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German publication examines online gambling

Written 5.22.11 :

The German publication Deutsche Welle took a look at the online gambling phenomenon in Germany over the weekend, commenting that although it is technically illegal to gamble online, German punters are rarely prosecuted and the pastime has a massive following.
 
The article quotes respected German lawyer and internet gambling expert Wulf Hambach, who says: "On paper, it's illegal to play for money - that goes back to a treaty enacted in 2008, which stipulates a total ban on online gambling: lotteries, sports betting and online poker as well."
 
in researching the industry, the author of the piece came to the conclusion that internet gambling is a huge international industry, with the European Commission estimating its burgeoning growth to annual revenues of around Euro 8.3 billion three years ago.
 
The Betting Research Unit at Nottingham School of Business told Deutsche Welle that in the UK, which has an enlightened but strictly regulated online gambling industry, the government reaps some GBP250 million a year in  taxes through a fifteen percent tax on operators.
 
In contrast, the German government has missed out on significant tax revenues by taking a prohibitionary stance on internet gambling.
 
"Operators, many of whom are based outside the country, don't pay taxes to a government that has forbidden their games. And when it comes to taxing the players, there's a conflict between the legislature's definition of poker as a game of chance and the tax authority's interest in collecting revenue from online gaming," says Hambach.
 
"Most players don't pay taxes because in Germany poker is considered a game of chance, and winnings from such games are tax-free."
 
The author observes that the fact that it's possible to consistently earn a profit from online poker would seem to suggest that it's more than a simple game of chance, like slot machines or roulette.
 
"In a small number of hands, I could probably beat the poker world champion," said Vaughan Williams of the Nottingham School of Business. "But the more hands you play, the less it's about chance, the more about skill."
 
Germany's current treaty governing online gambling expires in 2012. At that time, the 16 states may revise the legal status of online gambling. But in the meantime, the risks of prosecution to online players are relatively low.
 
"If it were a crime, you'd have to put about 5 million people in jail. That wouldn't be a politically popular move," says Hambach.
 

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