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German Gambling Tax Could Push 49% of Players to Illegal Casinos
By Shane Addinall May 09, 2021 IndustryThe new German State Treaty to regulate online gambling in the country comes as bittersweet news as strict laws will be implemented, including new turnover taxation requirements that may push masses of players to illegal casinos.The German gambling climate is changing in a big way for both players and operators. The approval of a new gambling state treaty by all sixteen German states will see a new framework installed into the online gambling sphere by 2022.
The new regulations will widen the selection of gambling options considerably. While only sports betting is currently legal in the country, the new federal laws will allow for a larger offering of casino games, but under strict provisos.
A framework for federal governance of gambling has been needed for a while in the country. Germany has not been as quick to embrace regulated gaming the way the rest of the EU has. However, getting all states on board has not been an easy task. Prime Minister, Armin Laschet had this to say of the final resolutions:
“This state treaty was a Herculean task and, as a result, is a strong sign of how federalism lives and functions in Germany and how it comes to the right results through sometimes arduous negotiations. A joint effort was made to solve a problem that had seemed unsolvable for years. The conflicting interests, needs, and concerns for the benefit of all 16 states were considered.”
The release of the new legislation for the market space has come under great scrutiny though, with many controversial talking points arising. Many of the changes to the legislation will limit the freedom of play which is enjoyed in other gambling markets in Europe. Some of these controversial sections in the treaty include:
- Slot restrictions with a €1 wager limit per spin.
- Live sports betting restrictions limiting bets to ‘final results’ and ‘next scorer’ options only.
- Setting monthly financial limits on player accounts.
- The implementation of a 5.3% turnover tax.
While there are concerns about all the new implementations discussed above, the most worrying instalment for the market is potentially the 5.3% taxation on game turnovers, as this is set to turn many players to the black market for their entertainment.
The Trouble with the Taxes
The problem casinos have with turnover tax is that it is money owing on what the operator generates, irrespective of whether it is profit or not. As such, gambling operators will have to ensure that they make decent profits on the games to afford the taxes comfortably. To do this, they will have to lower the RTP percentages to players.
A study conducted by Goldmedia for industry heavyweights like Novamatic/Greentube, Entain, and Flutter Entertainment shows that Germans who currently play at unregulated sites will have to sacrifice returns of between 96% to 98% for RTP ratios closer to 90%. That is a massive shift in anyone’s book.
This new change will present a big problem for the average German player who is more worried about the RTP when choosing a game, than anything else. A statement from Goldmedia read:
“In the study, the selection preferences of the players for online gaming offers with a focus on Online Slots were determined. The result is that for players in Germany, payout rates are more important than a German license and the associated security aspects.”
Regulated casinos and providers have concerns about the fact that up to 49% of players might move to play their games outside of the regulated environment. This is problematic to both profit generation in Germany and the protection of its players.
The new tax laws are due for implementation along with the German State Treaty after approval by the federal council and then finally by the legislature. So, there is still time for a U-turn, however unlikely it may seem.
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