The Licensed Market Cannot Carry the Burden Alone

The central question in German online gambling regulation is not only whether a licensed market exists. The harder question is whether consumers actually stay inside it when they make real decisions under real conditions. A legal framework can create permits, technical systems, supervision and public registers, but it cannot automatically control consumer behaviour. Channelisation only works when the regulated offer is not merely lawful, but also reachable, understandable, commercially credible and sufficiently attractive for the player who is already willing to gamble online.

This is where the debate often becomes too comfortable. The existence of licensed operators is sometimes treated as if it were itself a consumer protection outcome. In practice, legal protection only reaches the player who chooses the legal route and remains there. A player who leaves the regulated framework does not take OASIS, LUGAS, German supervision, official complaint channels or domestic accountability mechanisms with them.

The consumer journey does not begin inside a statute book. It begins with a search, a recommendation, an advert, a payment option, a bonus offer, a registration form, a blocked transaction, a rejected deposit, a missing product or a comparison between what is available legally and what is offered elsewhere. Each of these moments can either support channelisation or weaken it. If too many points of friction accumulate, the licensed market is asked to do something it cannot do alone.

Germany’s Glücksspielstaatsvertrag 2021 was designed to move online gambling into a regulated framework under restrictive conditions. That logic is understandable from a public policy perspective, because the alternative to regulation is not consumer protection, but unmanaged consumer behaviour in a digital market. The regulatory aim is not simply to legalise offers. It is to channel demand towards safer legal alternatives and away from illegal operators.

The difficulty is that channelisation depends on a relationship between rules and behaviour. If the regulated market feels slower, weaker, less competitive or more uncertain than the alternatives, some consumers will test the border. Not all will do so knowingly, and not all will understand the legal difference between a licensed and an unlicensed site. Some may simply follow the product that appears easier, more generous or less restrictive.

This is why the consumer journey matters. A player does not experience “regulation” as a single concept. They experience verification, deposit limits, product restrictions, advertising messages, payment friction, bonus structures, market depth, odds, casino content and customer support. If the legal offer wins enough of these moments, channelisation can hold. If it loses too many of them, the protection model becomes more fragile than the formal licensing architecture suggests.

Regulatory response

Germany has built a serious regulatory structure around the legal online gambling market. The GGL publishes an official whitelist, which identifies operators holding a licence or concession under the GlüStV 2021. Licensed operators must also display on their own websites that they hold state permission and indicate which authority granted it. This is a necessary tool, because consumers need a verifiable way to distinguish legal offers from illegal ones.

The framework also relies on central player protection systems. The OASIS player exclusion system is described by the authorities as a nationwide, cross-game instrument for player protection and the prevention of gambling addiction. For legal online operators, participation in mandatory technical supervision is also central. The GGL states that LUGAS belongs to the compulsory IT supervision systems for legal providers.

These mechanisms matter. A legal market without exclusion tools, technical oversight and official transparency would be much weaker. The problem is not that these systems are irrelevant. The problem is that these systems only function where consumer activity remains inside the licensed perimeter.

That is the uncomfortable part of the channelisation debate. Germany can build a highly controlled licensed system, but the more controlled that system becomes, the more it must ask whether consumers still regard it as a viable alternative. Regulation can reduce harm, but it can also create friction. Friction may be justified, especially where it protects vulnerable players, but it still has market consequences.

The regulatory response has therefore moved increasingly towards measurement. The GGL’s own publications page states that its reports analyse market development, including figures and trends in the German gambling market, particularly online. In its 2025 activity report announcement, the GGL stated that it did not publish separate 2025 figures for the size of the illegal market, but relied instead on the scientific study on black market and channelisation. According to that GGL summary, the study showed a 2024 illegal online gambling market share of 23 percent and a channelisation rate of 77 percent.

Those figures are important, but they should not end the discussion. A 77 percent channelisation rate can be presented as evidence that most online gambling activity is regulated. It can also be read differently: nearly one quarter of the online market remains outside the intended framework, according to the regulator’s own public summary. For a consumer protection system built around regulated participation, that is not a marginal policy detail.

This does not mean the legal framework has failed. It means the framework still depends on market behaviour that cannot be commanded by law alone. The official response must therefore be judged not only by licences issued, providers supervised or systems connected. It must also be judged by whether players are consistently being pulled into the legal market rather than pushed, nudged or tempted outside it.

Market reality

The market reality is more difficult than the regulatory architecture suggests. Licensed operators are asked to serve several objectives at once. They must comply with strict technical requirements, follow advertising rules, implement player protection systems, maintain commercial competitiveness, retain customers and compete against operators that may not observe the same restrictions. That is not a normal competitive environment. It is a heavily conditioned market attempting to compete against alternatives that can ignore many of the conditions.

This imbalance is central to channelisation. If illegal or unlicensed offers can provide fewer checks, higher flexibility, broader product availability, different incentives or fewer interruptions, they may appeal to some consumers precisely because they sit outside the regulated framework. That does not make those offers safer. It makes them commercially dangerous from a public policy perspective, because the player may perceive convenience before they perceive risk.

