Responsibilities have been divided among the 16 German states, each tasked with evaluating specific aspects of the regime – from licensing and advertising to product rules.
Hembury describes a structured approach. The states have taken on ‘sponsorship’ roles for different areas, allowing for detailed assessment of how each provision has worked in practice. She notes that authorities are “currently within the internally set deadline”, suggesting results should be published by the end of 2026.
However, others expect delays. Priglinger-Simader points to earlier setbacks in the timeline and believes the final evaluation may not appear until 2027. “There is simply a lot of work involved,” he says. “Discussions between the 16 German states are complex.”
What matters more than timing is substance. Expectations remain cautious. “I wouldn’t expect the report to introduce major changes or a fundamental shift in German gambling regulation,” Priglinger-Simader says. Instead, the outcome is likely to be a series of targeted adjustments rather than a complete redesign, he expects. Dr Stark-Lütke Schwienhorst agrees. The process, she argues, is best understood as what she describes as “evaluation-backed calibration”.
A more open dialogue
So while a sweeping reform is unlikely, the tone of engagement has shifted more clearly.
Court rulings have provided more balanced interpretations of the framework, encouraging more constructive engagement. At the same time, bureaucratic hurdles have frustrated both sides.
“The bureaucratic and formalistic approach has slowed down many procedures and has, hence, united the industry and the regulator to a more pragmatic and efficient work stream,” Hembury says. There is also growing alignment on core objectives, she continues: “The industry and the regulator seek similar goals: licences, game approvals, bet permissions and overall channelisation of customers to the white listed market.”
Priglinger-Simader sees similar progress, noting that cooperation has improved since the regulator became fully operational in 2023. But he cautions that alignment across Germany’s federal states remains uneven. Dr Stark-Lütke Schwienhorst says that the regulator is engaging “more openly”, but remains committed to a data-driven approach.
What could change as part of the Interstate Treaty review?
The key question is whether improved dialogue will translate into meaningful reform. Germany has struggled to curb illegal operators, with court rulings exposing gaps in the legal basis for IP blocking and prompting efforts to strengthen enforcement. Product regulation is another. Online casino games, particularly table games, remain fragmented under state-level control. Nearly five years after legalisation, there are still few licensed offerings.
“This shows that the current system hasn’t worked,” says Priglinger Simader. Moving towards a unified national framework would, he argues, be “a major step forward”.
Player protection measures are also being reassessed. The €1,000 monthly deposit limit has long been criticised as too restrictive. Limited change is already visible. Deposit limits can now be increased – up to €30,000 in exceptional cases – under strict conditions. Dr Stark-Lütke Schwienhorst sees this as evidence that the system can adapt, with “narrower adjustments” possible within the existing framework.
There may be more to come. Priglinger-Simader points to potential increases in slot stake limits and adjustments to gameplay restrictions as areas where early signals could emerge. Luka Andric notes: “The challenge now is to translate this understanding into tangible regulatory adjustments.”
Number one issue
If product rules are one constraint, taxation is another – and perhaps the more difficult one to resolve. Germany’s 5.3% tax on gambling stakes has been widely criticised for undermining competitiveness. By reducing margins, it limits operators’ ability to offer attractive products and reduces return-to-player rates.
Priglinger-Simader is clear on its importance. “The number one issue is the stake tax for online slots,” he says. A shift to a gross gaming revenue model would make licensed products more competitive. Dr Stark-Lütke Schwienhorst reaches a similar conclusion from a regulatory perspective. The current model, she suggests, creates incentives for consumers to migrate to unregulated offers, making it difficult to reconcile with the goal of channelisation.
Yet reform remains challenging. Tax policy sits at the federal level, outside the direct scope of the Interstate Treaty, requiring broader political alignment.
Lessons for neighbouring gambling markets
Germany’s experience is increasingly relevant beyond its borders, particularly as other European markets move along a similar regulatory path. The Netherlands offers a clear parallel. A series of tax increases – alongside tighter restrictions – have already begun to weigh on the licensed market. Early signs of declining revenues and concerns about channelisation echo Germany’s earlier trajectory.
Related Article:
For Chris Elliott of Wiggin, the pattern is predictable. “Tax and regulation cannot be considered in isolation,” he says. Higher duties reshape operator economics, limiting their ability to offer competitive pricing, bonuses and products. As a result, “consumers will migrate to offshore sites that are not subject to those constraints, particularly those who are more price and product sensitive”.
Germany also shows how difficult it is to reverse that shift. “As the regulated market becomes less competitive, the commercial attractiveness of operating outside it increases,” Elliott says. Crucially, “once channelisation is lost, it is difficult to recover”.
Melanie Ellis of Northbridge Law emphasises the nature of the problem. “The outcome of high taxes and restrictive regulation in Netherlands and Germany demonstrates how well-intentioned measures can undermine their own policy objectives,” she says.
Wulf Hambach, partner at German law firm Hambach & Hambach, offers his observation: “The current situation in Germany is a learning example for the UK and the Netherlands: On the one side you should create enough room to allow competition between licensed gambling operators to be able to offer new gambling products to the customers and on the other side you should also have enough flexibility to step in as a regulator as soon as too much danger and/or negative effects occur around a new gambling products.”
UK should take notice
According to industry experts, the UK is also at risk of learning the hard way after the government introduced steep tax hikes for the gambling sector. “The lesson for the British government and Gambling Commission – although this may be coming a little too late – is that customers can and will take their business elsewhere if too many restrictions are introduced, particularly if that happens in a relatively short timeframe,” says Melanie Ellis.
Related Article:
She highlights another concern: “While each individual measure can be justified on player protection grounds, the cumulative effect ironically leads to players – including the most vulnerable – gambling in environments with little to no player protections”.
This creates a well documented policy paradox: rules designed to protect consumers may ultimately expose them to greater risk. For both Ellis and Elliott, the lesson is one of adjustment. Elliott stresses the need to assess whether new policies and enforcement efforts are sufficient to maintain channelisation. If not, the outcome becomes “lose/lose”: lower tax revenues and weaker consumer protection.
Why it matters:
- The Netherlands and the UK are following a similar path to Germany. Rising taxes and tighter restrictions are already affecting their licensed markets.
Ellis, meanwhile, highlights the importance of evidence. “It is vital that the UK Gambling Commission steps up its efforts to measure and monitor the scale of the black market,” she says, arguing that policymakers must “take time to assess the impact of regulatory changes and tax increases to inform future policy decisions”.
Fragile progress
Germany’s regulatory framework is unlikely to undergo a dramatic transformation. The commitment to strong player protection remains, and political constraints limit the scope for reform. But the direction of travel certainly has shifted.
“If we see changes such as increased stake limits, that would be a clear sign that regulators are listening,” says Priglinger-Simader. Hembury shares that cautious optimism, although she notes that not all improvements in dialogue will necessarily translate into legislative adjustments.
Germany’s experience shows how easy it is for regulation to drift out of balance – and how hard it is to restore that balance once lost. The green shoots for meaningful change are there. Whether they take root will depend on how far policymakers are willing to go.
Frequently asked questions
What is the German Interstate Treaty on Gambling review?
Why has Germany’s licensed gambling market struggled?
What changes could come from the Interstate Treaty review?
Original article: https://igamingbusiness.com/legal-compliance/german-interstate-teatry-review-green-shoots-for-european-neighbours/
