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A Balanced Take on Optimal RTP for New Turnover Taxation in Germany

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What should be the optimal return to player (RTP)? This is a hotly debated question in the German gambling industry following the changes in the turnover taxation that are scheduled to come into force from 1 July 2021.

While several figures and many theories have been advanced, we found particular LinkedIn post by Robert Lenzhofer, Co-Founder and CEO of Hölle Games, particularly well-balanced and insightful.

We are reproducing the post with minor changes here, with permission from the author. You can find the original post here.

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Over to Mr. Lenzhofer now…


I have published a LinkedIn poll recently with the title: “If/when Germany introduces the 5.3% turnover tax, what RTP rate is best suited considering both game-play and effective tax-paid?”

After one week and 120 votes from industry experts, the poll showed the following result:

There are a few ways of looking at this, but I think the key take-away is that the industry this poll represents is fairly evenly split between above 90% RTP and below 90% RTP.

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The tax explained

First, to ensure we are on the same page, a quick explanation of the tax proposed:

Currently a 5.3% tax on turnover has been proposed and a draft-legislation does exist. I won’t go into the politics and the thinking behind this, but rather try to analyze the numbers.

A 5.3% tax on every bet being placed on an online slot means an operator can not offer an RTP over 94.7%. At 94.7% RTP, the operator would break even exactly on a bet-level, but obviously would lose money as marketing, employees and general operation have to be financed somehow. Considering financial overhead in any operation, that means the maximum RTP a casino is technically able to offer while avoiding bankruptcy is probably around 93% or more likely at 92%. This is the top ceiling and at the same time too high to be profitable.

Now, there is a bit of uncertainty and I’m also not entirely sure if the number to calculate against is 5.3% or rather 5.033%. The tax is 5.3% on turnover, meaning a 1 EUR bet causes a tax of 5.3 cents, which totals to 1.053 EUR. The tax-portion of 1.053 EUR is less than 5.3%. 100*5.3/(100+5.3) = 5.033 resp. 5.033%. I do calculations here in this document based on 5.3%.

How to balance RTP and profitability

We’ve established above that 93% or 92% is the top ceiling, but where is the bottom?

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The table below shows how a Slots-operator will be taxed, calculated into the GGR-equivalent %-age number and cross-referenced with RTP. For reference, many other jurisdictions in Europe offer a GGR-based tax-rate of around 20%. As you can see from the table below, the 5.3% tax-rate on turnover wouldn’t be so bad, if players would accept 80% RTP. At 80% RTP, the GGR-equivalent tax-rate is 26.50% and thus a competitive tax-rate.

The coloring I have done here may be slightly biased, especially in terms of RTP so please take with a grain of salt. But if you roughly accept that the red-area you want to avoid on the RTP and on the GGR-% side, then you end up with an RTP-bandwidth between 84% and 91% to play with.

Further, and again granted you accept the coloring, an operator obviously wants to find an RTP in the green and a GGR-% in the green. Here we arrive at 88% and 89% RTP.

Now, a lot has been written that players will not accept such low RTP’s as say 84%. There are counter-arguments made that in land-based slots the RTP is exactly at that level and actually 88% is on the higher-end in land-based casinos.

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On the other hand, for many market-participants the number “9” is a psychological blocker. Players, Affiliates and a couple of Slots-Studios I speak to feel very anxious offering product below 90% as this number still feels somewhat close to the industry-average of 94 to 97%. 89% sounds very different than 90%, although it is “just” 1% in RTP dropped.

Sportsbook vs. Casinos

It will be interesting to watch if Sportsbook or Sports-led brands will choose a differing RTP-rate than Pure-Play Casinos. A Sportsbook can more easily stay on a higher RTP and just pause all short-term expenses (bonus, marketing, etc.) and focus on cross-sell. A pure-play Casino will have to look a lot more closely on bottom-line and in my opinion will have a hard time offering e.g. 90% RTP-Slots as the GGR-equivalent tax-rate is 53%.

Game-Mechanics?

Will there be new Game-Mechanics invented to combat this problem? Looking at the table above again, the second column states how many spins a player on average can make until 1 EUR is spent depending on the RTP-Level. At 95% RTP this is 20 spins. Now, if a Game-Mechanic can be invented that provides a low mathematical RTP while at the same time provides a similar amount of real spins, then this could be a solution to the problem.

Conclusion

The above explanation is in no way complete – there are actually interesting studies which analyze how much an RTP is “felt” by the player and there is probably very good data the land-based industry has to offer.

But, to move away from being neutral, here’s what I personally think: The reality will be that everyone will push the RTP down and experiment with the lowest acceptable RTP as this maximizes their income. As such, come 1st of July, we’ll see a lot of RTP’s experimented with. Imagine you are a pure-play casino and you can provide a Game-Mechanic that feels good to the player and has a nice session length, while staying at or below 40% GGR-equivalent-tax. I believe things start to fall apart financially for an operator at 40% tax-rate. If you own your own media-assets and have good deals with your suppliers and run a tight operation then a 40% tax is possible to do really well in Germany. That means, the average-RTP across the portfolio will have to be around 87-88%. I think you can mix in 91% games into the portfolio just so that is part of the portfolio too, but the majority of revenue of the white-market in Germany will in my opinion come from Slots around 88% RTP. And since some games will be mixed in at 90/91% you can expected some slots to be mixed in at 84/85% rate as well.

