EGBA issues German tax warnings & potential unlicensed website uptick

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The European Gaming and Betting Association has urged members of the German parliament to reconsider the proposed gambling tax measure, as well as issuing warnings of a black market uptick and land-based advantage.

The trade association says that a proposal by Germany’s Bundesrat to tax online poker and slots stakes at punitive rates would lead to more players using unlicensed websites. 

It adds that the move would also offer a “substantial and unfair” tax advantage to land-based operators, which it adds could reach as high as €290m each year in Bavaria alone.

It warned that the proposal by the German Bundesrat to introduce a 5.3 per cent tax on online poker and slots stakes would undermine the key objective of the country’s new online gambling regulations, and would be in breach of EU state aid rules.

“We welcome the regulation of the German online gambling market, and we fully appreciate that an online gambling tax will need to be paid,” explained Maarten Haijer, secretary general of the EGBA.

“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.” 

The group warns that the tax measure would impact the competitiveness of the licensed and regulated online poker and slots offer, which it says would lead to 49 per cent of German players preferring to use unregulated websites, according to a new player survey published by Goldmedia.

Secondly, the EGBA adds that the measure is punitive and would, in Bavaria for example, result in online poker and slots being taxed at rates four to five times higher than their retail equivalent land-based casinos, and 15 times higher than slots in land-based amusement arcades. 

In light of these concerns, the EGBA urges members of the German parliament to reconsider the proposed tax measure when it is debated in the Bundestag in the coming weeks. 

It is added that alternative tax rates, more closely aligned to those imposed by other EU member states, would ensure that the overwhelming majority of German players use licensed websites and benefit from the protection of German consumer laws, in line with the key objective of the country’s new regulation.

The association has shared its concerns about the proposed tax measure with the European Commission, and, should it be adopted as proposed, will consider all options, including filing a formal state aid complaint with the EC.