How does the 5.3% gambling tax relate to the RTP?

What is the RTP value exactly?

Each game has a payout percentage, also known as an RTP value. RTP stands for Return to Player. This value indicates how much percent of the players' bets are returned. Games with a high RTP value appear particularly lucrative.

Ultimately, the advantage of the house, that is, the value that the online casino retains, is significantly lower. If a game has a payout rate of 96.5%, the online casino would only retain 3.5%. The rest goes back to the players.

In this article, you will discover the online casinos with the highest payout rates.

Does the RTP decrease due to gambling tax?

Already, it can be surmised that the gambling tax affects the RTP. Someone has to bear the burden of this tax. If an online operator does not pass on the gambling tax to players, they would incur losses in the long run. Soon enough, the provider would vanish from the market.

For instance, let's assume that an internet-based gambling establishment possesses a return to player (RTP) rate of 96%. Consequently, the advantage held by the house would amount to 4%. The provider would have a guaranteed profit of 4%. However, if the gambling tax of 5.3% were to be deducted from the winnings, the online casino would end up in the red.

The online casinos, of course, do not intend to burden the players with this. They are left with no other option but to ask the players to bear the burden of the gambling tax. One way they might do this is by reducing the payout percentage.

How do online casinos offset the new gambling tax?

In order to sustain their viability, every business entity must generate profits. Consequently, it is reasonable to assume that online casino operators attempt to pass on the burden of gambling taxes to the players in some manner. Essentially, they have two options at their disposal for this purpose.

Variant 1: Deduction of gambling tax from the player's account.

In this variation, the gambling tax would be automatically deducted from the player's account after every wager. It does not affect the payout ratio of the online casino. To aid comprehension, we have prepared a small example calculation here.

• Stake: €100.00
• The player's costs (5.3% gambling tax on stakes) are paid to the state: €5.30.
• The payout rate remains unchanged at 96%, resulting in a payout of €96.00 for players.
• The house edge for online casinos is 4%, which equals €4.00.
• Player's net profit after tax: 90,70 €

Variant 2: Reduction of the payout ratio.

The payout percentage of the online casino could potentially be reduced by 5 to 6 percent on a general basis. Occasionally, the reduction may be even higher, resulting in an RTP of 87%. In such instances, no gambling tax would be deducted from the player's account.

In order to comply with German regulations, the online casino is responsible for calculating and paying taxes on the wagers placed by players. As a result, players may experience a lower payout rate. Let's illustrate this with a sample calculation for better understanding.

• Mission: 100,00 €
• No deduction of gambling tax from the players' balance: 0.00 €
• The payout ratio has been reduced from 96% to 90%, resulting in the following payout: €90.00.
• The house advantage for online casinos is 10% and results in: €10.00.
• Payment of €5.30 to the tax authorities by the online casino.
• Players benefit from reduced payout ratios by winning more money. 90,00 €

In our case, the initial option would bring an advantage to players as only the gambling tax is deducted from their own wager. However, the RTP value remains high, ensuring a favorable outcome.

Ultimately, it also depends on the percentage by which the payout rate is reduced by the online provider. If, for example, the rate is lowered from 96% to 91%, the payout for players would be €91. However, the extent to which the online provider decreases the payout rate is a determining factor. If the decrease is, for instance, from 96% to 91%, players would receive a payout of €91.

If the payout ratio were reduced to 87%, the payout for players would be €87. In this case, the first option (deducting the tax from the player's account) would be significantly more lucrative.

Which variant of gambling tax have online casinos opted for?

Legal gambling providers have the freedom to choose whether to deduct the gambling tax directly from the player's balance or opt for a reduced payout rate. However, it seems that so far, the majority of legal providers have opted for the lower RTP.

But why do many providers choose the lower RTP? There are certainly several reasons for this. Mainly, it will be due to the effort that online providers would have. If the providers were to choose to deduct the gambling tax from player accounts after each bet, the workload would certainly be enormous.

By employing the strategy of universally reducing the RTP value, the deduction of taxes from the player's account would no longer be necessary on every occasion. It is highly likely that the determination and remittance of the correct gambling tax would be considerably simpler and time-saving by means of the lower payout ratio in general.

Fortunately, there are many casino players who prefer the first option, which is the higher RTP. Luckily, there are some casinos that have opted for this variant. Among them are the providers Lord Lucky and Löwen Play. These casinos have maintained the higher payout ratio but deduct the gambling tax after each bet.

In the long run, casino players are likely to achieve a higher profit.

How do players perceive the regulations and gambling tax?

The introduction of the new State Treaty on Gambling regulations has sparked a divided opinion among the masses. Numerous individuals appreciate the stringent security measures implemented. Most notably, countless players are elated to finally have the opportunity to engage in legal online casino gaming.

However, there are also several factors that oppose it, causing discontent. These include various restrictions such as betting limits and monthly deposit limits. The limited selection of games is also criticized.

Players find it particularly infuriating that there must be a minimum 5-second break between spins. The gambling tax also leaves a negative impression. Ultimately, players experience significantly lower payouts or have the tax deducted when playing at online casinos.

Does the gambling tax affect the range of games on offer?

The game offer is also affected in part by the gambling tax. Some providers have completely withdrawn their games from the German market, as lowering the payout rate would change all RTP values of the games.

If the games are less profitable due to the reduced payout rate, fewer players would engage in playing the slot machines. This implies that the provider earns insufficient money to sustain the offering.

Let's take a look at an example, shall we? If a game typically has a payout rate of only 94%, lowering it would bring the rate down to below 90%. The profitability of such a venture would no longer be truly lucrative in this situation.

Who is responsible for paying the gambling tax to the government?

The responsibility for paying the gambling tax lies with the online operator, who must remit it to the tax office. In this regard, players have no involvement. It is the gambling provider who shoulders the burden of determining the amount of gambling tax to be paid and transferring it to the tax authorities. Therefore, the task of calculating the payable gambling tax and making the necessary payments rests solely with the gambling provider.

If profits are made in the online casino, they do not have to be taxed. Players can breathe a sigh of relief. They will only be asked to pay once. Nothing from the winnings will be handed over to the government.

Is it possible to bypass the gambling tax in licensed online casinos?

The evasion of gambling tax is not possible in licensed online casinos under the GGL. Taxes must be paid on all bets placed in online gambling halls. The online casino is obligated to collect and remit the tax to the treasury.

If you want to play the various slot machines legally in Germany, you must come to terms with the gambling tax. It is an integral part of the new regulations and must be adhered to.