Berlin slot machine tax increased to 25 %: entry for gaming arcades as a solution?

Berlin has really done it: the amusement tax that arcade operators have to pay to the tax authorities for their offers has been raised from 20 to 25 percent, i.e. by a whole 5 percentage points. There has been an outcry in the industry (which has been ongoing for weeks): insiders have issued warnings about an "absurd policy", fearing a "severe setback in the fight against rampant illegal gambling" and predicting far-reaching risks of insolvency. There is even a suggestion that the tax increase could be compensated for by charging entry fees for gambling tickets!

Welcome to the "fascinating" world of amusement tax - or as some affectionately call it: "The fun tax with an official stamp." In fact, it levies fees on everything that brings pleasure: whether pool tables, concerts, blockbuster premieres or even slot machines. But while a few cents added to a movie ticket by the cinema operator won't ruin the movie night, a different dimension opens up for gambling operators. Here, the tax has a direct impact on gross gaming revenue, which makes it not so easy to offset. Berlin has now decided at fairly short notice to increase the tax from 20 to a whopping 25 percent - and this is naturally causing heated discussions.

The change in Berlin was already announced in the Law and Ordinance Gazette on December 31, 2024. But only now is the information leaking out to the general public.

The industry is reacting - shall we say - emotionally.

• As early as December 2024, when the plans were announced, critics such as the German Vending Machine Industry Association spoke out. The list of concerns was long: insolvencies, job losses, fewer offers and - particularly sensitive - a strengthening of illegal gambling. The comments ranged from cautious pessimism to alarm bells.
• However, Berlin's Senate was unimpressed and suggested reducing costs or finding alternative sources of income. A suggestion that sounds like a mockery to many. The trade press is now even talking about possible entrance fees for amusement arcades. A measure that was also discussed in Frankfurt with the equally controversial tax increase from 5 to 7.5 percent.

And now the exciting question: is a 5 percent increase really such a big deal? With a wink, you could say: it depends on whether you are standing behind the counter or sitting in front of the vending machine. But joking aside, the pressure on operators is obviously increasing massively - and the effects could be more far-reaching than the mere tax increase would suggest. How could a sensible balance be struck?

Berlin is picking up: At 25 percent, the capital is one of the frontrunners when it comes to slot machine tax - and is causing concern for the industry

For the slot machine industry, the capital's "front-runner status" is a horror, as numerous voices have pointed out. The Senate administration, which was the first to respond to press inquiries when the increase came into force, remains calm. However, associations and operators are sounding the alarm.

An optimistic Senate, a pessimistic industry

The Berlin Senate is surprisingly relaxed about the situation. Jean-Jacques Dengler, press officer for the Senate Department for Economics, Energy and Public Enterprises, explained at the request of AutomatenMarkt:

"The Senate Department for Economics, Energy and Public Enterprises does not assume that there will be a withdrawal of the market due to the increase in the amusement tax."

At the same time, he emphasized that Berlin has stepped up the fight against illegal gambling, which should ultimately strengthen legal competition. However, the industry takes a completely different view.

Spielos can be a pretty hot spot, by the way: We took a look at what happens in German gambling halls in a week.

"A bitter setback": the reaction of the gaming machine industry

Georg Stecker, spokesman for the umbrella organization of the German gaming machine industry, sharply criticizes the increase:

"The planned increase in amusement tax is a bitter setback in the fight against rampant illegal gambling, especially in Berlin."

He points out that the legal framework for legal gambling is already extremely restrictive. Minimum distances between gambling halls, the reduction in the number of devices in the catering sector and regulations such as the ban on seating have greatly reduced the attractiveness of legal gambling. Since 2012, the number of gaming arcades and machines has fallen dramatically.

Increasing illegal gambling - a home-made problem?

Thomas Breitkopf, 1st Chairman of the Association of Vending Machine Dealers Berlin and Eastern Germany, describes the situation drastically:

"Especially in comparison to other federal states, Berlin's extremely restrictive policies have led to illegal gambling being on the rise in the capital."

Instead of steering and regulating the market, the tax increase is achieving the exact opposite: players and operators are moving into uncontrolled, untaxed areas. Breitkopf warns:

"This drastic increase will force many of the remaining entrepreneurs into insolvency."

The consequences: Less tax revenue and a further strengthening of the black market.

"I've reached my limit": voices from the hospitality industry

The increase is hitting operators and restaurant owners hard. Marion Przymusinski from Komet Automaten reports to games & business:

"With 25 percent amusement tax, I can no longer operate profitably. With all the taxes and duties as well as the increased costs for wages and energy, I've already reached my limit."

A financial boomerang?

Another point of criticism: the additional burden could become an own goal for Berlin itself. The 25 percent rate may initially sound like more revenue, but bankruptcies and business closures could quickly wipe out the expected millions in tax revenue.

Incidentally, a recent analysis by the Federal Statistical Office also hit quite hard: According to this, tax revenues from online slots are said to have fallen 38 percent.

The Senate sees the solution for Berlin in possible compensation measures, such as cost reductions. But how realistic is this for operators who are already operating at their limits? One thing is certain: with the increase in amusement tax, Berlin has tackled a hot potato that could cause a few headaches not only for operators but also for the Senate itself.

5 percent more? Sounds harmless, but hits hard: how could the industry compensate for this?

Five percent more - that may sound like a manageable increase to the layman. But for amusement arcade operators in Berlin, it's far more than just a sip from the tax bottle. To understand this, it is worth taking a look at the hard reality of the figures.

The figures reveal the problem

The additional 5 percent on gross gaming revenue is just one piece in an already costly puzzle. In addition to the 19 percent turnover tax and other levies, the increased amusement tax rate of 25 percent is now added on top. This looks as follows for an average amusement arcade:

We recently took a closer look at how to open an amusement hall and what it costs to operate.

The question is: what is left over? After deducting taxes and ongoing operating expenses (which are already above average in Berlin due to high rents and increased energy prices), there really is hardly any room for win for many operators. 2.in this structure, 500 euros more or less can make all the difference when it comes to "to be or not to be" in business terms!

Entrance fees: Really a solution or more of an additional risk?

One suggestion that has already been put forward is the introduction of entrance fees. But how realistic is this?

Pro entrance fees:

• Additional revenue could of course help to at least partially offset the increased costs.
• It would also create a kind of "exclusivity factor" that could possibly increase the attractiveness of amusement arcades for paying guests.

Contra entry fee:

• However, many customers would probably also be put off, which would then lead to a decline in visitor numbers - and therefore even fewer wins.
• Admission fees would be a further obstacle that would put legal providers at a disadvantage compared to illegal gambling operators.

Incidentally, Paris could become completely gambling-free by 2025, but this is unlikely to happen in Berlin.

Source of the image: https://pixabay.com/photos/taxes-coins-stack-money-finance-1694413/

Central text sources: https://www.gamesundbusiness.de/berlin-25-prozent-vergnuegungssteuer-in-kraft, https://www.gamesundbusiness.de/berlin-geplante-erhoehung-der-vergnuegungssteuer-stoesst-auf-kritik, https://www.automatenmarkt.de/nachrichten/artikel/berlin-vergnuegungssteuer-steigt-von-20-auf-25-prozent