The Hessian Higher Administrative Court in Kassel has upheld Wiesbaden’s decision to increase its slot machine tax from 5% to 7.5% from 1 January 2024, preserving a measure the city expects could raise up to €1 million.
The German state court rejected challenges brought by gaming hall operators and found the local by-law legally valid. The decision is not yet legally binding, however. The applicants can seek permission to appeal, with any such application to be reviewed by the Federal Administrative Court of Leipzig.
Operator argued tax threatened viability
Andreas Braun, who owns four arcades in Wiesbaden, challenged the increase in April last year through an objection and constitutional complaint. He argued that the higher tax had a “strangling” effect on businesses by absorbing operators’ profits.
Braun referred to an earlier high court ruling which said taxation could not rise to a level that effectively “consum[ed] livelihoods”. That 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,” the measure could not be allowed to reach that point.
Braun also claimed that members of the public had been excluded from a preparatory finance committee meeting without justification.
The court dismissed both lines of argument. It said the exclusion issue did not invalidate the by-law and found no evidence that the tax was imposing an excessive burden capable of choking businesses. The judges also pointed to the largely stable number of gaming halls in Wiesbaden following the increase.
Different treatment of casino taxation
The court rejected an equal-treatment argument based on the differing treatment of gaming machines and casinos. Gaming machines are taxed by the municipality, while casino taxation is handled by Hesse, it noted.
The locally legislated tax applies to expenditure on gaming machines. Wiesbaden has said the increase was introduced in response to pressure on its finances.
Braun’s complaint also cited a study in which nearly half of respondents said they were considering illegal gambling services because of legal restrictions.
That issue has gained attention as German authorities recently acted against an alleged illegal online gambling operation suspected of facilitating wagers worth approximately €5.86 billion over 30 months.
The DSWV, which represents licensed sports-betting operators, welcomed the enforcement action as a necessary response to the expansion of the illegal market and the risks linked to it.
“This successful investigation clearly demonstrates the scale that the illegal gambling market has now reached,” said Mathias Dahms, president of the DSWV.
