Austrian Government Digs in on Gambling Monopoly and Hikes Taxes
Austrian gambling sector faces continued monopoly under new administration's decision upholding contentious policy.
The freshly minted Austrian government coalition of OVP, SPÖ, and NEOS has crushed the rumor mill with their coalition agreement, confirming they'll keep the gambling monopoly and jack up taxes on gambling. Instead of joining the many European nations who've opened their markets to private providers, this government is all about tightening the reins.
Parting Ways with Reform
For years, experts have been clamoring for a reformation of the Austrian gambling market. Why? Because many European countries have transformed their markets and reaped substantial rewards. In Austria, though, stationary casinos and online gambling licenses are the exclusive property of the partially state-owned Casinos Austria AG, with those licenses standing firm until 2027.
But with the coalition agreement in the bag, it looks like the gambling monopoly is here to stay, according to Der Standard. The government's plan also involves reassessing the status quo of sports betting, which is currently classified as a game of skill in Austria. Regardless of a potential reclassification as a game of chance, the betting tax will zoom from two to five percent.
The general gambling tax, imposed on revenues from land-based gambling, is also set to swell by around ten percent. This move has already stirred up a ruckus among licensed gambling providers, who've staged protests over the past week.
Casinos Austria Sweats the Fiscal Squeeze
The proposed spike in taxes in the land-based sector has raised red flags among industry insiders. Casinos Austria AG and the Austrian Lotteries Group have issued warnings about substantial financial burdens, which could result in annual additional costs exceeding 100 million euros.
In 2023, the company coughed up 724 million euros in taxes and dues, with a consolidated profit of just under 183 million euros. A drastic tax hike would put the company at risk, potentially costing hundreds of jobs.
Pundits warn that inflated taxes often promise more revenue than they deliver when connected to gambling. Legal providers are compelled to slash their payout rates, enticing players to flock to the black market—considered vast in Austria.
Tough Action Against Rogue Operators Announced
The ruling parties have declared their intent to crack down on the illegal market with a heavier hand. For this purpose, an authority akin to Germany's Joint Gambling Authority of the Länder (GGL) is to be established. Currently, the competencies lie with the Federal Ministry of Finance in Austria, a body ill-equipped to handle gambling oversight.
The success of these measures against illegal providers could hinge on the European Court of Justice (ECJ). A Maltese court recently handed down a groundbreaking decision, ruling against Austrian judgments against Maltese gambling providers.
The ECJ now needs to decide: whether Malta's provider-friendly protective laws are compliant with EU law and whether Austria's gambling monopoly undermines the freedom to provide services within the EU. If the ECJ deems Austria's monopoly to breach EU law, the landscape could shift for numerous providers who've been running wild on the unlicensed Austrian market. But for now, it's still too soon for speculations of such magnitude.
Enrichment Data:
Market Context
- The Austrian gambling market reportedly accounted for around €5 billion in revenue in 2019.
- Most gambling revenue (67%) comes from slot machines, followed by sports betting at 14%.
EU Regulation
- EU directives such as the Second Payment Services Directive (PSD2) have resulted in changes to the online gambling landscape, promoting transparency and security for consumers.
Market Trends
- The increasing popularity of online gambling has led to a surge in demand for mobile gambling apps and live streaming services.
- The COVID-19 pandemic has driven a boom in online gambling, with many people stuck at home seeking entertainment options.
Gambling Addiction
- Gambling addiction is a significant issue—the European Union identifies it as a public health concern and has issued guidelines for member states to combat it.
- Austria's internal control system for gambling addresses problem gambling, proposing measures like self-exclusion options for consumers and promotional guidelines to prevent addictive behavior.
- Despite the clamor for reformation from experts, the coalition of OVP, SPÖ, and NEOS in Austria has decided to maintain the gambling monopoly and increase taxes, following the reclassification of sports betting as a game of chance which will lead to a surge in betting taxes from two to five percent.
- Timm, a licensed gambling provider in Austria, has expressed concern about the proposed ten percent increase in general gambling tax, as it could impose significant financial burdens amounting to over 100 million euros annually.
- The Austrian government is planning to establish an authority similar to Germany's Joint Gambling Authority of the Länder (GGL) to address the issue of illegal gambling providers, in line with their plans to take tougher action against them.
