The Gambling Research Centre (Forschungsstelle Glücksspiel) at the University of Hohenheim in Stuttgart has issued a series of recommendations to update German gambling laws, including imposing taxes on unlicensed operators, and legalising, but strictly controlling, online casino games.
The Centre’s position paper, released ahead of a meeting of state lawmakers in December, also called for a new, federal regulatory authority to be established.
“There is agreement that the enforcement against illegal providers on the Internet needs to be strengthened,” the Centre said.
It pointed out that offshore operators were currently able to bypass any gross revenue or turnover taxes imposed on licensed operators, or only a sales tax on revenue. By ensuring that all gaming businesses, whether licensed or not, were required to pay tax, the illegal operators would lose a key advantage over the regulated market.
The Centre highlighted the fact that land-based casinos generated gross gaming revenue of €607m in 2017, and paid €319m in casino and sales taxes. The illegal online market, on the other hand, is estimated to have generated total GGR of €1.76bn that same year, but only paid value added tax of €334m. Had they been subject to the same taxes as their land-based counterparts, these operators would have been liable for €915m in taxes.
Furthermore, it noted, illegal land-based gambling is currently a criminal offence in Germany, but the Criminal Code does not cover illegal online gambling. As such, the Code should be reworded to ensure that foreign operators offering their services online would be included, it said.
The Centre added that legalising and regulating online casino would be a boost to the country, as the games are already commonplace but currently unregulated. The report said that player protection measures such as a self-exclusion list, feedback on gaming behavior and spending limits would help improve the status of online casino.
“Currently, the offer of online casino games on the Internet is largely illegal, but still takes place. It can be assumed that some states will continue to allow online casino games or will do so in the future,” it explained. “Also, for player protection reasons, a regulated market is preferable to a non-regulated market.”
However, it also recommended a complete ban on casino advertising, and said that poker should remain illegal, due to the risk of fraud and manipulation.
Finally, a regulatory body established as an incorporated public instution, with the power to issue statutory ordinances, would ensure operators, lawmakers and suppliers could “to obtain legal certainty as soon as possible in disputes”.
The recommendations are for a future regulatory framework to replace the third amended State Treaty, which which was ratified earlier this year but will serve only as a placeholder until June 30, 2021, when a longer-term model is to be brought into law.
Under the new treaty, licence applications will be processed from January 2020. However, operators will be restricted to offering online sports betting, with no in-play, a €1,000 monthly spending limit imposed on players, as well as a 5% tax on turnver.
In addition to the research centre, the Deutsche Automatenwirtschaft (DAW) slot association and the German Sports Betting Association (DSWV) have offered their own suggestions for the new framework.
The DAW argued that should be permitted to offer multiple game verticals, and that updated regulations should maintain the state lottery monopoly on draw-based games. The DSWV, meanwhile, called for a root-and-branch overhaul of the current framework with a significantly expanded market, arguing that evidence suggests that there are no grounds to suggest that online gaming is any more dangerous than other forms of gambling.
