Germany's New Tax Laws Could Drive Online Gamers to Illegal Sites

Germany is set to implement new taxation laws on online poker and slots, which could drive players to unregulated websites. A 5.3% tax on poker company revenues and 8% on online slot providers is proposed to come into force on July 1st. This move has sparked concerns among experts who fear that the high taxation levels could make legal gambling unattractive and drive players to the illegal market.

According to a player survey by Goldmedia, 49% of respondents stated they would switch to unregulated websites should such punitive tax rates be levied. Dr. Justus Haucap, a leading economist, warns that the proposed taxes could make legal gambling so unattractive for players that they are driven to the illegal market. He explains that cutting player payouts by 8% would be the only way for operators to retain their profit margins, thus deteriorating the attractiveness and competitiveness of the legal game.

Dr. Haucap's report, commissioned for operator associations, suggests that a 15-20% tax based on gross revenue should be set. This, he argues, is the only way to achieve a high channeling rate with high tax revenue at the same time. The law is due to take effect on July 1st unless it hits a stumbling block in the German legislature and/or via EU intervention.