EU complaint filed over German igaming tax rate
The German gaming group Deutscher Sportwettenverband has filed a state aid complaint with the European Commission.
Germany.- The industry group Deutscher Sportwettenverband (DSWV) has filed a complaint with the European Commission arguing that Germany’s proposed tax rate for igaming offers an unfair advantage to land-based operators.
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.
While DSWV appears to be the first group to make a complaint to the European Commission, the European Gaming and Betting Association (EGBA) has also said that it believes Germany’s proposed tax rate may contravene EU law.
EGBA secretary general Maarten Haijer has said the EGBA may also file a complaint to the EU if the current tax proposal goes ahead.
He said: “We welcome the regulation of the German online gambling market, and we fully appreciate that an online gambling tax will need to be paid.
“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.
“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.”
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.
