Wiesbaden's decision to increase its slot machine tax will be implemented as planned, following an affirmation from the Hessian Higher Administrative Court in Kassel. The court upheld the city's increase from 5% to 7.5%, set to take effect on January 1, 2024.
The court explained that gaming hall operators' objections were overruled, asserting that Wiesbaden's legislative decision was legally justified. This ruling secures a revenue initiative the city expects to generate up to €1 million, according to the court's summary.
Andreas Braun, who owns four arcades in Wiesbaden, voiced his concerns about the tax increase in an objection and constitutional complaint filed in April of the previous year. He claimed that the tax hike would create a ‘strangling’ effect on local businesses and essentially wipe out operator profits.
Braun referenced a high court decision from over a decade ago which emphasized that tax increases should not reach a level that endangers the livelihoods of slot machine operators. The ruling stated, “If the tax burden alone makes it impossible to establish the occupation of slot machine operators as the economic basis of one’s livelihood within the municipality.”
Additionally, Braun stated that the public was unjustifiably excluded from the preparatory finance committee meeting that discussed the tax raise.
In its response, the court found that this exclusion did not undermine the validity of the by-law. It noted there was no evidence that the new tax rate would have a debilitating effect on businesses, pointing out that the number of gaming halls in Wiesbaden remained stable following the proposed increase.
The court also addressed the argument concerning equal treatment, clarifying that while gaming machines are taxed at the municipal level, casinos are taxed by the state of Hesse. Wiesbaden's tax, established by local ordinance, applies to expenditures on gaming machines and is intended to help alleviate the city’s financial challenges.
While the court's decision is not yet legally binding, the applicants may appeal the denial of leave to appeal, which will be reviewed by the Federal Administrative Court in Leipzig.
Braun also highlighted a study indicating that nearly half of surveyed individuals were contemplating the use of illegal gambling services due to constraints placed on legal options. Recently, German authorities have stepped up efforts against illegal online gambling, targeting operations suspected of handling approximately €5.86 billion in wagers over a 30-month period.
The DSWV trade body, which represents licensed sports betting operators, welcomed these enforcement actions as necessary due to the illegal market's expansion and its associated risks. "This successful investigation clearly demonstrates the scale that the illegal gambling market has now reached," stated Mathias Dahms, president of the DSWV.
