EGBA files EU state aid complaint over German igaming tax

The EGBA says the proposed tax rate is "punitively high".
The EGBA says the proposed tax rate is "punitively high".

The European Gaming and Betting Association is the second group to file a complaint with the European Commission over Germany’s proposed tax rate for online slots and poker.

Germany.- The European Gaming and Betting Association (EGBA) has filed a complaint with the European Commission arguing that Germany’s proposed 5.3 per cent tax on online slots and poker turnover constitutes illegal state aid for land-based gaming.

The trade group’s announcement comes just a day after the German industry association Deutscher Sportwettenverband (DSWV) announced that it had made a similar complaint.

The complaint against Germany’s Federal Council, the Bundesrat, argues that the tax rate contravenes EU rules on state aid

The proposed tax regime for Germany’s new igaming market is currently being analysed by the federal legislature, the Bundestag.

It sets a 5.3 per cent tax rate on turnover on online slots and poker, which many operators and associations fear will make the licensed igaming sector untenable.

A survey carried out by Goldmedia for Entain, Flutter Entertainment and Greentube found that half of German igaming players may be driven to the unlicensed market as a result of the tax rate.

The survey of 619 slot players found that 49 per cent of players may stick with unlicensed operators if licensed operators have to reduce payout ratios.

The study said that licensed operators would be likely to offer payout rates of around 90 per cent in order to absorb the tax, while unlicensed operators would be able to offer payout rates of around 98 per cent. 

The tax rate on land-based gaming in Germany varies from state to state. However, Goldmedia estimated that in Bavaria, the difference in the tax bill for the land-based and online sectors would come to €293.9m.

EGBA secretary general Maarten Haijer said: “We have previously made our concerns about the tax proposal known to the German authorities but to no avail and they will now need to justify the measure under EU law.

“We appreciate the efforts made in recent years towards introducing a new online gambling regulation in the country and recognise that an appropriate tax will need to be paid by online gambling operators.

“However, the rate of the proposed tax is punitively high and will distort market competition and directly benefit Germany’s land-based gambling establishments over their online counterparts. 

“We call on German politicians to rethink the proposed tax rate and bring it closer in line with the tax rate applied to online casino products in other EU countries.”

Germany’s new gambling legislation 

The new state treaty on gambling has finally been approved by all 16 of Germany’s federal states, providing a framework for the launch of a licensed igaming market.

Operators hoping to work under Germany’s new licensed market have already been able to cater to customers under a transitional regime since November.

Many have already seen an impact on revenue as a result of amending operations to comply with new legislation, with Bet-at-home reporting a 5.5 per cent drop in revenue year-on-year.

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EGBA gambling regulation