Author: Marshall Meyer

European Gambling Association Criticizes German Gambling Tax

In the course of the new German State Treaty on Gambling, a new gambling tax was brought into being. This was also more than necessary. The previous law on gambling did not yet deal with online casinos . Furthermore, Germany has taken criminal action against online gaming providers in recent years, albeit with little or no success. However, this makes it clear that Germany was by no means on the side of the online casinos and may not even have planned to legalize them.

Now, however, things have turned out differently and a separate tax had to be created for the soon-to-be legal online gaming providers. It was set at 5.3 percent and is marginally higher than the previous tax on various games of chance. The much bigger problem is the calculation basis. The tax should be calculated on the stakes. This means considerable disadvantages for both the player and the gaming provider :

The gambling providers have to adjust the payout quota downwards due to the tax. This makes the affected providers unattractive for the players. Unlicensed companies do not have to change the quotas. For this reason, the EGBA sees the aim of the German gaming contract as endangered.

In order to be able to estimate what the consequences of the new tax could be, a study was launched. The results of the study clearly reflect how the players think about it .

It is positive that the first licenses are already in place for Germany: Entain, Flutter and Greentube have the coveted license and are therefore allowed to offer online poker and slots. However, these corporations also have mixed feelings about the gambling tax and have carried out a study for this reason. 619 players took part in this online study . Half of these admitted they would no longer gamble with legal providers when the tax comes into effect. This is primarily due to the fact that the gambling corporations will most likely lower the payout ratio from 96 to 90 percent. This is the only way they can remain competitive – from a financial point of view.

If all players now implement their plans to migrate to illegal gaming providers, the goal of the German State Treaty on Gaming would definitely not be achieved . After all, gambling should be legalized with the contract so that dubious providers are no longer used. Legalization would also increase player protection, as there are very strict rules attached to a license. However, if the players migrate to illegal providers, the player protection disappears.

EGBA also states that the new tax on online gambling will benefit land-based casinos and amusement arcades . The latter do not have to pay the new tax. This creates the following imbalance: The tax on online slots is fifteen times as high as on the slot machines on site. For online poker, the tax increases four times – compared to poker on site.

Strictly speaking, the new rule created by the State Treaty on Gambling would violate EU law, as land-based gaming providers would receive a tax advantage. The technical term for this is illegal state aid . The EGBA even goes further and has asked the German government to reconsider the tax. If not, the association would lodge a complaint with the EU.