The passing of a new online gaming law in Schleswig-Holstein may change the landscape for Germany's bricks and mortar casinos if the same policy of market liberalisation is applied across the whole of the gambling industry.
Germany’s 16 Länder have thus far failed to agree on a blanket online gaming policy, or at least one that does not contravene European law. Proposals include restricting the number of betting licences to just seven and introducing a tax rate of nearly 17 per cent on turnover.
Schleswig-Holstein, which unlike its fellow Länder favours taxing profit rather than turnover, is determined to forge ahead with its own plans to regulate and licence egaming operators. If it chooses to do so - and the other states do not follow - it could create a situation where players from other states could play online games provided by operators licensed there.
Wulf Hambach of Hambach and Hambach believes Schleswig-Holstein’s proposed legislation will go through and will force the other Länder to respond or risk losing out on a significant amount of tax revenues. Crucially, the state may also decide to review its current policy towards land-based casinos.
"I believe Schleswig-Holstein will also liberalise the terrestrial casino landscape and provide a lower tax regime, creating a new form of competition," he told InterGaming. "The casinos in other states will go to their own governments to ask them to do something similar for them."
If the introduction of online gaming legislation acts as a catalyst for positive change within the land-based casinos it will surely be welcomed by operators, some of which continue to be propped up by their state governments. In Bavaria, for example, the legitimacy of its casino monopoly has been called into question following the news that several properties are to be subsidised in order to keep them open.
"Over the last decade or so all of Germany’s casinos have lost the economic basis to survive," said Hambach. "The smoking ban, taxation - sometimes as high as 80 per cent - and the internet have had a major impact.
"I see drastic reforms in terrestrial casinos because only in a atmosphere of, for example, an entertainment park where there are also hotels and sports facilities, can they survive. It’s now a case of something has to be done or you let them die."
By restricting casinos’ ability to diversify their offering and explore additional entertainment options, Germany may see the public move towards less regulated areas of gaming, such as arcades, he said.
"More and more we will see a shift towards uncontrolled areas of gambling where the same level of restrictions are not in place and that is not desirable."
The present legislative situation, he added, will also discourage foreign investment in Germany’s casino market as the existing level of taxation is creating a barrier to making casino ventures profitable.
