German Länder launch national lottery
Country's two state-owned lottery bodies merged to offer "an attractive alternative to private operators" " lottery the only vertical to be taxed on 16.67% of turnover.
Germany has merged its two federal lottery operators to form die Gemeinsamen Klassenlotterie der Länder (GKL), the country’s first national lottery organisation, as part of the implementation on the amended Interstate Gambling Treaty.
The merger was officially described in a statement this morning as a move to offer an “attractive alternative to private operators which offer unregulated and unsafe products.” In a separate resolution, the GKL has been approved by the Länder to expand the range of lottery products it can offer from 2013.
All 16 of Germany’s member states have agreed to the formation of a national lottery as part of the implementation of the country’s controversial gambling treaty, which was originally signed by 15 of the 16 Länder with Schleswig-Holstein the notable exception, and brought into force on 1 July following the passage of the Federal Horse Racing and Lottery Act into law.
Under the revised terms of the treaty, lottery operations will be the only vertical which will still be taxed at 16.67% of turnover, effectively making the private lottery businesses unprofitable. This may have been a factor in JAXX SE selling off its lottery business to private investors after securing a Schleswig-Holstein licence, changing the company name to myBet Holding SE.
Schleswig-Holstein had originally forged ahead with its own egaming legislation, with its bill approved by the European Commission in May 2011. It imposes a 20% tax on gross profit, allows for unlimited licences and places no restriction on products offered. However, after awarding its first licences in May the ruling Christian Democratic Unionist (CDU) party was defeated in a state election, to be replaced by a coalition government led by the Social Democratic Party (SPD).
This led to fears that the licences would be revoked, though these have since been dismissed by the Land’s new minister of the interior Andreas Breitner.
Under the terms of the interstate treaty only 20 sports betting-only licences will be awarded, with companies taxed on 5% of turnover, restrictions placed on in-play betting and a limit of 1000 placed on player bets. While this treaty, amended and signed in October last year, is a marked improvement on the original proposals of 16.6% turnover tax and only 7 licences, it is still seen to be hugely restrictive, in a market potentially worth more than 1bn, and was slammed by the European Commission in March this year.