Brake: Amusement tax increased by 25 %

In Brake, Lower Saxony, the so-called amusement tax was recently increased by a quarter. Specifically, the tax on gaming machines is to be increased from 20 % to 25 %. The local amusement arcades are fuming and complaining that it is not possible to operate economically with such a high tax burden. In the end, the black market could benefit once again.

The amusement tax was introduced to curb certain addictive amusements such as gambling on slot machines. This is what is known as an incentive tax, as a high tax burden is intended to discourage players from spending too much money.

Furthermore, it is of course an open secret that the purpose of such an amusement tax is also to generate revenue for the municipalities. However, if the tax burden on the legal market becomes too high, the same effect could occur as with online providers and many gamblers will switch to the black market. As recently as August of this year, we reported that criminals are profiting from the declining turnover in gaming arcades.

Brake: Amusement tax rises to 25%

In Brake, a town of 15,000 inhabitants, the amusement tax will rise from 20% to 25%. Operators will have to pay a quarter of the revenue generated by a gaming machine directly to the town of Brake as amusement tax. The proposal to increase the tax came from the Committee for Economic Affairs, Finance and Digitization.

The amusement tax in the municipality was last increased to 20% in 2018. As the eleven operators based in the city continued to generate millions in profits, it was now deemed appropriate to increase the amusement tax further. However, with an increase from 20% to 25%, the tax is rising by a quarter in one go.

Amusement arcade operators outraged by the tax increase

The local Merkur Group criticizes the tax increase and points out that the arcades cannot compensate for the higher tax burden with higher prices or longer opening hours. The industry is more strictly regulated than almost any other, which reduces flexibility to a minimum. In the worst case scenario, the tax increase could mean that the operation of amusement arcades would no longer be profitable.

Mario Hoffmeister, spokesman for the Merkur Group, commented on the issue as follows:

"A tax increase of 25% is in no way appropriate, as it can hardly be compensated for and makes it almost impossible to operate economically. (...) However, we hope to be able to keep the location (in Brake, editor's note)”.

What consequences could the increase in amusement tax have?

First of all, an increase in the amusement tax has no impact on the guest in the arcade. The amusement tax has no direct influence on the win rate, as the tax is only calculated on the basis of the gaming revenue.

However, if the tax burden is too high, operators will no longer be able to operate profitably and will have to close down. This ultimately benefits the black market, which pays no taxes and offers players no protective measures. Back in March 2022, we at GambleJoe reported that illegal gaming machines are on the rise.

Image source: https://pixabay.com/de/photos/weser-brake-sandstedt-himmel-kräne-2257391/