According to LeoVegas CEO Gustav Hagman, online casino restrictions in Germany are creating a "huge" black market in a country that will soon be regulated.
Referring exclusively to EGR, Hagman admitted he was unsure about the operator's financial prospects in Europe's largest economy due to the presence of other operators who chose not to comply with the transitional rules.
“I think we just need to wait until July and the new licensing system, and then we will have a level playing field,” Hagman said.
“Right now it’s the wild west of Germany that has turned into a huge black market,” he added.
In October 2020, the German authorities introduced a set of new rules for potential online operators, including deposit limits of €1,000 per month and a slot machine spin limit of €1.
Table games should also be disabled, although the individual states of Germany will decide whether they eventually allow online casino games such as blackjack and roulette. Operators hoping to provide a regulated online casino offering in the country must comply with these regulations in order to be eligible for a license when the market goes live on July 1, 2021.
Hagman has previously reaffirmed his commitment to the market, suggesting that short-term problems will be worth the long-term gains, insisting that Germany could become one of the top three markets for business, which seems to have changed in the current environment.
LeoVegas, which has been compliant with German interim regulations since its launch in October, has experienced a significant downturn in market revenue, down 45% annually in the first quarter of 2021.
The Malta-headquartered operator estimates that up to 80% of the online casino market in Germany has been taken over by non-confirming operators, resulting in a “distorted” competitive landscape with regulated firms taking customers offshore.
“We know for sure that there are many small operators that are not complying with these restrictions, not implementing everything that you need to implement in Germany ahead of the new legislation,” Hagman told the agency. EGR .
“So, naturally, players choose these brands because they are better to play with today.
“Hopefully we can win them back, but it depends on the German authorities and whether they go for not only those firms that do not comply now, but also those that do not comply with the rules after July.
“We tried to illustrate this to them and I know that other bigger operators besides us like Tipico and bwin are also suffering a lot, but I don't know what to do.
“I think we just have to wait until July 1st and just hope that the German authorities are taking this seriously,” he added.
Despite his grim assessment of the German market, Hagman is hopeful that the dominance of dissenting online casino operators will be short-lived due to changes in legislation.
“We are grateful that German gaming legislation will fall under the jurisdiction of the German tax authorities, so the tax authorities will hunt down operators who do not pay taxes in Germany,” said Hagman.
“It will be more difficult for black market operators after July 1, and there is also talk of things like blocking payments, which is a really good sign,” he added.
The European Gambling and Betting Association (EGBA) recently said that a negotiated 5.3% turnover tax for German online poker and slot machines could cut entry into the regulated market to 51%.
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