Enteractive: Tough new regulations in Germany can be addressed

New iGaming regulations in Germany mean a tough environment for licensed operators who will have to work within strict guidelines when it comes to marketing. However, there are ways they can communicate with their players and add to their experience, writes Enteractive founder and CEO Mikael Hansson.     

The German InterState Gambling Treaty that came into force at the beginning of July has been widely trailed by executives and media outlets and the verdict is unanimous: nothing (or very little) good will come of it. 

Such an opening sentence may seem dramatic, but comments by operators who since February have reduced their activities and product portfolios to comply with the new regulations in advance of their full introduction in July all point to the negative impacts of the changes.    

Flutter Entertainment and Kindred group have already stated the new regulations will lead to  €20m drops in full year EBITDA figures, while first quarter revenues for LeoVegas were down 13% overall, but up 4% excluding Germany. The trend is replicated across all the operators active in the market. 

“First quarter revenues for LeoVegas were down 13% overall, but up 4% excluding Germany”

As a wealthy country with the biggest economy in Europe, Germany is a market where operators should be growing strongly across both online betting and casino verticals, but the new regulations will instead mean a highly restrictive market where operators try to maximise returns from limited product options. 

Key casino products missing

In addition, while both sports betting and casino verticals are impacted by the new rules, casino-focused brands are not allowed to offer online roulette, blackjack or live casino, key products to attract players in any regulated market, and face further constraints related to contacting players for marketing and promotions and stake limits. 

Online sportsbooks face the same restrictions around marketing and stake and deposit limits, but their betting products give them more time to develop market share and they can drive bettors towards the more profitable casino products. This is far from ideal for the sportsbooks, but at least they have some leeway with regards to how they can attract players and how long they can stay active in the market as they build up their client base. 

The regulatory environment for dot de operators might improve in the next few years, but realistically and if other regulated countries like France and Italy are anything to go by, this will not happen for some time, while as an industry iGaming has learnt not to rely on favourable regulatory changes!

To that we can also add that industry lobbying, such as raising the topic of illegal operators and the low rates of player visits that regulated sites are already experiencing compared to their pre-regulation levels, is unlikely to sway regulators. 

For the brands operating in Germany there is no doubt that those with scale, diversified product portfolios and being able to rely on revenues from other geographies will be able to weather this period of activity better than the smaller, single product specialists.  

But regardless of the size of the companies in the market, it’s clear all have to balance their activities carefully as they deal with monthly betting limits across both betting and casino or marketing restrictions. 

Operator options 

The situation in Germany is hard for regulated operators, they are losing money and market share despite complying with all the regulations imposed by the authorities. So what can they do to address the situation in the most constructive way possible? 

While it’s important to be patient, German regulations have only just gone live, operators that are active in the market are facing up to a situation that is not as promising as it could or should have been. 

For this reason we believe maintaining dialogue with players is a productive way to build relationships and maintain contact with customers and enables operators to gather granular data that can help them address customer requests with more relevance. In a newly-regulated market like Germany it helps players understand on which regulated sites they can play. 

Some forms of advertising and affiliate support are restricted, but communicating with existing players in your databases is permitted, as long as the player has “a contractual relationship” with the operator.  So, as long as they have consented to receiving communications, speaking directly with players to make sure they are enjoying the iGaming entertainment, safely and within their means, is a good way to maintain contact with your players, as well as performing an RG function.   

We currently find that in many of our calls, even if we refrain from offering a bonus, players will still ask about them – in which case we assist them by directing them to the relevant onsite offers. 

By engaging with your players in this way can put your operator brand front-of-mind and earn their trust and respect for your caring approach to their patronage of your services. 

In addition, this contact not only increases dialogue, it also provides granularity on their preferences, how to optimise return on investment and helps reduce churn and increase customer loyalty.

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