The licensed market therefore cannot carry the full burden alone. Operators can improve user experience, strengthen compliance, communicate licence status and design safer products, but they cannot neutralise every offshore alternative through compliance. They cannot make illegal competitors follow German limits. They cannot alone educate every consumer on the practical difference between a licensed and unlicensed site. They also cannot fully overcome a regulatory design if the legal product becomes too weak compared with what players can find elsewhere.

This is where policy must be honest. A licensed market that is too constrained can become symbolically correct but behaviourally vulnerable. It may satisfy the formal regulatory model while losing certain consumer segments in practice. The most at-risk players may not be the ones who patiently check the whitelist, read licensing notices and compare supervisory standards. They may be the ones who respond fastest to friction, blocked product choices, aggressive incentives or the promise of fewer restrictions.

There is also a communication gap. The whitelist is essential, but a public register is not the same as consumer understanding. Many players will not start their journey by checking official databases. They may not understand which authority supervises which offer, why a licence matters or how exclusion systems work. If consumers only discover the meaning of legality after something goes wrong, channelisation has already been weakened.

The same applies to responsible gambling tools. OASIS and technical supervision systems may be central to the German model, but they are not persuasive consumer propositions by themselves. A player in control may view them as protection. A player looking for fewer interruptions may view them as restrictions. This tension cannot be wished away, because the same measure can be socially valuable and commercially inconvenient at the same time.

The more direct question is whether Germany has found the right balance between protection and participation. If regulation makes the legal offer safer but less attractive, the system must measure whether the safety gain is offset by leakage to unregulated alternatives. If the market loses consumers who would otherwise have remained inside a supervised environment, the result may weaken the very consumer protection objectives the rules were designed to support.

This does not mean every restriction should be loosened. That would be too simplistic and would ignore the public health purpose of gambling regulation. It means restrictions must be assessed against actual consumer behaviour, not only against regulatory intention. A rule that looks strong on paper but accelerates movement outside the licensed market may require careful review, better communication or more effective enforcement around the surrounding ecosystem.

The GGL’s 2025 activity report announcement shows that illegal gambling is being addressed increasingly as a market-environment issue, not only as a question of individual illegal operators. That is a relevant shift. If the illegal market functions through payment services, advertising pathways, platform availability, technological workarounds and consumer habits, then the response cannot rely solely on licensed operators being compliant. The broader environment has to be made less hospitable to illegal offers.

At the same time, legal offers must remain commercially credible. A regulated market that cannot compete on basic consumer expectations will struggle to channel demand. That does not require copying the illegal market. It requires a policy framework that recognises consumer choice as a real force. People do not always choose the safest option simply because the state has approved it.

Conclusion

The German channelisation problem is not a theoretical dispute between regulators and industry. It is a consumer protection question. Legal offers protect players only when players use them. Every player who leaves the licensed framework is also leaving the tools that make the framework meaningful.

The official figures published by the GGL suggest that a substantial majority of online gambling activity is inside the regulated market. That is important and should not be dismissed. But a remaining illegal share of 23 percent, as referenced by the GGL in relation to the 2024 study, still represents a serious challenge for a system built on channelisation. The question is not whether Germany has created a licensed market. The question is whether that market can continue to attract and retain enough consumer behaviour to justify confidence in the model.

The licensed market cannot be expected to carry this burden alone. It needs consistent enforcement against illegal alternatives, clearer consumer communication, a credible commercial framework and regulatory decisions that are tested against behaviour rather than intention. The strongest consumer protection system is not the one that looks strictest in isolation. It is the one that keeps the player inside the protected environment.

That is the uncomfortable lesson. A legal framework does not win consumer behaviour automatically. It has to earn it, defend it and measure it continuously. If friction, uncertainty or commercial weakness in the regulated market strengthens alternatives outside the intended framework, then channelisation becomes less a regulatory slogan and more a warning sign.

FAQs

What is channelisation in online gambling?
Channelisation is the process of directing players toward licensed and regulated online gambling operators instead of illegal or unlicensed websites.

Why is channelisation important in Germany?
It helps ensure players remain within a regulated environment where consumer protection measures, supervision and responsible gambling tools are available.

What is the GGL?
The Gemeinsame Glücksspielbehörde der Länder (GGL) is Germany's national gambling regulator responsible for supervising licensed online gambling operators.

What is the OASIS player exclusion system?
OASIS is Germany's nationwide self-exclusion system that prevents excluded players from accessing licensed gambling services across participating operators.

What is LUGAS?
LUGAS is Germany's mandatory technical supervision system used to monitor licensed online gambling providers and support regulatory compliance.

Why do some players choose unlicensed gambling websites?
Some players may be attracted by fewer restrictions, larger bonuses, broader game selections, or easier payment methods offered by illegal operators.

How does consumer behaviour affect online gambling regulation?
Even with strong regulations, consumer protection only works if players continue using licensed operators instead of moving to illegal alternatives.

What challenges do licensed operators face?
Licensed operators must comply with strict regulations while competing against offshore websites that may not follow the same legal requirements.

What did the GGL report about Germany's online gambling market?
According to the GGL's referenced 2024 study, the illegal online gambling market accounted for approximately 23% of the market, while channelisation reached 77%.

How can Germany improve channelisation?
Stronger enforcement against illegal operators, better consumer education, effective communication and maintaining competitive licensed offerings can help improve channelisation.