Newsletter - Turnover tax may doom German market regulation, experts warn ...and more!

German regulator issues 21 sports betting licenses, 35 applications still pending

The Regierungspräsidium Darmstadt (Hesse), which oversees the German online sports betting licensing process, has so far granted 21 betting licenses. 35 license applications are still under review, a spokesperson said. It is unclear how much time the Hessian regulator will need to decide on the pending applications.


Pending sports betting license applications from operators that do not comply with the transitional regime may be rejected due to unreliability.


With 21 major operators having been granted a sports betting license, 87% of the German betting market is now regulated, the spokesperson added.


In the meantime, it has also been decided that Germany's future national gambling regulator will be based in the city of Halle in the state of Sachsen-Anhalt. Sachsen-Anhalt is among the states that has decided to ratify the GlüStV 2021.


Dutch regulated online market to open on October 1, 2021

In a letter to the Lower House, the Dutch Ministry of Justice and Security has confirmed that the country's Remote Gaming Act will enter into force on April 1, 2021 – one month later than originally envisioned. The regulated online market will open six months later, on October 1, 2021.


The Netherlands Gambling Authority subsequently clarified the license application deadlines and the customer database purge that is expected of prospective licensees.

The Netherlands Gambling Authority currently expects an initial batch of around 40 remote license applications from April 1 onward.


UKGC dismisses concerns that additional regulations would lead to black market growth

In a letter responding to the Gambling Related Harm All Party Parliamentary Group (APPG), UK Gambling Commission (UKGC) CEO Neil McArthur said he is “not convinced” that further regulation of the licensed market could send consumers offshore to the unregulated realm.


“We know that licensed operators and their trade bodies are concerned about the impact of the illegal market, but our own evidence suggests that the impact may be being exaggerated,” McArthur further added.


“Black market concerns should be kept in proportion to the need to continue to drive up standards and make gambling safer in the regulated market.”

Thus, the UKGC decided to introduce additional restrictions to strengthen the protection of online slot players.


The new measures include outright bans on the following features:

· Features that speed up play or give the illusion of control over the outcome.

· Slot spin speeds faster than 2.5 seconds.

· Auto-play - which can lead to players losing track of their play.

· Sounds or imagery which give the illusion of a win when the return is in fact equal to, or below, a stake.


Upcoming events

The following events may be of interest to the Gaming in Germany community.


Events

  • SiGMA Europe has been rescheduled to 13 – 15 April, 2021.

  • The third edition of CasinoBeats Summit will return to Malta from May 18 – 20, 2021, as part of Spring iGaming Week organized in partnership with KPMG and Gaming Malta.

  • The Betting on Sports America conference and expo has been scheduled for 8 – 10 June, 2021 and will bring together all the major players in the fast-growing North American sports betting industry.

  • iGB Live 2021 has also been moved to 28 September – 1 October, 2021, but will still take place in Amsterdam!

  • The World Gaming Executive Summit is returning live on 6 – 8 December, 2021 at the W Hotel, Barcelona.

  • ICE London and iGB Affiliate London have been postponed to 1 – 3 February, 2022.


Webinars and virtual events

  • Mindway AI has published an on-demand webinar on player profiling and efficient responsible gaming interventions.

  • Sportradar, the global provider of sports betting services, announced the launch of Sportradar Connect, a new curated event series. The first session, on 23 February, 2021, will feature Ted Leonsis, founder, chairman, principal partner and CEO of Monumental Sports & Entertainment in Washington DC

  • Join the iGaming Next Power Hour every Friday @3pm CET for a short, compact, educational and social weekly digital gathering with some of the brightest and most connected minds of the industry.

Turnover tax may doom German market regulation, experts warn


A proposed 8% tax on virtual slot stakes would drive players away from the regulated offering, a report, drawn up by DICE Consult at the behest of the Deutsche Sportwettenverband (DSWV) and the Deutsche Online Casinoverband (DOCV), shows.


A working group made up of the State Finance Ministries of Hesse, Nordrhein-Westfalen, Bayern and Berlin proposed an 8% tax on online slot turnover, as well as a 5.3% tax on poker stakes.


While this discussion has been put temporarily on hold for the time being, such tax rates would make the German regulated market uncompetitive and would drive players toward illegal offerings, the report's lead author, Prof. Dr. Justus Haucap, convincingly demonstrates:


“On average, the payout quota for virtual slot machine games is currently around 96 percent [...] This means that players win back an average of 96 percent of their stake. The casino receives four percent of the stake on average. However, the tax burden for a gambling stake tax of eight percent [...] exceeds the [operator's] income by 100%.
Online gambling providers would therefore have to adjust their payout percentages. Based on a competitive payout quota of currently 96 percent on average, the online casino would have to reduce this by a further eight percent (the amount of the gaming stake tax) to 88 percent. Such a gaming stake tax of eight percent would then have the same effect as a gross gaming income tax of 66.67 percent (eight euros tax of the 12 euros withheld). The tax burden is therefore still immense, even with a reduction in the payout ratio - especially in a European comparison, where the average gross gaming income tax is 19 percent.
In practice, however, such a reduction in the payout rate from 96 to 88 percent will not be possible at all. The player could effectively bet about three times as much on the black market with the same starting budget or effectively play three times as long as on the regulated market.”

Because of this, the German market would be virtually certain to fail to meet its targets for channelization, which would then mean that players would not be protected. This, in turn, means that the rationale for regulating the market in the first place would entirely disappear.

Other news

The State of Nordrhein-Westfalen has decided to declare the bidding process surrounding the privatization of the state-owned Westspiel casinos confidential. Even the number of received bids has remained a secret.


Starting in March, Google will allow real-money gambling apps (lottery, betting, casino, and fantasy sports) in its Germany-facing app store.


The Hamburg gambling supervisory authority fears that players will increasingly turn to illegal gambling offerings as the Covid-19 lockdown continues.


The state government of Mecklenburg-Vorpommern has introduced legislation to approve the GlüStV 2021.


Sachsen-Anhalt will create more advice centers to help treat and prevent gambling addiction as part of its plans to implement the GlüStV 2021.


With an annual turnover of €735m (2019: €657m), LOTTO Hessen GmbH achieved its best financial results ever in 2020.


The Administrative Court of Baden-Württemberg has suspended the forced closure of land-based betting shops, as long as minimal face-to-face customer interaction can be guaranteed.

Austrian gamblers have launched proceedings to recover over 32m worth of losses from unlicensed online gambling operators.