The DSWV (Deutscher Sportwettenverband) and DOCV have filed EU state complaints against the Bundesrat, German’s Federal Council. The gaming and betting associations argue that the proposed tax rates on iGaming provide land-based operators an unfair advantage over online operators.
Germany’s state governments are on the verge of approving a 5.3% proposed tax on poker and online slots stakes. However, the European Commission has been dragged into a complaint filed by DOCV and DSWV. The EC’s involvement comes in the knick of time to pump the brakes on the proposed tax rates.
There are time constraints involved as well, with a tight timetable that will see the proposed taxes approved by the country’s states latest June 7. This will allow the national parliament a chance to draft legislation and pass it as law before the planned July 1 implementation of the Fourth State Treaty on Gambling. The proposal is under the scrutiny of three committees.
But it’s this framework that has caused friction between gaming and betting associations DOCV and DSWV and the Bundesrat. The 5.3% proposed tax is considered unworkable and that they offer an unfair market advantage. According to the two associations, the differentiated tax rates imposed on online gaming favor land-based casino operators, and this they say is similar to state aid.
The dissatisfaction expressed by the German associations comes after another complaint was filed by the EGBA (European Betting and Gaming Association). Similar to the German associations, the EGBA is against the proposed tax rates, arguing that they offer favorable conditions for state-owned casinos.
The German associations aren’t just crying foul, they have a report to back their concerns. According to a Goldmedia report requested by Entain, Greentube, and Flutter Entertainment, the proposed tax rates would lead to a rise in unregulated sites. The report explained that half of the German punters would resolve to black sites to avoid the taxes.
After receiving the complaints, the EC is now demanding that the German state governments provide further clarification on the difference between state aid and the proposed tax rates. According to the EC business legislation, no member state is allowed to offer any form of advantage to preferred companies or industries, or companies in certain regions in such a manner that may affect trade through the likes of tax rates.
Due to the petition, the implementation of the tax rates may take a while, up to a year. This is also because of the forthcoming recess of the state governments. Later in September, there will be federal elections that could further delay the implementation.
Even with the multiple hurdles presented before it, the national government is still standing by its decision to implement the gambling regulation. This is whether the controversial tax rates are included or not. Of course, the tax delays will go down well with the DOCV and DSWV. According to the associations, this will provide plenty of time for various stakeholders to propose more acceptable solutions as far as the tax rates go.
Earnings reports from the first quarter show that most of the European operators singled out Germany’s market complications. Increased operational costs due to adjustments as well as complying with the incoming gambling regulations are among the complications cited.