Entain Plc, a prominent player in the global gaming industry, endorsed the findings of a study commissioned by the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV), highlighting the significant presence of black-market operators in Germany. The operator noted that current regulations disincentivized consumers from engaging with regulated gambling companies, contributing to substantial regional losses.

Unlicensed Operators Hurt the Regulated Market

According to the University of Leipzig report, only about 50.7% of players were channeled towards licensed online gambling spaces, while approximately 28.9% of traffic headed to unlicensed EU providers and 19.9% to unlicensed offshore providers. The study estimated that the unregulated online gambling market generates three-quarters of the revenue, resulting in significant tax revenue losses.

Germany’s regulatory deficiencies have also been detrimental to operators, as the aftermath of the State Treaty on Gambling in Germany included a visible shift of players towards illegal providers due to access barriers imposed by the current regulations. The operator has since experienced a significant decline in recorded sales and has been a vocal advocate for more effective enforcement efforts.

When looking at individual gaming behavior, it becomes clear that players are obviously switching to illegal providers and continuing to play there.

Grainne Hurst, Entain Group Director of Corporate Affairs

Entain operates Bwin, one of Gernamy’s top three online sportsbooks, and maintains an impressive presence among many European jurisdictions. While the Old Continent is infamous for its diverse regulatory environment, the company noted that current German regulations were among the most restrictive, significantly limiting competitiveness with grey market entities.

Entain Offered to Collaborate with Lawmakers

During an interview with GamesundBusiness.de, Entain Group Director of Corporate Affairs Grainne Hurst stressed the necessity for regulatory amendments to enhance player protection and make legal gaming offers more appealing. She reiterated that proper implementation of regulations could effectively redirect players towards legal platforms and reduce the appeal of unlicensed operators.

Entain also criticized German regulator Glücksspiel (GGL) for its lacking methodology, which only recorded a 2-4% share of illegal gambling activity. The operator expressed willingness to engage in discussions with the GGL to help foster improved player protections in Germany and encourage a fair, sustainable, and player-focused market.

Entain is making great efforts in Germany to ensure that implementation is now consistently geared towards the best possible player protection with appropriate channeling.

Grainne Hurst, Entain Group Director of Corporate Affairs

While Entain’s stance against illegal operators in Germany is commendable, the company remains primarily motivated by the impact of such activities on its bottom line. Increased competitiveness with unlicensed entities would significantly bolster its regional presence and signify a milestone achievement. A victory in Germany should also alleviate the company’s ongoing troubles and improve investor confidence.

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Brazil’s provisional measure No-1182 lays the groundwork for a nationally regulated betting market. However, the planned tax increase of 18% for licensed operators caused significant concern. The IBJR argues that such harsh measures would place unsustainable burdens on law-abiding operators, driving consumers to unregulated and dangerous alternatives. 

Unsustainable Taxes Can Hurt the Regulated Market

The IBJR is Brazil’s premiere organization committed to promoting responsible gambling practices and advocating for a balanced and fair regulatory environment. The authority has been a staunch proponent of the country’s decision to legalize its sports betting market, giving players safe wagering options. However, the organization has repeatedly criticized the shortcomings of Brazil’s upcoming legislation, outlining lawmaker oversights.

Most recently, the proposed 18% tax hike elicited more harsh criticism. The Institute argues that such a significant increase could hinder Brazil’s nascent sports betting industry, hampering its growth and competitiveness with gray market operators. Such a tax burden could cause reduced investments in technology, marketing, and customer support, hurting the regulated sector.

This burden concerns all companies in the segment… as it will impact the entire economic chain derived from the sports betting sector.

Andre Gelfi, IBJR president

According to the Institute, a higher tax burden on licensed operators could increase betting odds and reduce payout rates for players. Such measures would prompt bettors to seek more attractive alternatives in the gray market, where they face almost non-existent protections from fraud or problem gambling.

Brazil Has Achieved Substantial Progress

The IBJR emphasizes that the government should prioritize responsible gambling initiatives and player protection measures instead of imposing burdensome tax rates. By fostering a safe and transparent gambling environment, Brazil can cultivate a thriving and sustainable sports betting industry while safeguarding its citizens from potential harm associated with excessive gambling.

Brasil’s new legislation delivers on that regard, giving regulators and authorities the necessary tools to tackle match-fixing and illegal gambling. The updated regulations also explicitly prohibit people under 18 and other vulnerable groups from wagering, protecting them from unsustainable financial losses. The IBJR’s in-depth familiarity with Brazil’s ongoing gambling challenges and the state of its sports betting sector makes its advice invaluable in creating effective regulations.

While President Lula da Silva’s provisional measure aims to establish a comprehensive regulatory framework for sports betting in Brazil, it is evident that the proposed tax increase requires further consideration and revision. Ensuring the development of a robust and responsible gambling industry requires policymakers to engage in dialogue with industry experts, operators, and responsible gaming advocates, seeking a middle ground that fosters growth and safeguards consumers.

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Hector Fernandez, the chief executive officer of Aristocrat Gaming, spoke with CNBC about the future of the gambling industry and the resilience of gaming. He highlighted that the industry has demonstrated its strength time and time again, surviving periods of economic difficulties and financial unrest.

While macroeconomic conditions do have some effect on gaming, the American industry has recorded no significant change in consumer behavior during difficult periods. Fernandez noted that many US companies have reported impressive march figures, attesting to the strength of the gambling ecosystem.

Fernandez pointed out that, interestingly, companies that invested during the COVID downturn actually came back stronger. On the contrary, companies that made cuts are now lagging behind those that were able to lean in.

Fernandez: Asia Presents Tremendous Growth Opportunities

The interviewers asked Fernandez about the importance of the Asian market to his company. To that, the CEO replied that Asia presents tremendous growth opportunities. The Philippines and Singapore, for example, are markets that have surpassed the pre-COVID GGR levels.

At the same time, Macau is showing positive signs of recovery. While the special administrative region is yet to fully recover, the visitation rates are rebounding, sparking optimism about the future of Macau gaming. In April, for example, hotel occupancy exceeded 80%, Fernandez noted.

Aristocrat Gaming’s CEO noted that there are many similarities between North America and Macau.

Through COVID, through lockdown periods, people kind of missed out on live experiences – the ability to go somewhere and have social interactions. What we saw is that as the world opened back up, humans just really craved that live experience and that ability to have fun and disconnect, if you will.

Hector Fernandez, CEO, Aristocrat Gaming

He added that he is certain Asia is experiencing a similar thing right now.

Many Customers Tend to Spend More

When asked to comment on the trends in player spending Fernandez said that his company noted that player wallets in certain regions are now bigger.

One of the phenomena we’ve seen is that the wallets are bigger. As consumers do come back and engage in gaming, the overall wallet has grown. I think that’s really as a result of that period where they weren’t able to engage.

Hector Fernandez, CEO, Aristocrat Gaming

Overall, Fernandez seems optimistic about the future of gaming in spite of the temporary economic headwinds. He believes that the industry is poised to rebound and grow further.

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