Germany’s new State Treaty on Gambling has cleared its final hurdle and will come into force as expected on July 1.

The treaty was ratified by the state parliament of Saxony-Anhalt on Wednesday and is expected to secure approval in the last remaining state, North Rhine-Westphalia, by the end of this month.

The successful ratification process ends years of regulatory uncertainty in the German online gambling market by authorising and regulating online sports betting, slots and poker.

“This is the beginning of a new age of gaming regulation in Germany. After sports betting, the federal states are now rightly regulating further online games of chance in order to finally control what is happening on the market,” said Mathias Dahms, president of the German industry association DSWV.

“The new State Treaty on Gambling is an important step towards modern regulation, but there is also a need for improvement. We consider the state databases for the complete monitoring of all consumers to be extremely questionable from a data protection point of view. The fact that particularly popular live bets should be allowed on football and ice hockey games in the future, but possibly not on handball and tennis, completely misses the expectations of customers. Adjustments will have to be made here soon. We place our hopes in the new authority, which will shape and objectify the gambling policy debate in the future.”

Dahms added that the biggest challenge for operators in the newly regulated market will be the high tax rates set by state and federal governments.

“The federal states want to tax all stakes on virtual slot machine games and online poker – including stakes made with previous winnings. The tax rate of 5.3 per cent on the stakes is far too high in an international comparison. This makes the game considerably more expensive for the customer, with game credits used up more quickly,” Dahms explained.

“In the end, only the black market profits from this. No other country in Europe taxes the stakes in virtual slot machine games, but always the gross gaming revenue – the actual revenue of the gaming provider. In this way, Germany is taking the wrong direction in tax policy.”

Gaming Intelligence