Boosted sports betting-related income tax
The Federal Ministry of Finance in Berlin released its 2016 tax revenue report, revealing that income from sports betting tax has significantly increased. While around 240 million euros were collected in the 2015 calendar year, this amount rose to approximately 307 million last year. This marks a 28% increase within just one year.
The German Sports Betting Association (DSWV) cites multiple reasons for this surge in tax revenue. Firstly, European Championship years tend to generate higher turnover for betting providers due to the presence of major soccer tournaments. Additionally, the increase in tax compliance from providers who are increasingly active in the German market, despite the absence of regulation, is a contributing factor. "Mathias Dahms, President of the DSWV" explains.
Interestingly, the German sports betting market is largely unregulated. Only one provider, ODDSET, is licensed in Germany and authorized to offer bets. However, the monopoly held by ODDSET is highly controversial and not enforced practically. ODDSET typically offers lower odds than its international competitors, so players prefer to use the services of these other providers. These providers are licensed in other European countries and take advantage of the freedom of competition within the EU.
Despite this situation, the German state allows the providers to operate. Since the introduction of the current sports betting tax in 2012, companies have been paying taxes amounting to 5% of the stakes placed, without any legal obligation to do so. The betting volume for 2016 was reported by the Federal Ministry of Finance to be 6.13 billion euros. The ambiguous legal situation is not obvious to customers, who benefit from the attractive offers from the providers. Some Bundesliga clubs and sporting events are even sponsored by betting providers, as well as television advertisements and many websites in German. Because of the legal ambiguities, the state could potentially respond with bans, but has chosen not to do so.
The revenue generated from these tax contributions is one of the factors preventing further action. Additionally, several rulings from the European Court of Justice have cast doubt on the authorities' laws concerning the gambling monopoly. The federal states responded to these rulings by deciding to issue 20 licenses for sports betting providers in 2012. However, the companies found this numerical restriction arbitrary and filed lawsuits. The courts agreed with their argument and ceased the proceedings. Since then, the popularity of sports betting has increased, but no significant action has been taken by the state. At the end of last year, the Conference of Minister Presidents finally decided on a new award procedure for 2018, using qualitative standards instead of the previous numerical limit.
The DSWV argues that these changes are not enough. The association suggests that the tax revenue from sports betting should be earmarked for the promotion of grassroots sport in the future. "Mathias Dahms, President of the DSWV" explains further, "Popular sport generally does not have access to sponsors like top-level and professional sport, for example."
This illustrates the significant difference in speed between the private and public sectors. While companies are calling for legal certainty and regulation, the state has been stuck at the level of declarations of intent for years. The public sector could potentially generate more revenue by granting concessions and collecting the corporate tax from the local companies. Furthermore, the objectives of the Interstate Gambling Treaty, which primarily focus on player protection, could be achieved through earmarking revenues and enforcing stricter regulations on licensees.
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Source: www.onlinecasinosdeutschland.com
