German operators and politicians are at odds over how to address an illegal gambling machine market estimated at between 60,000 and 100,000 units — operating alongside approximately 160,000 licensed machines nationwide.
Legal operators Merkur and Löwen are calling for stronger enforcement and policy reform, arguing that the current regulatory framework is redirecting players toward unlicensed venues where no player protection requirements apply. Politicians from the SPD parliamentary group are pushing back, warning that the industry’s preferred remedy — expanding legal gambling access — would increase overall participation rather than shrink the illegal market.
Scale of the Problem
Police data from North Rhine-Westphalia illustrates how extensive unlicensed activity has become. Officers uncovered 350 illegal gambling events in the state over the past year, covering unlicensed poker games, other prohibited activities, and unauthorised machine operations.
A single enforcement action in Berlin demonstrated the operational scale. Around 400 officers drawn from the Police, the Public Prosecutor’s Office, and Customs and Tax investigators searched 74 locations across the city, seizing 120 slot machines. The scale of that single operation — one city, one raid — sits against an estimated national illegal machine count that may exceed 100,000 units.
The ratio is stark. If the lower estimate of 60,000 illegal machines is correct, unlicensed machines account for roughly 27% of the total machine market. At the upper estimate, that share approaches 38%. Either figure represents a substantial portion of a market that licensed operators are paying taxes and compliance costs to serve.
Industry Position
Merkur Vice Chief Executive Manfred Stoffers argued that strict regulations are driving customers away from regulated venues. Illegal operators, he said, ignore licensing requirements entirely and run machines in unlicensed locations with no player protection infrastructure. The competitive asymmetry is direct: licensed operators bear the cost of compliance while illegal competitors absorb none of it.
The broader industry argument follows from that premise. A regulatory environment that makes licensed operation commercially difficult, while enforcement against illegal operation remains limited, inevitably channels market share toward unlicensed operators. German betting operators raised similar concerns about black market growth last autumn, when tightening restrictions coincided with the start of the UEFA Champions League season.
Political Pushback
Sebastian Fiedler, domestic policy spokesperson for the SPD parliamentary group, acknowledged the illegal market must be consistently tackled but rejected the industry’s proposed solution. Fiedler called for stricter controls on the location of licensed gambling venues — a measure that would further constrain licensed operators — and warned that expanding legal gambling access would not reduce the illegal market. It would, in his view, increase overall gambling participation.
That position reflects a longstanding tension in German gambling policy. Stricter location rules for licensed venues would, by the industry’s own logic, worsen the channelisation problem if enforcement against unlicensed alternatives does not accelerate in parallel. The two positions are not easily reconciled: more restriction without enforcement pushes activity underground; more legal access without enforcement credibility may simply enlarge the market overall.
The broader European pattern shows regulators applying greater financial pressure on non-compliant operators, but Germany’s federal structure complicates centralised enforcement action against land-based illegal activity.
Treaty Evaluation and Regulatory Context
The debate is unfolding at a significant moment. Germany’s 2021 Interstate Treaty on Gambling (GlüStV 2021) is undergoing its first formal evaluation, with findings expected later this year. Ronald Benter, a Board Member of the German Joint Gambling Authority of the Länder (GGL), addressed the evaluation process at the 23rd Gambling Symposium at the University of Hohenheim in March 2026.
The GGL’s own data on the online gambling black market recorded a channelisation rate of 77.03% — meaning roughly one in four euros of online gambling activity continues to flow to unlicensed operators despite four years of licensing activity under the current treaty. The land-based illegal machine problem suggests the full scope of unlicensed market participation is wider than that online figure captures.
Enforcement capacity under the current framework has real limits. The GGL issued 231 cease-and-desist proceedings in 2024, with 83 directed at illegal gambling operators and the remainder against advertising for unlicensed services. Website blocking as an enforcement tool has been constrained by German court rulings finding the current legal basis inadequate. Legislative amendments to address that gap are under development but have not yet been enacted.
What the Evaluation Needs to Answer
Experts at the Hohenheim symposium framed the central dilemma plainly: regulations set too strictly damage the legal market; regulations set too loosely increase gambling-related harm. The Berlin raid and the North Rhine-Westphalia enforcement figures confirm the illegal market is already operating at significant scale under the current balance.
The 2026 State Treaty evaluation will be the next formal checkpoint for German gambling policy. The outstanding questions — whether stake limits, location rules, or enforcement powers require revision, and whether the IP blocking legal gap will be closed before the next evaluation cycle — will determine whether the licensed market can compete on terms that keep players in regulated venues.
Source: Global Gaming Insider
