The European Gaming and Betting Association (EGBA) has warned that a proposal by the German Bundesrat to introduce a 5.3% tax on online poker and slots stakes would undermine the key objective of the country’s new online gambling regulations to direct online poker and slots, customers, into a regulated market and would be in breach of EU state aid rules.
According to EGBA; The effect of the tax measure would be twofold. Firstly, it would impinge upon the competitiveness of the licensed and regulated online poker and slots offer and lead to 49% of German players preferring to use unregulated websites, according to a new player survey published by Goldmedia. Players outside of the regulated market would be deprived of the protection of German consumer laws, rendering the proposed tax incompatible with the key objective of the country’s new online gambling regulation due to enter into force on 1 July 2021.
Secondly, the proposed tax measure is punitive and would, in Bavaria for example, result in online poker and slots being taxed at rates 4-5 times higher than their retail equivalent land-based casinos and 15 times higher than slots in land-based amusement arcades. This would provide a substantial and unfair tax advantage to Germany’s land-based operators over their online counterparts. The EGBA believes that this would constitute an illegal state aid under EU law. According to Goldmedia, the substantial tax advantage for land-based operators would be as high as €290 million each year in the state of Bavaria alone.
Maarten Haijer, Secretary-General of EGBA 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.”