The fractured nature of federal bureaucracy also means that the new central regulatory authority whose establishment we welcome - is not going to take up its work until 2023. In the meantime, responsibility for gambling regulation is split between authorities in Hesse, Saxony-Anhalt and the ominous Council of Gambling regulators, the “Glücksspielkollegium”.
" A MIXTURE OF OVER-REGULATION, FISCAL ZEALOUSNESS AND STATE PROTECTIONISM IS CASTING A SHADOW ON THE GERMAN MARKET "
Licenced operators are also required to connect to cumbersome technical databases in order to solve problems that never existed in the first place. The so-called activity database is an ambitious technical undertaking aimed at preventing customers from gambling at more than one online operator at a time. The cost-benefit ratio of this sort of privacy invasive tracking by state authorities is likely to be very poor. In fact, it creates multiple data protection and liability risks. Gambling regulators and customers would be better served if the focus is on problem gamblers and self-exclusion tools.
The fact that state lotteries are not required to connect to the self-exclusion database OASIS is just one of the examples whereby the federal states give preferential treatment to their own gambling operations. Most federal states are also in the process of establishing regional monopolies for online casino games, i.e. table games and live casinos, a further step towards the balkanisation of the German online gambling market, which still suffers from a lack of coherence. In this respect the new regulatory regime deepens the regulatory inconsistencies. Taxation is one such example: for the first time the same gambling products are taxed entirely differently depending on whether they are offered in physical premises or online. This is not the only reason why the new tax regime has been severely criticised: Germany is the only country in the EU that has opted for a 5.3 percent tax on stakes for online slots and poker despite warnings from renowned economists, such as Professor Justus Haucap, who fear this will further undermine the aim of the Interstate Treaty to channel consumers towards safe and licensed products. In order to accommodate the new tax, operators will have to radically reduce payout rates for German consumers, thus worsening their experience. The cumulative effect of the tax, product restrictions and limits is bound to make a dent in many operators’ revenue projections and the capacity to regulate and channel the German market.
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