It is unclear what was on the minds of the representatives of the 16 German States (Lander) when they voted to terminate the German Monopoly, only to replace it with a far more devious, unbalanced, unfair and unworkable structure doomed to failure.
The proposed set of new German gambling laws have a 16.7% turnover tax on licensed online sportsbooks and only permit current land-based casino license holders to apply for the seven online gambling licenses. It was immediately clear that it is not possible for even Midas to remain profitable with such Herculean anti-business restrictions in place.
As soon as the announcement was made, shares of Bwin.Party began to slide, losing 30% of its value – close to $500 million in investor funds – in just two days. . Tens of thousands of German and international investors lost over half a billion in equity. Bwin.Party generates a third of its earning from the German market, and edgy investors are obviously not very optimistic in the feasibility of any future industry-beneficial amendments.
The vote taken by the federation of the 16 German states, was sharply divided along ideological and regional lines. Due to the recent electoral success of anti-gambling political parties (for reasons to do with the German immigration policy), it is likely that online sportsbooks in Germany will simply close their doors.
A similar situation is unwinding at the very moment in France, who taxed their online sportsbook industry almost completely out of existence to the delight of underworld bookmakers.
The transcripts of the negotiations between the 16 states, which resulted in this hideous set of laws, are still unreleased and eventually will be read with great interest by parties who wish to see the German gambling market open up to fair and balanced competition.
The German state of Schleswig-Holstein has already drafted a bill with a much fairer and sensible 20% tax on gross profits which is used within the Spanish and Greek new gambling frameworks. The amended Schleswig-Holstein bill has already completed the first parliamentary hearing and has been submitted for EU approval.
“The legislation does not appear to adhere to EU open markets law,” said industry analyst Mr. James Hollins, who doesn’t believe that the legal challenges could amend the new law prior to its introduction.
Bwin.Party, along with casino operator GVC Holdings, has publicly stated if the 16.7% turnover tax laws are enacted, the two companies will apply for German internet casino licenses only within the state of Schleswig-Holstein.
Such a move could theoretically enact their own unilateral online gambling empire which would have the legal authority to operate online gambling ventures throughout the entire country. The German casino monopoly is set to expire on December 31, 2011.