Fueled by online slots, Germany records a 15.5% spike in gambling tax revenue
Online gambling has shown an encouraging increase in adoption in Germany over the last year, as the nation reported a gambling tax revenue of $591.6 million in the third quarter of 2022. This figure represents a staggering 15.5% increase year-on-year from Q3 2021.
Online gambling revenue has seen a massive spurt after several operators were handed licenses in Germany over the last year. ©Jonas Leupe/Unsplash
Out of the $591.6 million, $122.3 million came from online slots. This figure was considerably higher than the Q3 total of $32.5 million received in taxes last year. This noteworthy spike comes after Germany granted licenses to about nine virtual slot operators this year. In September this year, Solar Operations Limited became the latest operator to receive its license to operate in Germany. The Malta-based operator joined a list of eight other businesses and eleven brands that have already been approved to operate in the country.
Quite a few Malta-based operators have jumped on board. Tipwin, The Mill Adventure, Cashpoint Malta, BluBet Operations, Solis Ortus Service and Rootz are the other operators from Malta apart from Solar Operations that are now legitimate in Germany. Additionally, a host of operators offering virtual slots are in line, awaiting their respective license approvals. The responsibility to hand out these licenses will pass from the Glücksspielkollegium to the Gemeinsame Glücksspielbehörde der Länder (GGL) from January 01, 2023.
Apart from virtual slots, the online betting activity for the FIFA World Cup 2022, which is right around the corner, could also be responsible for strong numbers in the year’s final quarter.
Other German gambling revenue trends
The online poker tax revenue was a little over double of what it was last year, as it generated $7.9 million. The tax revenue from sports betting was down by 47.8% to $53 million. The number could recover and rise during the upcoming World Cup. Negative tax revenue for sports betting was reported in many states. Hesse, Bremen and Berlin were a few of these states that bore the biggest brunt of the fall. Lottery kept its pace and performance at the optimal level as it was responsible for a hefty chunk of the tax revenue.
Lottery brought in $406.4 million, spiking 8.4% year-on-year. The Totalisator taxes total was $1.78 million, and the Racing tax revenue was $189,500. Germany’s most densely populated state, Nordrhein-Westfalen, reported a tax revenue of $137.1 this year. This was the highest tax revenue generated in a state. A total of a little under $50 million came from virtual slots ($19.3 million) and online betting ($24.5 million) in the state.
How Germany taxes the industry
On July 01, 2021, a new several operators.
Online casino games that include virtual slots will fall under the ambit of VAT. The Fourth Amendment clearly states that any operator that offers licensed or unlicensed online gambling products will be subject to taxation.
The amendment enabled companies issued with licenses to operate anywhere across Germany. The validity of issued licenses is five years. The Interstate Treaty on Gambling allows all private operators offering sports betting, virtual slots and online poker to apply for this license.
GGL and its strictness will dictate next year’s revenues
From the start of next year, the Gemeinsame Glücksspielbehörde der Länder (GGL) will be in charge of ensuring a uniform application of the law and regulating the transnational gambling market in Germany. The organization promotes the rules of gambling to prevent gambling addiction and manipulation in the country and oversees the control and supervision of national gambling across all 16 federal states of Germany. As an extension, it will also contribute directly to tax growth with respect to the gaming industry in Germany. The regulatory body has already shown action in the recent past.
As specified earlier, the GGL will be responsible for approving licenses for operators offering online gambling services starting from January 01, 2023. Last month, after noticing the illegal gambling services of the Lottoland Group, the entity acted swiftly to try and enforce chances. Several Internet Service Providers (ISPs) were contacted and told to block all websites that belong to the Lottoland Group in Germany. Simultaneously, the GGL is using everything in its arsenal to eliminate these illegal services from the market.
According to the GGL, all Lottoland Group websites have offered illegal gambling services for years. Lottery game participation on these websites are actually bets on the outcome of a lottery draw, not just a regular lottery draw. According to the new laws in place, this is considered illegal. GGL’s statement on the issue was a strong example of how strict the regulation under them could get.
“The network of companies operating under the name Lottoland has been offering illegal gambling for years. This offer is particularly precarious, as many players believe that they are participating in a lottery game at Lottoland. However, this is not the case. The offers made by Lottoland at www.lottoland.com and www.lottohelden.de and www.lottohelden.com are bets on the outcome of a lottery draw instead of participating in the actual lottery draw. These offers are not permissible on the basis of the State Treaty on Gaming and have therefore already been prohibited. However, they can still be accessed on the Internet. For this reason, the first legal steps taken by the Gemeinsame Glücksspielbehörde der Länder were aimed at preventing Lottoland’s offerings by means of administrative procedures on network blocking and payment blocking.”
