The Hessian Higher Administrative Court in Kassel confirmed that Wiesbaden’s increased tax on slot machines will remain in effect. The tax rate will rise from 5% to 7.5%, effective January 1, 2024. This decision followed legal objections from gaming hall operators, which the court deemed unfounded, affirming that the city’s public decision was legally justified. The increase is expected to generate up to €1 million in revenue, according to the court’s statement.
Andreas Braun, who owns four arcades in Wiesbaden, filed an objection and a constitutional complaint against the tax hike in April last year, claiming it would have a detrimental ‘strangling’ effect on businesses and that it diminishes operator profits. Braun referenced a precedent set by a high court ruling over a decade ago, which stated that tax increases should not reach a level that would ‘consume livelihoods’.
The ruling indicated that if the tax burden makes it unfeasible for slot machine operators to maintain their businesses as a source of income within the municipality, it would be questionable. Braun also contended that the public was unjustly excluded from the preparatory finance committee meeting.
However, the court stated that this exclusion did not compromise the validity of the by-law and found no evidence to support claims that the tax would negatively impact businesses. Judges pointed out that the number of gaming halls in Wiesbaden had remained stable since the increase. They also dismissed arguments about unequal treatment of taxation, clarifying that while municipal taxes apply to gaming machines, casino taxes are governed by the state of Hesse.
The local tax applies to expenditures on gaming machines, and city officials noted that the increased rate was a measure to address financial pressures. Although the decision is not yet legally binding, there remains an option for an appeal regarding the denial of ‘leave to appeal’ to the Federal Administrative Court of Leipzig.
In his initial complaint, Braun also referenced a study indicating that nearly half of survey respondents contemplated using illegal gambling services due to restrictions in the legal gambling market. In recent weeks, German authorities have targeted an alleged illegal online gambling operation believed to have handled about €5.86 billion in wagers over a 30-month period.
The DSWV, which represents licensed sports-betting operators, supported the enforcement actions as necessary to combat the growth of the illegal market and its associated threats. Mathias Dahms, president of the DSWV, stated, “This successful investigation clearly demonstrates the scale that the illegal gambling market has now reached.”
