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Operators dissatisfied despite major German tax reform

Following objections by the European Commission Germany has made a number of concessions in regards to their online gambling regulations. However, the concessions are not enough to satisfy a number of the largest operators in Europe.
Last Thursday 15 of the 16 German states agreed to lower a proposed tax on online gambling from 16.6% to 5% and said they would issue a further 13 licences in addition to the current 7. However, tax turnover tends to be more damaging to operator profits than the gross profits tax which other countries employ.

Fifteen out of sixteen German states have passed new regulation governing online gambling but are now facing heavy criticism.

There were other negative effects for operators, all online poker and casino games have been banned by the proposal and a cap of 1,000 Euro a month applies to all bets. The change in regulation comes after the European Commission said that it was concerned that the original proposal would infringe the freedom of companies to operate within the EU.

The Remote Gambling Association (RGA) has also expressed dissatisfaction with the new regulation. The Chief Executive of the RGA, Clive Hawkswood, said that there doesn’t seem to be a connection between the wish to “provide German citizens with a regulated market and the actual text of the State Treaty.” He goes on to say that due to the ban on online casinos and poker games, the regulation “will have little effect in reducing the large number of German citizens gambling with operators licensed in other jurisdictions and which offer casino and poker products.”

The German State of Schleswig-Holstein has put forward its own gambling law which will be effective as of next year. The law will see operators taxed on a gross profits basis and will also allow operators to offer casino and poker games. However, their tax rate is higher at 20%.

OCA News Editor

Jenny McKinnley is OCA’s financial correspondent. After spending years on the trading floor in both NY and London, she offers insight from the inside out on world financial news and events.