The Tax Stands: Germany Opens Despite Tax Protest

Despite late opposition, Germany's 5.3% gambling tax stands as the long-awaited debut of full regulation comes into effect.

The New Market

Set to be overseen by the gambling authority of Saxony-Anhalt state, Germany's new market and licensing system is now fully open for private operators of sports betting, virtual slots and online poker across the entire federation.

Key Regulations

Against the backdrop of the controversial 5.3% tax, all licensees will be further prohibited from advertising sports betting before or during the live sports event broadcasts, with football players and officials barred from sports betting advertising. Monthly player deposit limits are set at 1000 euros per month.

In Application

The conditions for the new Interstate Treaty on Gambling came into full force on Thursday, July 1. The designated central gambling authority in Halle of the federal state of Saxony-Anhalt has established licensing conditions for virtual slot machines and online poker, with casino games such as blackjack or roulette not covered by the licensing conditions.

Self-Exclusion System

Operators are required to use problem gambling detection software software to identify problem behavior at the earliest stage possible. The German model will provide avenues for those identified with problem behavior to voluntarily have themselves blocked from all amusement arcades, casinos, online casinos and sports betting through the use of an expanding central player lock file called OASIS.

The Tax

Applicable specifically to stakes in games of chance in online casinos analogous to racing and sports betting, the 5.3 percent tax rate initially came under fire from the German Sports Betting Association.

Opposing Concerns

Concerns of players being driven to the black market at a rate of almost $1b per year, and net gain disparities between land-based and online operators calculated disparity of $354 million led the European Gaming and Betting Association (EGBA) to submit a formal state aid complaint to the European Commission in response to the 5.3% tax proposed by German Bundesrat to no avail as of yet.

Outlook

The proof is only in the pudding: if the tax plays out as inequitably as opponents claim, the tax would be among the first adjustments on the table for the massive market, with some growing pains to be expected.