Pulse
Investing in the culture of gaming
By Lewis - 8 July 2020
G3 interviews Otto Wulferding, CEO of the German Gaming Association DSbV. In 2019, the casino gaming market in Germany enjoyed a period of intense growth as players reacted to the reduction of street gaming machines by swelling the ranks of the country’s casino sector. The uplift of close to 30 per cent in many locations was not exclusively due to increases in slots play, as table gaming revenues also experienced a positive boost.
Gross gaming revenue (BSE) of state-licensed casinos in Germany increased by 25.6 per cent compared to the previous year. It rose to €860.263m as compared to €684.840 in 2018.
“This brings us roughly back to the level of income we had 12 years ago; we have finally bottomed out since 2007 and the following decade,” states Otto Wulferding, CEO of the German Gaming Association DSbV. The BSE indicates the market value that is comparable to sales: income minus winnings, the regular difference between the stakes and the winnings of the players. Likewise, the number of visitors nationwide increased by 13.21 per cent in 2019, to approximately 6.4 million guests in German casinos (2018: 5.7 million).
Slot machine games accounted for the largest share of growth in 2019, with an increase of 32 per cent or €700.1m as compared to the 2018 figure of €531.1m. However, the increases in gaming revenues we not solely attributable to slot machines as classic table games also enjoyed better fortunes in 2019. Table games in Germany, including roulette, blackjack and poker achieved 2019 BSE of €160.130m as compared to €153.742m in 2018.
Could you tell us more about the German Gaming Association? How many casinos do you represent and what are the origins of the organisation?
The German casino market consists of 10 licensed and privately owned casino operators (30 locations in Berlin, Bad Neuenahr, Hamburg, Bad Homburg, Hesse, Lower Saxony, RhinelandPalatinate, Saxony-Anhalt, Mecklenburg-West Pomerania), as well as nine licensed and state owned casino operators (35 locations in eight states, Baden-Württemberg, Bavaria, Brandenburg, Bremen, North RhineWestphalia, Saarland, Saxony, Schleswig-Holstein).
The German casino association DSbV DeutscherSpielbankenverbande.V. represents the state owned casinos, due to their partly different interests compared to the private sector.
How is state licensed gambling regulated in Germany? What is the history of state licensed casinos and what conditions have to be met for state licensed casinos to receive regulatory approval?
The licensed gambling market is limited to a certain number of casino licenses. They receive a concession, to offer gambling in a controlled environment to prevent fraud or exploitation of casino guests. Preventing and fighting gambling addiction is one of the major goals.
This licensing model was undermined by online-casinos, offering their services world-wide. In addition to already existing illegal gambling offers in back rooms, an online based black market was formed. With the online market, the German states were unable to exercise applicable law.
Illegal off shore casinos are estimated to make a turnover of more than €2bn. Now the German government reacts with new legislation. The German licensed casino industry was in desperate need for a level playing field. Licensed casino operators have to comply with a variety of rules and regulations (safety, security, transparency, gambling addiction, game authenticity, etc.).
Online casinos which are not operated out of Germany, do not abide by the same rules, even though their services are used by Germans. With new legislation, the legal framework will also be applicable to online operators. We are convinced that our competence has to be extended to the digital world, so that online-gaming finds its way into a controlled environment, as demanded by the German government.
What are some of the challenges that the sector is currently facing?
Online based off shore casinos are still growing with above average rates. However, the results in 2019 show that the licensed casino market is moving in the right direction, still offering reliable and comfortable casino games.
The framework in which these games are offered has changed in recent years, due to the changes in guest behaviour. Especially the group of young customers tends to prefer online gambling with easy, barrier free access, even though these offers are predominately illegal.
The online gambling market was missing strict and consistent regulation as well as enforcement on all platforms. So online casinos were operating in a legal no man’s land.
The new gambling treaty in Germany will change that. Until now, Germany’s digital gaming laws had no teeth. This was especially obvious when watching television. Online casinos without a German license were advertising their products and services.
They were even sponsoring football clubs and other sports. Their products and services were illegal, though, for operator and player. In failing to establish boundaries, Germany lost a lot of credibility and Germans lost the ability to know right from wrong.
How have state licensed casinos benefited the local community where they are located and the state in terms of generating income?
Local communities profit in numerous ways from casinos, most importantly presence and revenue. Casino Baden-Baden, one of the most famous casinos in the world, is a perfect example: Baden-Württemberg, the state in which Casino Baden-Baden is operated, profits from its revenue, which the state collects via taxes.
Furthermore, the city itself profits from the casino’s world-wide brand awareness, which promotes image and prestige and therefore tourism.
The New York Times wrote about Baden-Baden in 2017: “the famed Casino is worth a visit for its opulent design and its importance to the town’s history.” Casino Baden-Baden is part of the brand Baden-Baden. The brand awareness is strengthened by events such as Nato’s anniversary celebration. Moreover, the casino employs close to 200 people.
Could you tell us more about the different types of gaming on offer as well as other amenities and facilities in state licensed casinos? So what kind of new innovative games and other services do the casinos offer to customers? Are there any games in particular which are popular for your customers? What are some of your casinos stand-out features and games?
The offered types of gaming are regulated by law. There is the classic French Roulette, as well as American roulette, blackjack, poker and slot machines. The unique selling point of licensed casinos is that guests experience real games with real people.
They support and honour a casino being a place for live, face-to-face entertainment. They appreciate the social interplay, which forms a different, a superior gaming experience compared to games on a screen. Live gaming makes a difference.
Many casinos also offer other forms of entertainment: Readings, Fashion Shows, Concerts, etc. Furthermore, casinos, in contrast to online casinos, also offer restaurants and clubs which guests can visit. They add value to their unique gaming experience, which guests can enjoy.
What’s the size of the state licensed gambling sector? Germany’s casino revenue has returned back to the sales level of 12 years ago with a 25.6 per cent increase in turnover in 2019 and a 13 per cent spike in attendance following investments in gaming culture. Could you tell us how this has happened and what is behind the increase?
The Gross Gaming Revenue (GGR) of licensed casinos in Germany grew by 25.6 per cent in 2019. In total, the GGR was €860.263m (as compared to €684.840m in 2018). With that, legal casinos surpassed the 2007 GGR.
From 2007 on, casinos were highly affected by regulations and new competitors, especially online gambling. They were able to make a comeback though. With a rise in GGR, there has also been a rise in visits in 2019, which saw a 13.21 per cent increase , which means about 6.4 million guests in German casinos (compared to 5.7 million in 2018).
The biggest contribution came from slot machines with a rise of 32 per cent, about €700m (compared to 2018 with €531.1m). However, table gaming also rose in 2019, with roulette, blackjack and poker yielding a GGR of €160.130m (2018: 153.742 euros).
This reversal of a trend was made possible with investments in gaming culture and gaming security by the German licensed casino operators.
