and introduce obligatory opening and closing times.
Under the new Treaty existing gaming establishments will not be able to have more than one concession from 2017, a system which operators currently use to run more than one concession from the same building by having separate entrances. This enables them to run more than the stipulated number of machines from one location. Some German machine operators have claimed the new regulations amount to a “powerful programme of eradication”.
The German slots industry has threatened to pursue its cause through the courts and, indeed, Siegfried Kauder, head of the Bundestag’s Committee on Legal Affairs, has said that the gambling treaty would face legal tests for its restrictions on slot machines. This would throw into question the constitutionality of some elements of the new Treaty.
The April 2011 draft version of the Interstate Treaty on Gaming proposed that the supply of Internet casino games be restricted to existing licensed German casino operators and would be subject to an evaluation after 5 years. Such permission to expand online in Germany would have been a welcome opportunity for the country’s casino operators, which have experienced tough times in recent years. But it seems this initial idea has been dropped in the latest version of the Treaty.
Casinos are the most heavily taxed of all gambling activities in Germany, and the taxation system differs from state to state. Since they are a subject to each State regulation, every State can set their own rate. If there are no exemptions, casinos are subject to the 16% of turnover tax. In some instances casinos can be taxed 50% or more of their GGY, which is based on a graduated system. In some States, with a principal casino tax which is applied on GGY, some additional taxes can be applied as well, so the casino taxes can effectively go as high as 90%.
The tax rate usually depends on the casinos’ revenues. For instance, in the state of Baden- Württemberg casinos are taxed at 50% on GGY for revenues up to €25m, 55% on revenues from €25m to €50m and 60% on revenues over €50m. A further levy may be reduced in the first years of casino activity. The state of Hessen has the same tax rates as Baden-Württemberg but also applies an additional levy on casino revenues which is regressive. So for instance, for revenues in the
German Casino GGY (€m) 2003-2010 Source: European Casino Association
range of €25m to €50m, in addition to 55% casino tax, a further 25% in additional levy is charged, which makes the total tax on casino revenues 80%.
At the beginning of 2010, there were 65 casinos operating in Germany. Niedersachsen was the State with the largest number of casinos (10) while Thüringen had only one casino. The largest casino operators in Germany include Casinos Austria International, with 10 casinos operating in several States, Spielbanken Bayern (Casinos Bavaria) with nine casinos – all in Bavaria, and WestSpiel, with eight casinos in four different States.
From 2003 to 2007 casino revenues have been more or less flat. In 2008 however, a dramatic 21.1% YoY drop of revenues was recorded. The decline in revenue continued in 2009, with a decline of 13.8% YoY, to €724m. Such a sharp decline in revenues is putting pressure on a number of casinos and raising questions about their survival. The decline continued in 2010, when the revenues reached €651m, another double-digit fall of 10.1%.
The future of the three casinos in the state of Saxony-Anhalt encapsulates the situation in the German casino market at present. In 2007 The state government decided in 2007 to sell the state-owned casinos after years of declining revenues. The operating company Spielbanken Sachsen-Anhalt was eventually sold to the Cypriot-Israeli property developer Sybil Group. The bid by the Sybil Group included a project to convert an old power station into a shopping centre, hotel, and entertainment complex with a large casino. But in the economic climate the company was unable to raise the necessary financing. Then in May 2011 the Sybil Group
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