The complaint concerns the proposed tax rates under Germany’s fourth state treaty on gambling, which allows for nationwide online casino operations. The treaty has been approved by all 16 states and is set to take effect on 1 July. The Bundesrat has submitted a proposal to the Bundestag for final approval, which is expected to be granted. Currently, the proposal is being reviewed by three different committees.
However, there is concern within the industry about the taxation of online slots and poker at a rate of 5.3% of turnover. Many argue that this rate would be unworkable. A report commissioned by Entain, Flutter, and Greentube from Goldmedia warns that if turnover is taxed at 5.3%, half of all German slots players may opt to play on unregulated sites instead.
In response to these concerns, the DSWV (Deutsche Sportwettenverband) has filed a complaint with the European Commission, arguing that the tax rates should be considered as illegal state aid. This move could potentially delay the implementation of the treaty. Under European law, member states are not permitted to grant advantages to specific companies, industry sectors, or regions that affect trade through interventions like tax rates. However, there are certain exceptions that may be granted on a case-by-case basis.
The European Gaming and Betting Association (EGBA) has also criticized the tax, claiming that it is punitive and favors the land-based industry over its online counterpart. While land-based tax rates can vary by state, Goldmedia estimates that in Bavaria alone, there would be a difference of €293.9m in tax bills between the land-based and online sectors, with slot halls benefiting the most at €178.1m.
Currently, online gambling operators in Germany can offer their services under a transitional regime as long as they adhere to the terms of the new treaty. These terms include restrictions such as a €1 stake limit per spin for slots and an average spin speed of five seconds. Operators such as LeoVegas and Bet-at-Home have already reported a decline in revenue in the first quarter due to these restrictions.
