EGBA urges German Lander to drop ‘anti-competitive’ online tax rates

By | May 5, 2021

The European Betting and Gaming Association (EGBA) has urged the German Bundesländer to reject proposed tax rates of 5.3% on online poker and slots, arguing that this would undermine the country’s recently updated gambling regulations.

The turnover tax has been proposed by the Bundesrat, Germany’s Federal Council, as the final tax arrangement that should be imposed on casino and poker verticals of the Fourth Interstate Treaty on Gambling (GlüNeuRStV). 

The final tax-rate applicable to online casino and poker vertical remains the final outstanding issue of the overhauled Interstate Treaty which is scheduled to come into force on 1 July. 

Citing a study by Goldmedia showing that 49% of German players would prefer to use an unregulated operator, EGBA has argued that the proposed tax would both infringe upon the competitiveness of Germany’s gambling sector, as well as push gamers towards unlicensed betting sites where they are not afforded the same protection as the regulated market.

Secondly, the trade association has pointed out that the tax would provide a ‘substantial and unfair advantage to Germany’s land-based operators over their online counterparts’.

Web-based betting firms in the state of Bavaria alone would be taxed at rates between four and five times higher than their retail equivalent land-based casinos and 15 times higher than slots in land-based amusement arcades, if the proposal is approved.

This, EGBA argues, would go against the regulations of the European Commission, which prohibit ‘differentiated tax treatment,’ as this qualifies as ‘state aid’ under European Union law.

“We welcome the regulation of the German online gambling market, and we fully appreciate that an online gambling tax will need to be paid,” said Maarten Haijer, Secretary General of EGBA.

“However, we urge the German parliament to reconsider the proposed punitive rate of the tax because it will push German players to use unprotected and unregulated black-market websites and give land-based operators a massive tax advantage.”

Instead, the body ‘urges members of the German parliament’ to reconsider the tax rates, and instead entertain the possibility of introducing alternative rates more closely aligned with other EU member states, ensuring that the majority of players use licensed operators, in line with the objectives of the GlüNeuRStV.

EGBA has also made it clear that it will ‘consider all options’ to prevent the tax from being implemented. Having already shared its concerns with the EC, the association has asserted that it will file a formal state aid compliant with the EU’s executive branch if necessary.

Haijer added: “We stand ready to share our experiences in other jurisdictions of the EU, and firmly believe that a tax level can be established which strikes the right balance between meeting the needs of the German consumer while ensuring sufficient tax revenue for the state.

“Should the measure go ahead as proposed, we will have to consider all available options, including filing a state aid complaint with the European Commission.”

Against independent consensus, policy groups of the Bundesrat have argued that high taxes on online casino verticals are required to dissuade national consumers from intensive play.

Germany’s new online gambling regime will further impose player protection measures such as a €1,000 monthly deposit limit across all operators and a €1 stake limit on slots.

Once established later this year, the GlüNeuRStV will also require all operators to individually register player details with the gambling registry of each Lander.

Q1 trading saw a number of European-listed operators cite German market complications, noting tough operational adjustments to provisional Interstate demands servicing the nation’s 16 Lander. 

Foreign and domestic incumbents have stated that they will accept the final terms of the Interstate Treaty as a means to provide regulatory certainty for Germany’s online gambling marketplace.

However participants have warned the Bundesrat that German gambling will require an immediate modification once its regime is launched, as its legislation has proved unsatisfactory for all relevant stakeholders.