Germany is difficult, but it has enormous potential

No one can deny that Germany's online betting and casino rules make life difficult for operators, but exceptional client retention methods may establish solid foundations for this massive market, writes Andrew Foster, CBDO at Enteractive.

The Glücksspielbehörde (GGL), Germany's new gambling regulator, began operations on July 1 and has much to do to ensure that operators licenced in the country can make the most of what are challenging regulations for one of Europe's largest online betting and gaming marketplaces.

The GGL's official start date is January 1, 2023, but the new authority and its staff will have plenty to accomplish because German-licensed operators have significant challenges when it comes to competing with unauthorised websites, earning revenues, and profits.

Under duress

These pressures are the result of a relatively limited legal framework that allows online bookmakers to only offer live betting on match winner and total goals scored markets. When it comes to internet gaming, only digital poker and slots are regulated, while popular table games like roulette and baccarat are not.

Furthermore, spending restrictions such as stake limits and maximum monthly spend levels apply, with German players limited to monthly spending limits of €1,000.

Meanwhile, operators are taxed at 5.3 percent on turnover, which is not the same as being taxed on gross revenues. The impact on German manufacturing has been obvious. According to data from the Ministry of Finance, German sports betting earnings would fall 16% to €7.8 billion in 2021.

Regulatory compliance

The working atmosphere is not ideal from the start, but at least the market is now governed by a federal authority that will employ more than 100 people by January of next year. Furthermore, one of its top tasks will be to combat illicit operators so that registered operators can at least operate in a protected market.

This will be a key aspect of the GGL's efforts since, with regulated operators not permitted to offer as many live markets or online gaming products as offshore operators, players will be enticed by all of the products offered by unregulated websites.

It should be noted, however, that driving offshore bookmakers out of the regulated industry will be difficult. Most of them are prepared for enforcement measures and use mirror websites and fresh domain names to avoid ISP blocking or blacklisting.

Solid foundations

In such cases, it is obvious that one of the best methods for operators to capitalise on the market is to drive optimal lifetime values from their players through high customer retention rates. This maximises the earnings generated by operators from their players while maintaining open communication lines with them.

Enteractive, of course, specialises in this. For many years, we have helped operators maximise player income by delivering highly localised reactivation agents that activate and engage with players in their native language.

Such effort will be considerably more vital in the German market, where financial demands imposed by restrictions on consumer brands will be a near-constant element of their employment.

Another issue to consider is that a number of well-known businesses with large market shares have decided to exit Germany. This means that, while competition will remain high, operators who focus on creating strong foundations for their German operations will be able to thrive in a less congested market than was the case just a few months ago.

It's also worth noting that Germany's industry stakeholders, particularly its sports betting associations, the DSWV, will work hard to change the country's online gambling legislation to make them more business-friendly for its members.

There appears to be a perception in the German market that regulations will be further optimised, with the aim that this will benefit licenced operators. So, even though the regulations are stringent, no one denies that there are significant benefits to be gained from Germany. However, it is going to be a protracted process, which is why, in collaboration with Enteractive, operators can immediately begin setting the groundwork for great customer retention that generates revenues and profitability.

By fLEXI tEAM