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The state of North Rhine-Westphalia has finally given its approval to the GlüStV or State Treaty on Gambling, which allows for the legalization of online gambling in Germany. This comes after all 16 federal states agreed to it, opening up the market for reputable online casinos, sports betting, and poker starting from July. The biggest question now is the proposed tax model, which has industry experts and researchers worried. Here's a rundown of the recent developments.
The Long-Awaited GlüStV is Finally Approved
North Rhine-Westphalia took its sweet time with the GlüStV, but after the state parliament gave its nod during the second reading, the treaty has gained approval from all 16 federal states. The law was initially met with some resistance as it involved discussing legalizing gambling with gambling experts. Though the law has now been ratified, not everyone is happy about it.
The vote happened on April 28th, with the governing CDU and FDP factions supporting the new gambling law, the Greens abstaining, and the SPD voting against. The AfD, which also voted against it in other states, this time supported the law.
Opposition parties criticized the supposedly inadequate player protection that would come with the legalization, but didn't block the law. They argued that the digitalization of gambling should not be ignored.
Minister President and Governor candidate Armin Laschet (CDU) also spoke up in favor, calling it a good compromise. He emphasized that a ban on online gambling was ineffective, as it was happening on the black market regardless. Laschet urged against over-regulation, as players will just retreat back into illegality.
Controversial Gambling Law
Criticism of the player protection provisions in the new gambling law doesn't come only from associations like the DAW (Deutsche Automatenwirtschaft e.V.). State parliamentary groups have also voiced their concerns. The CDU and Left Party in Saarland, along with the FDP and Greens in Lower Saxony, have all raised concerns. However, the regulations were developed based on successful models in Europe's regulated markets.
The GlüStV introduces various restrictions. For instance, there's an advertising restriction, a betting limit of €1000 per month, a €1 betting limit per spin for online slot machines, and a ban on live betting and table games like roulette and blackjack. The federal states also have the option to issue licenses for these two sectors, such as the state lottery. Other regulations include early warning and blocking systems.
Cutting-edge providers of online gambling depend on advanced algorithms that detect problematic gaming patterns and set off alarms. These exclusion and blocking systems are crucial for preventing gambling-related damage. They're also necessary to obtain a gaming license in Germany.
Other important aspects include the creation and documentation of player accounts, gaming processes, and a central blocking file for problem gamblers. A new gambling authority in Halle will be responsible for overseeing and enforcing these regulations. It will issue licenses and impose sanctions for rule violations. At least 120 jobs are expected to be created by this new organization. The number of gambling counseling centers is also set to increase.
The Controversy Over Online Taxes
The German government is hopeful that legalization will lead to better controls, more jobs, and additional tax revenue. To achieve this, the Federal Council intends to modernize the Racing Betting and Lotteries Act of 1922, one of the oldest tax laws in Germany. However, the proposed tax model is problematic. A 5.3% wagering tax is planned, and it's the primary source of expected tax revenues (over €1.3 billion).
This tax presents a significant issue. In Europe, a tax on gross gaming revenue is more common, and this model would make it difficult for online gambling companies to be competitive. If the tax burden is too high, these companies might have to lower their payout rates, also known as RTPs (Return to Player), to at least 90%. This would make legal products less attractive for players, and they may turn to illegal options.
RUB (Bochum) and HHU (Düsseldorf) universities have expressed serious concerns about this tax model. Despite the potential tax revenue, it could drive providers out of the market, making it difficult for players to stick with legal options. It remains to be seen if the German legislators will reconsider their decision.
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Source: www.onlinecasinosdeutschland.com
