The evaluation will therefore go beyond a mere compliance check and analyze whether the regulatory framework enables a functioning market or whether it inadvertently leads to a depletion of the legal offering and thus to a weakening of the channeling.
The Quantitative Dimension: A Review of the Licensing System
The German licensing system is one of the most restrictive in the world. Providers must meet extensive technical, financial, and organizational requirements to obtain a license from the Joint Gaming Authority of the German States (GGL). As of the end of 2025, a differentiated market structure is evident: According to the GGL’s own analysis of its whitelist, a total of approximately 38 different companies with valid licenses were active in the areas of sports betting and virtual slot games. The online casino games segment (table games such as roulette or blackjack), however, remained fragmented due to state-specific jurisdiction and lengthy licensing procedures.
The 2026 evaluation will systematically examine the efficiency of these processes. The focus here will be particularly on processing times for gaming certifications and advertising approvals. A central question for the evaluators will be whether the duration of the licensing procedures—which often take many months—significantly hampers the innovative capacity of legal providers compared to the unregulated market.
Market Dynamics: Growth, Stagnation, and Consolidation
A key indicator of the market’s health is gross gaming revenue (GGR). In 2024, the legal German gambling market (online and land-based) generated a volume of approximately 14.4 billion euros—an increase of about 5% compared to the previous year. Despite this moderate growth, the market structure shows signs of consolidation.
The evaluation will assess how many providers have exited the market since 2021 or ceased operations due to high compliance costs. A market characterized by high fixed costs for IT security, anti-money laundering, and technical reporting (LUGAS/OASIS) tends to favor large corporations. The evaluation must assess whether this development leads to an "oligopolization" that reduces competition and thus diminishes the appeal for end customers.
Economic Viability and the Tax Burden
A key focus of the technical assessment is the financial stability of licensed companies. German licensees bear a significant burden due to:
- Gaming tax: The taxation of wagers (rather than gross gaming revenue) for virtual slot games and online poker is widely regarded as a structural disadvantage across the industry.
- Regulatory fees: The costs of ongoing supervision by the GGL.
- Compliance investments: The implementation of early detection systems for gambling addiction and money laundering prevention.
The 2026 evaluation will analyze whether margins in the legal market are sufficient to sustainably ensure necessary investments in player protection and product quality. Critics are already warning of a paradox: An excessive fiscal burden lowers the return-to-player (RTP) rates in the legal market, which in turn drives players directly into the arms of illegal operators who can promise higher winnings.
The conflict between product diversity and regulation
A functioning market is characterized by a broad portfolio that appeals to different types of players. The evaluation will examine whether the current licensing system restricts certain popular game formats (e.g., live casino offerings or specific sports betting markets) too severely.
The scientific analysis will investigate the extent to which the ban on certain product features negatively impacts the channeling rate. A key aspect here is “market breadth”: If legal providers are only allowed to offer a “light product,” while the black market provides the full spectrum, regulation loses its steering effect. The market structure is viewed here as an indirect but powerful indicator of the success of regulatory objectives.
The GGL as Market Watchdog and Coordinating Body
Since the GGL fully assumed its responsibilities on January 1, 2023, the authority has established itself as the central body. The 2026 evaluation will also assess the supervisory authority’s operational effectiveness.
- Transparency: How clear are the guidelines for providers?
- Enforcement: How successful is the fight against illegal competitors in creating a level playing field for licensees?
- Communication: Is the GGL perceived by market participants as a predictable partner or as a bureaucratic obstacle?
Innovation and Technical Evolution
The digital gambling market is evolving rapidly. New technologies such as artificial intelligence for early detection of gambling addiction or modern cryptography for data security offer opportunities but also pose challenges for regulation. The evaluation must clarify whether the current legal framework is flexible enough to integrate such innovations into the legal market in a timely manner. A market structure that only allows technical innovations after years of review processes risks falling behind international competition.
Competitiveness and International Benchmarks
A comparison with markets such as Denmark, the United Kingdom, or the Netherlands will be part of the evaluation. Some of these countries have achieved significantly higher channeling rates. The experts will examine whether this is due to a more liberal market structure, different tax models, or more efficient licensing. If Germany lags behind in a European comparison in terms of the number of licensed providers or market attractiveness, this will be seen as an indication that corrections to the State Treaty are necessary.
Market Structure as the Foundation of Channeling
The market structure is far more than a statistical figure; it is the breeding ground on which the goals of youth protection, addiction prevention, and tax fairness thrive or fail. The 2026 evaluation will have to deliver a clear verdict on whether the “German approach” of strict licensing and technical control has produced a stable legal market.
A diverse and economically healthy legal sector is the best defense against the black market.
Should the data show that the provider structure is eroding or the economic basis of licensees is dwindling, policymakers will be forced to readjust the regulatory levers to save the system from collapse due to market migration.
Read Part Five of our series on the evaluation of the State Treaty on Gaming here.
Want to stay up to date? Subscribe to our newsletter and follow us on LinkedIn, X and Facebook.