Study suggests German State Treaty could see 40% playing offshore

| By Marese O'Hagan
A new study suggests that new restrictions and taxes in online gambling in Germany could lead to 40% of players playing offshore and may cancel out player protection efforts.

The study, which was conducted by the Handelsblatt Research Institute on behalf of online trady body Eco, found that restrictions outlined in the new German State Treaty, the Glücksspielneuregulierungstaatsverag, and the accompanying tax rates could encourage users to play in unlicensed markets and may affect efforts for player protection.

“Our data show that the majority of players in online casinos react very sensitively to changes in gaming conditions,” said Professor Dr. Bert Rürup, president of the Handelsblatt Research Institute, on the findings of the study.

“This means that if the playing conditions on the online casino site they have been playing on change, for example, in the form of poorer chances of winning, lower betting limits or lower gaming speeds, over 40 percent of online casino players would look for an offer in which the playing conditions have not deteriorated.”

Dr. Rürup also commented on amendments to Germany’s Race Betting and Lottery Act, which would set a turnover tax of 5.3% for onlien slots and poker, saying: “The taxes planned by the federal states are extremely high in European and international comparison. A 5.3% tax on stakes could make legal and licensed offers very unattractive.”

The 5.3% turnover tax is an amendment to the Act and was heard by Bundestag’s Finance Committee on 7 June. Two further committees – on Sport and Legal Affairs and Consumer Protection – are also considering the bill.

The amendment has already faced major opposition, the Düsseldorf Institute for Competition Economics (DICE), warning that a tax on turnover could “doom” re-regulation and another study estimating that half of all German players may play offshore under the system.

In response to aspects the Treaty, Eco expressed concern regarding data protection in terms of the planned system to prevent players playing with multiple operators at a time. Standards for this system were released last week.

Last week, the European Gaming and Betting Association (EGBA) filed a formal state aid complaint to the European Commission against the Bundesrat in response to the 5.3% tax proposal, while industry body Deutscher Sportwettenverband (DSWV) filed a similar complaint. Both bodies argue that the tax rates are illegal state aid as they favour the land-based sector over online.

Professor Michael Rotert, Eco honorary president, believes that the Treaty should be readjusted to align with best practices in data protection and with lower taxes.
“A sensible regulation that enables state control involves opening up the online gambling market to licensed providers who are under state control,” said Rotert.

“This must not be jeopardized by taxation plans, excessive data collections and restrictive regulations, because this survey also confirmed how important the protection of personal data is to people.”

The Treaty was approved by the state parliament of Nordrhein-Westfalen in April and is set to come into force in all 16 federal states on July 1.