What Rising Taxes Mean for Game Selection and Product Development in Germany’s Online Casino Market

As taxes continue to rise for Germany’s online gaming market, the entire market’s ecosystem is being shaped by the squeeze. This tax pressure is seeing the types of games and services being developed and offered to players change, becoming more limited.

The online casino market in Germany has been changing over a number of years; the catalyst for many of these changes can be seen as the introduction of the Interstate Treaty on Gambling, or the Glücksspielstaatsvertrag (GlüStV 2021). This regulatory shift was done with good intentions; it aimed to bring all of the disparate gambling ecosystems of Germany together under one regulatory umbrella to make oversight simpler and easier. One aspect of the GlüStV 2021, however, has been an increase in tax pressure that many operators are finding difficult. For many operators, this tax pressure has limited their ability to be innovative or to take chances on new products, forcing them to only stick to products that are guaranteed to see strong returns.

While Germany is not alone in Europe in having a stricter gambling ecosystem, it does stand out from some of the other markets. With such a strict set of expectations for operators to follow, coupled with rising tax demands, is Germany’s market an example that other countries will follow, or one that they will take as a warning? One thing is clear: The current online casino market in Germany is one that is being heavily shaped by its tax environment.

What Exactly is the Tax Situation for German Online Casinos?

The GlüStV 2021 states that online casino operators must pay a 5.3% turnover tax on all stakes. A turnover tax is paid for the total amount of the bet, and is required regardless of whether the player wins or loses and also ignores whatever the operator’s margins might be. While the intention behind this taxation structure can be debated, the effect is that it minimizes the profit margins of the operators and means that every wager placed costs them more money.

While this tax was decried by many industry stakeholders and operators at the time, it wasn’t until other, more recent tax adjustments that the pressure truly began to mount. Changes associated with player protections are crawling forward at a relatively constant rate, introducing further compliance and licensing fees that must be paid. New player protection technologies must also occasionally be implemented, some of which, when mandated as a compliance requirement, could involve significant retooling, an expensive process.

For operators that have relatively thin margins, these rising tax pressures are more than unwelcome; they are squeezing them out. It forces operators to change the game selections they offer, how they pay players and how they innovate.

Game Selection Suffers

An early casualty of this mounting tax pressure on operators is the selection of games that they offer to players. While some operators, like the ones that are listed as good German online casinos on Adlerslots, are able to still provide a decent variety of games, others cannot. Due to the unique nature of the GlüStV 2021 taxes, games that require players to bet often and that also have decently high payout chances are much riskier and less valuable for operators to host. This means that slot games, typically the most popular form of online gambling in many regions in the world, are heavily hampered in the German online casino market. But what are operators doing to combat this?

Offering Games with Low RTP

Many operators are offering more and more games that have a significantly lower Return to Player (RTP) percentage. This means that over time, the amount that players will win back is less than it was before the tax changes. In effect, the games are not as good to play for players.

High-Volatility is High-Risk

Because every bet has the same tax percentage, games that offer a large degree of unpredictability in their win or loss ratios are unnecessarily complicated for operators to budget around. This means that most games offered have predictable play patterns and offer less explosive winning potential to players.

Games Designed Around Turnover Taxation

Some operators are investing in game designs and types of games that have gameplay loops that are easy to optimize around the turnover taxation ecosystem that they must operate in. This means things like crash games, instant-win games and games that rely on simple RNG-based table games variants are becoming more common.

Developers Have Changed How They Develop

With such a unique taxation ecosystem, many game developers that work with the German market have taken it upon themselves to design games that work better for operators within this system. 

This means that games are being designed that have mechanics that will lower the impact of the turnover tax. Having fewer bonus rounds, fewer opportunities to place additional bets or have additional spins and a much simpler RNG.

In addition, some developers are making specific product versions for release in the German market. That means that they might have the same aesthetics, but they offer lower RTP, have less autoplay and feature modified jackpots than they do in other parts of Europe.

In essence, developers that service the German market have altered the way they design games. Rather than feature-rich offerings like incorporating video chat, live dealer games and other things designed to captivate players and surprise them with all sorts of innovative mechanics, developers are experimenting with ways to circumvent and reduce the tax burden placed on operators.

Final Thoughts

Germany’s online casino marketplace is one that has been entirely reshaped by the tax burden that is being felt by operators. Not only are the operators affected, but players are seeing much less variety in the types of games they have available.

In such an ecosystem, game and software developers have shifted from innovating around new features that draw players, like incorporating cryptocurrency payments, to mechanics that work at lessening the pressure felt by operators.