German Legislators Oppress Online Gambling

Representatives of the European Gambling and Betting Commission want to challenge the decision of the German state legislature to raise taxes on online gambling, in particular, to raise taxes on online slots and online poker to 5.3%. German lawmakers are seeking to reform their online gambling market in the near future. The first changes regarding the increase in tax collections are scheduled for July 1, 2021. Thus, according to the new law, online casino operators organizing online poker games and online slots will be forced to pay an increased amount of government fees, which puts them at a disadvantage against the land-based operators.

The Bundesrat is the legislative body of Germany, representing the 16 states. Its representatives drew up and sent a special proposal to raise the tax on online gambling to 5.3%. This proposal must be finally approved by the Bundestag, the German legislature. It is noteworthy that at the moment the bill on increasing tax rates is being considered by three committees. There is reason to believe that lawmakers are trying to push through this bill as quickly as possible - before the entry into force of Germany's Fourth State Treaty on Gambling, designed to authorize the provision of online gambling and betting services to international operators wishing to operate in the German market. According to the proposal put forward by the Bundesrat, operators of online casinos will be forced to pay an increased tax of 5.3% on proceeds, which is almost 5 times higher than a similar tax paid by the land-based operators.

According to EGBA representatives, the proposed tax is significantly higher than that paid by land-based casinos. So, on average, online slots and online poker operators will have to pay 4-5 more to the treasury than their mortar-and-brick counterparts. Moreover, taxes on online slots will exceed similar taxes on land-based slot machines by almost 15 times. Using the example of Bavarian commercial enterprises, this will lead to about 300 million Euro in tax benefits for the latter. Overall, the land-based gambling companies will receive an annual tax benefit of around €750 million. In fact, it looks like the provision of state assistance to offline operators in their competition against online counterparts, which is contrary to the current EU legislation.

According to Maarten Hayer, Secretary General of the EGBA, they highly value the initiatives of German legislators to reform the online gambling market, but cannot support their plans to raise taxes for the online segment as they look "punitively high "and will undoubtedly bring undeniable tax benefits to operators of land-based casinos. Notably, Deutscher Sportwettenverband also filed a similar complaint. Recall that at the moment, operators of online gambling platforms provide their services in Germany in accordance with the so-called 'transitional framework' that will be suspended from July 1, 2021, when it will be replaced by a permanent law.