Online Gaming in Germany
Before we start elaborating the current situation regarding online gambling laws and the online gaming market we must distinguish three different regulatory bodies that have influence in Germany. The first one is of course the German government with jurisdiction on a federal level. The 2nd one is Schleswig-Holstein and lastly the European Union since Germany is part of it. Up until 2008 online casinos were not closely regulated. Local authorities were responsible for regulating and taxing any existent entities. In 2008 the German Federal Authorities took it up to themselves to decide the destiny of online gaming. The interpretation of the federal law states that placing a bet online is illegal, however, the authorities don’t seem to enforce it. In a way, online gaming is in the gray area. On the other hand Schleswig- Holstein even issued 23 licenses for online casino operators.
Rules and Regulation
It’s absolutely illegal to operate an online casino under the flag of Germany, but playing at an online casino still remains unclear. The reality seems to be that even if you play online the authorities won’t do anything, as long as you’re playing at a casino that’s not located in Germany. In 2008 the law which prohibited online gambling was called Interstate Treaty on Gambling. In effect this prohibited all sorts of gambling besides state licensed sports betting and horse racing. This agreement is against the free trade laws instated by the EU. Germany was heavily criticized because of this harsh treatment. Eventually, authorities and operators got to a point where nobody cares what’s going on as long as the key boundaries are respected.
The Casino Market in Germany
There are more than 50 land based casinos on the grounds of Germany. Most of the bigger cities have at least one casino. Their location is usually close to or integrated in the bath and spa resorts. On the other hand, online casinos are nonexistent in Germany, with the exception of Schleswig-Holstein. With no doubts casino games and the gaming culture in general is very popular among the Germans. It’s would be a pity if the German Federal Government doesn’t do something about the legalization of online gambling. After all, other countries are successfully regulating online gaming and they collect generous tax amounts. Instead of spending money to prevent it, the German government should regulate it and earn some extra income.
If you’re a passionate German player seeking for excitement, online casinos are the real deal. Make sure you don’t attract much heat as you never know what can happen as long as you’re in the gray area.
Unlike sports betting winnings which are subject to 5% tax, casino winnings remain untouched by the tax authorities. Instead, the operator pays a VAT equal to 19%, but not of the amount one player won, but how much the casino actually profited. This model is by far the worst thing that the EU could’ve come up with. Some countries like the UK have made online gaming products tax exempted in order to stimulate further growth and keep both casino and players happy.
For the time being tax and the tax rates are not the key issue regarding online gaming in Germany. Until a new bill is passed that clearly states if German players can play casino games online tax authorities won’t be able to enforce taxing on casino winnings.