Germany’s New Online Poker Tax Drives Operators Away

Germany has instituted a controversial new tax on online poker games. The country is now charging a 5.3% “rollover tax” on cash games and tournaments.

The rollover tax applies to buy-ins immediately after players are seated. If a player buys into a cash game for €100 and plays one hand, the operator is immediately liable for a €5.30 tax (100 x 0.053).

Not surprisingly, online poker rooms aren’t happy about the new tax. As you’ll see in the following post, some of these sites are already pulling services from the German market.

How Does Germany’s Online Poker Rollover Tax Work?

Bundestag, the country’s national parliament, recently approved the 5.3% rollover tax. This tax will dramatically increase the amount of revenue that the country gets from online poker games.

In the past, Germany taxed poker sites based on actual revenue like many other countries. Internet poker rooms only paid taxes on the rake they took in, minus expenses and other write-offs.

The new rollover tax, however, forces operators to pay based on any buy-in. Here’s an example to explain:

• An online poker player pays the full buy-in for a €1/€2 NL hold’em game (€200 buy-in).
• 200 x 0.053 = 10.60
• The poker site must pay €10.60 in taxes.
• The player, meanwhile, contributes €3 in rake before ending their session.
• 10.60 – 3 = 7.60
• The operator is losing €7.60 on this player through taxes alone.

The €10.60 tax would apply to the example above regardless of if the player logged one hand or one hundred hands. It would remain the same even if the player only contributed a few cents in rake.

Land Based Casinos & Poker Rooms Get an Advantage

Opponents of the new online gaming tax argue that it favors land-based casinos and poker rooms. After all, the rollover tax only applies to internet operators.

Brick-and-mortar casinos will still only pay taxes on gross-gaming revenue (GGR), which is winnings minus losses. They won’t be taxed just because somebody wagers or buys in for a certain amount.

The European Gaming and Betting Association (EGBA) has complained to the European Union (EU) about the matter. The EGBA points out how online poker and slots betting will be taxed at “4-5 times” the amount as land-based casinos.

They argue that the taxes are so excessive that they’ll exceed the revenue online poker rooms casinos earn even before other expenses are calculated.

The Deutsche Sportwettenverband (DSWV) has also lodged a complaint with the EU. They note that the rollover tax will hurt the “success of the new gambling regulation in Germany.”

The DSWV also points out that states are already “destroying their own work” regarding how they previously helped set up online gaming regulation.

Which Online Poker Sites Are Pulling Services from Germany?

Unibet Poker reacted quickly after hearing the news from Germany. They pulled all cash games and sit and go’s from the country’s market. They noted that these moves could be reversed if something changes in the future.

The iPoker Network is allowing individual network members to make their own choices. Betsson, for example, has pulled all of its games from Germany—even multi-table tournaments.

GGPoker is removing high-roller tournaments, VIP cash games, and All-in or Fold (Aof) tables from the country. They also noted that even more changes could soon happen.

PokerStars won’t be offering mid- and high-stakes cash games, sit and go’s, Spin & Go’s, and fast-fold games to Germans.

Stars was initially hesitant to act, hoping that politicians would change their minds at the last second. This scenario didn’t unfold, though, which is why PokerStars is removing many of its cash games and SNG-style offerings.

German players will still be able to play cash stakes going up to €1/€2 at PokerStars. However, no higher limits will be offered.

Partypoker is taking an interesting approach that involves keeping most their poker products in Germany. They will, however, be adding a 5.3% surcharge to the buy-ins for all current cash stakes and tournaments.

The 5.3% surcharge may make the games unprofitable for many/all players. Some players might be willing to brave this fee, though, just so they have some more options.

Poker Sites Bash German Politicians

Not surprisingly, some online poker rooms are angry about the new changes. GGPoker stated the following about the newly implemented tax:

“The restrictions are poorly designed to meet player protection goals and the taxation imposed on licensed operators is disproportionately high. The tax on poker, in particular, has been copied by other games without any effort to understand how poker works.”

PokerStars announced that they’ll be working on “Black Pool” cash games for German customers. These tables require players to stay seated for a set amount of hands.

This way, Stars will be getting adequate rake based on the taxes they’re paying. Here’s their statement on the subject:

“It goes without saying that we are disappointed to have to make this change and we understand that players will feel that the rake is unfair. Although it will be of little consolation to those of you affected by this change, we want to let you know that we are doing everything we can to reduce the cost to our players.”

Offshore Poker Will Become More Attractive to German Players

Germany’s regulated online poker market was supposed to provide a safer way to enjoy the game. After all, regulated sites must adhere to strict regulatory oversight.

The new German tax law, however, has forced many operators to make changes or vacate the market completely (e.g. Betsson). Online players will now have to either:

1. Play lower cash stakes.
2. Pay high surcharges (e.g. 5.3% at partypoker).
3. Choose offshore sites.

The latter serve Germany and other countries without obtaining proper licensing. Some offshore poker rooms operate with integrity, but others aren’t so trustworthy.

It’s the latter variety that make playing at unlicensed sites dangerous. Regardless, many German online poker players will now be tempted by offshore sites.