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Turnover of Legal Gambling Market in Hungary Increases

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The Regulated Activities Supervisory Authority (SZTFH) has announced that the turnover of the legal gambling market in Hungary has increased.

The SZTFH and its predecessor have been blocking illegal gambling websites since 2014, preventing them from being accessible to Hungarian players. Thanks to the more than two thousand blockings ordered so far in 2024 and 2025, the traffic and turnover of the legal market is sharply increasing compared to the total market, which can be considered a significant improvement compared to the illegal market presence in previous years.

One of the main goals of the SZTFH is to take action against websites offering illegal online gambling that are not licensed in Hungary and the prohibited advertising sites that promote them, and to whitewash the Hungarian online gambling market. In the past two years, several legislative changes have come into force that have resulted in the acceleration and extension of the blocking procedure to advertising and contributing sites, and have created the opportunity to track and immediately block illegal sites that are constantly jumping to new domain names every day in order to evade the authority’s measures. Thanks to the change in the legal environment and the intensive action of the Authority, the number of visits to illegal gambling sites has now decreased significantly.

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In the case of services offered by organisers who are not licensed to organise gambling in Hungary, the Authority has no possibility to oblige the gambling organiser to comply with the guarantee rules protecting the interests of the players, and the claim for the payment of the prize cannot be enforced before a Hungarian court. Gambling organisers who are not licensed by the Authority also violate the interests of the Hungarian State in the economic activity of organising and operating gambling. In addition to the above, by not joining the player protection register kept by the Authority, which prevents players who have been excluded from gambling voluntarily or by a court from participating in gambling, they also constitute an obstacle to the effective enforcement of goals related to player protection.

The SZTFH is committed to the elimination of illegal gambling and the whitening and increasing the competitiveness of the Hungarian gambling market in order to protect the interests of Hungarian players, and therefore will continue its intensive blocking activities with great effort and the use of innovative solutions in the future. Players can find out about the gambling organizers licensed in Hungary and the illegal sites blocked by the Authority on the Authority’s website.

The post Turnover of Legal Gambling Market in Hungary Increases appeared first on European Gaming Industry News.

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German Federal Research Minister Dorothee Bär to open gamescom 2025

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Federal Research Minister Dorothee Bär will take part in the official opening of gamescom on 20 August. This was announced today by Koelnmesse and game – The German Games Industry Association. The minister responsible for computer and video games in the German government will give a welcoming address at the opening of the world’s largest games event. Hendrik Wüst, Minister President of North Rhine-Westphalia, has also already been confirmed for the opening. During a tour of gamescom, they and other political guests of honour will gain an impression of the latest developments and trends in the games industry.

gamescom is the world’s largest and leading event for computer and video games. It brings together the international gaming community and entire games industry in a unique way, both in person in Cologne and digitally. gamescom 2025 will take place from August 20 to 24. The event will kick off on August 19, 2025 with gamescom Opening Night Live. gamescom is jointly organized by Koelnmesse and game – The German Games Industry Association.

The post German Federal Research Minister Dorothee Bär to open gamescom 2025 appeared first on European Gaming Industry News.

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FC Bayern and Betano Sign Partnership Agreement

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Premium Online Sports Betting and Gaming Brand Betano Joins Forces with Football Giant FC Bayern in a Landmark Three-Year Agreement

FC Bayern, the 34-time champions of Germany and six-time champions of Europe, has entered a three-year partnership with Betano, the leading international online sports betting and gaming brand owned by Kaizen Gaming. This strategic alliance designates Betano as an Official Partner of FC Bayern starting from the 2025-26 season and extending until the 2027-28 season.

Michael Diederich, FC Bayern Executive Vice Chairman commented: “We are delighted to have Betano as a new Official Partner of FC Bayern. Betano stands out as a global market leader in its field – highly innovative and always pushing forward – qualities that we hold in high regard and also claim for ourselves. With Betano at our side we have gained another reliable partner to help us reach our growth objectives and continue to strengthen our innovative edge”.

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George Daskalakis, Kaizen Gaming CEO, stated: “Today marks an exciting new chapter for Kaizen Gaming and Betano, as we proudly join forces with FC Bayern. When we first set out on our journey, we could only dream of partnering with one of the most iconic clubs in world football. They stand at the top of the game and this partnership reflects just how far we have come as a company, with Betano now recognized among the top online gaming and betting brands worldwide”.

Julio Iglesias, Kaizen Gaming Chief Commercial Officer added: “Germany has always been one of the most important markets for us, the second where Betano ever launched. Now, we are announcing our biggest partnership in the country and we double down on our commitment to creating innovative, safe and responsible gaming experiences for German fans. Of course, FC Bayern exceeds the borders of Germany, with millions of fans across the world. As Betano expands its international footprint, this partnership empowers us to connect with people globally”.

The post FC Bayern and Betano Sign Partnership Agreement appeared first on European Gaming Industry News.

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