The popular iGaming title “Hole In The Dike” from Holland Revenue is reportedly facing significant financial challenges as offshore competition intensifies. Industry analysts highlight that the game, once a strong performer in the domestic market, is now seeing revenue streams being siphoned off by offshore operators. This shift is prompting concerns within the Dutch gaming sector about regulatory effectiveness and market sustainability as local providers grapple with the rising influence of international competitors
European Gambling Markets Face a Stark Reality Check as Safer, Sustainable Visions Stall
What once looked like a promising new chapter for safer, more responsible gambling in Europe is quickly unraveling. Latest insights from H2 Capital, presented by COO Josh Hodgson at Gaming in Holland, expose a troubling trend: the Dutch offshore iGaming sector is surging monthly and is projected to eclipse the regulated market’s gross gambling revenue (GGW) by 2026.
And this challenge isn’t unique to the Netherlands.
With channelisation rates for slots reportedly plummeting to as low as 20-40% in Germany, Hodgson warns that key European markets, including the Netherlands, stand at a critical crossroads-but the window for effective course correction is rapidly closing.
Offshore Markets on the Rise
After the Dutch market legalized iGaming in 2021, initial optimism saw channelisation rates – representing the share of player stakes flowing through regulated platforms – peak near 70% in 2023. However, that momentum faltered.
A government-mandated 2024 review led to the imposition of strict deposit limits: €700 for players over 24, and €300 for younger gamblers. Though only a minority hit these caps, the impact is outsized. According to H2 Capital, the top 5% of players often generate up to 60% of market revenues. Restricting their legal spending inadvertently drives these high-value bettors to unregulated offshore sites-lacking vital responsible gambling safeguards.
By mid-2024, the Dutch gambling regulator (KSA) already recorded channelisation rates crashing to 50%, while offshore market growth skyrocketed by 52.4%, dwarfing the regulated sector’s modest 5.8% rise.
If left unchecked, H2 Capital predicts the offshore market will surpass the domestic regulated sector in 2026 – a tipping point with far-reaching implications.
The Tax and Regulation Spiral
Adding fuel to the fire, operator tax rates jumped from 30.5% to 34.2% at the start of 2025, with a planned 37.8% increase on the horizon. Operators report that this tax crunch has led to fewer player bonuses and lower return-to-player (RTP) values, eroding regulated site appeal-especially for high-stakes bettors. The knock-on effect? Further channelisation declines and diminishing tax revenues.
Meanwhile, government plans to ban “high-risk games” for 18-21-year-olds (a category still undefined) only deepen player uncertainty and further bolster offshore growth.
Enforcement: The Critical Course Correction
So, what’s the answer?
Hodgson stresses the urgent need for regulators to redouble efforts in policing their markets. This means cracking down hard on unlicensed operators through robust enforcement tools: payment blocking, ISP restrictions, affiliate clampdowns, and more. European markets like Germany, years ahead in their regulatory arc, are now confronting the fallout of over-regulation and are considering relaxing measures to regain balance.
Key Takeaways for the U.K.
While some nations wrestle with unintended consequences, the U.K.-still amidst regulatory reforms-faces a decisive moment. Affordability checks are entering final testing phases, joining a suite of measures mirroring Germany’s 2021 reforms, such as capped slot stakes, regulated game speeds, and bonus controls-many linked to plummeting channelisation rates.
Alarmingly, the U.K. government is reportedly eyeing tax hikes reminiscent of the Dutch approach. Operators are sounding the alarm, warning this risks pushing loyal bettors toward the unregulated and unsafe offshore market.
In summary: Europe’s regulated gambling markets must rethink the balance between player protection and market competitiveness-acting decisively to secure player safety without inadvertently fueling offshore growth. The lessons from the Netherlands and Germany are clear, and the time to act is now.
