Bundestag Approves 5.3% Online Casino Tax: Good or Bad Decision?

In March last year, the German federal states made an important decision, whose goal was to bring considerable changes to the country’s gambling legislation.

The new German Interstate Treaty on Gambling (Glücksspielneuregulierungstaatsvetrag (GlüNeuRStv) was intended to open the German online gambling market further. At the same time, the proposal was ready to introduce strict rules, especially for players protection.

In addition to legalising online gambling in Germany, the new law would establish a licensing regime for online games and extend the existing sports betting and lottery licenses.

According to lawmakers, the new procedure would be rigorous in order to make sure illegal gambling is eradicated.

After at least thirteen federal states greenlighted the new legislation by the end of April this year, and after receiving the approval of the German legislature, the Bundestag, everything is ready to see the new law come into effect on July 1.

New Tax Causes Controversy

The new law will have certain restrictions, limiting stakes at €1 per spin for online slot games. However, the most controversial part of the proposal is the introduction of a 5.3% tax on online slots and online poker turnover.

According to the Finance Committee, the tax will be applied to both licensed and unlicensed gambling offerings.

Even before the new law comes into force, implementing a turnover tax caused major concerns among experts.

A recent study, conducted on behalf of several online gaming operators, showed the tax could chase the players away from licensed operators. Some estimates say that nearly half of the gamblers in Germany (or 49%, to be precise) could move their activities outside the regulated market.

Will the Overregulation Have an Opposite Effect?

The survey was conducted by Goldmedia consulting and research group on behalf of Flutter Entertainment, Entain, and Greentube suggest the new turnover tax could have a dire impact on the German online market.

If the state continues to insist on the current online slot machines payout ratio, the country’s licensed sites could lose lots of customers. Up to 49% of players could turn their attention to black market online gambling sites, looking to grab their bonuses and offers.

The reason is quite simple: unregulated sites provide payouts rates of 98%. At the same time, payout rates at licensed operators wouldn’t exceed 90%.

The survey showed that the vast majority of players regard payout percentages as the most important factor. Nearly a third of the slot players said they would choose only licensed operators, while 6% valued the site’s product range and player protection measures.

It’s interesting that at this moment, 31% of players used unregulated gaming sites every month. However, further analysis also revealed that unlicensed sites got more hits than their licensed counterparts.

The study shows that around 75% of the use of online gaming sites is regularly based on offers utterly opposite to the requirements provided by the new law. These figures are a cause of significant concern. And while the new legislation focuses on the licensing process and player protection, it completely overlooks payout rates, which are essential for most German gamblers.