German Online Gaming: Don’t Mention the Law

Paraphrasing a famous football dictum, perennial winners Germany thought their hard-fought battle to legalise and legislate online gaming was over but now, just as they stand on the cusp of victory, they effectively face defeat through an ill-judged extra-time penalty.

Against expert advice, and in defiance of lived, pan-European, betting experience, federal (Bundestag) and state (Bundesrat) lawmakers have lumbered the nation’s newly legal sports and online betting industry with an additional 5.3 per cent tax-at-play that many gambling stakeholders claim will only throttle the iGaming baby at birth – and, they further assert, drive punters to the illegal market.

This month a new German law, the State Treaty on Gambling, which finally legalised online gaming in the nation, came into full force after decades of statist betting monopolies and prohibition.

But simultaneously what the central and state governments have given with one hand, the law, they’ve snatched back with the other, a muddled and clumsy imposition of a tax not on winnings, as is the industry norm, but on each and every individual online bet placed.

This makes online gaming more expensive for punters and reduces the chance of winning.

Now the German Sports Betting Association (DSWV)—backed by the European Betting and Gaming Association–has called foul.

“By taxing the individual stakes, the state asks the customer to pay for every single spin of the virtual slots – over and over again, every few seconds and even if the stakes come from previous winnings,” said DSWV President Mathias Dahms.

“There is a reason that all other EU countries have imposed an income tax on these games and not a gaming stake tax.

“German consumers now have two alternatives: Either they accept that the game will be significantly more expensive for them or they switch to black market offers that are easily available on the Internet and that do not pay taxes in Germany. Neither can be politically wanted,” Dahms asserted.

Prof. Justus Haucap, a leading German economist and former Chairman of the country’s Monopolies Commission, was even more strident and argued that the controversial tax would drive at least half all online consumers to illegal providers.

Added Dahms: “Sports betting is fun and popular with people. Gambling is part of the modern digital entertainment world. The DSWV believes in transparent and reliable gambling. [We] advocate consumer protection, the prevention of gambling addiction and the protection of minors. [But] excessive taxation must be corrected.”