The European Gaming and Betting Association has shown its disregard by filling a formal aid complaint to the European Commission. The complaint is a formal response to the German Bendesrat’s proposal to impose a 5.3% mandatory tax on all the revenue generated from online poker and slot stakes in the country.
The association has urged the members of the parliament of Germany to reconsider and make significant changes to the proposed gambling tax measures introduced last month.
The European Gaming and Betting Association states that such punitive rates applied on the online gambling sites will lead more players to prefer unlicensed websites. The increased preference for unlicensed gambling sites will somehow increase the fraud rate in the country.
The European Gaming and Betting Association believes that the tax proposal is in breach of the European state aid because the proposal will only apply to operators with online gambling platforms and charges four to five times higher tax rate on the gross gaming revenue when compared to land-based casinos.
Secretary-General at European Gaming and Betting Association, Maarten Haijer explains, “We have previously made our concerns about the tax proposals known to the German authorities but to no avail, and they will now need to justify the measure under the EU Law. ”
“We appreciate the efforts made in recent years towards introducing a new online gambling regulation in the country and recognize that an appropriate tax will need to be paid by the online gambling operators.”
“However, the rate of the proposed tax is punitively high and will distort market competition, and directly benefit Germany’s land-based establishments over their online counterparts.”
He added, “We call on German politicians to rethink the proposed tax rate and bring it closer in line with the tax rate applied to online casinos and their services in other EU countries.”
The European Gaming and Betting Association has previously backed some of the leading betting companies in Europe and has warned previously that the proposed online tax will result in substantial growth in the benefits attained by Germany’s land-based casinos.
Since many punters are leaning towards online gambling platforms the increase in the revenue with added higher tax rates will keep online gambling operators at a huge loss.
The tax proposal introduced by the German Bundesrat will also result in operators charging more from punters which will substantially push punters to prefer more unlicensed sites.
In Bavaria, it is predicted that the tax proposal will lead to the imposition of a four to five times higher tax rate on online poker and slot machines which is quite higher when compared to the land-based casinos. The new tax proposal will result in a tax advantage of up to €290 million every year for the state’s land-based casinos.
The association believes that the new tax proposal will constitute illegal state aid under EU law and the estimated extent of illegal aid for land-based gambling establishments in Germany would be around €741 million every year if the tax proposal is approved.