Connect with us
Prague Gaming & TECH Summit 2024

Latest News

The Right RTP for the German 5.3% Turnover-taxation?

Published

on

The Right RTP for the German 5.3% Turnover-taxation?
The Right RTP for the German 5.3% Turnover-taxation?Reading Time: 4 minutes

 

So, you may have seen a poll I have published 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?” If you haven’t seen it, here is the poll again for reference:

https://www.linkedin.com/feed/update/urn:li:activity:6790660730564825088/

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.

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?

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.

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 & in my opinion

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.

Update 07/05/2021:

I didn’t mention in this article two other potential solutions. One is directly taxing the customer on the bet and the other is directly taxing the customer on a win (paying the tax-authorities on a bet-level, but collecting funds/tax from players on a win) like currently most sportsbetting companies do in Germany. These solutions also lower the effective-RTP-rate to the customer (just charged at a differing touch-point).

The main issue with those solutions is that an operator ends up with an equivalent-GGR taxation of around 57% which isn’t sustainable. Here are some calculations of these alternative solutions: DE 5.3% Taxation Calculations

 

By: Robert Lenzhofer, CEO & Co-Founder at Hölle Games

George Miller (Gyorgy Molnar) started his career in content marketing and has started working as an Editor/Content Manager for our company in 2016. George has acquired many experiences when it comes to interviews and newsworthy content becoming Head of Content in 2017. He is responsible for the news being shared on multiple websites that are part of the European Gaming Media Network.

Continue Reading
Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Latest News

Uncover more treasure in Blueprint Gaming’s The Goonies Megaways™

Published

on

Reading Time: 2 minutes

 

One of Blueprint Gaming’s most popular series returns, as the gang is back to discover more secrets hidden in One-Eyed Willy’s treasure map in The Goonies Megaways™.

Built in partnership with Warner Bros. Discovery Global Themed Entertainment, the newest instalment from its series of games inspired by the award-winning film offers Megaways™ alongside Cash Collect features.

The film’s iconic characters lead the way on a colourful background with bespoke logos and symbols as players try to move the Inferno along the treasure map to trigger the bonus game by landing collect symbols. Reaching the One-Eyed Willy position will unlock its own unique upgrade.

Landing four collect symbols awards free spins and a cash multiplier, alongside the potential of a x10 each time a cash win is collected.

Cash symbols are present between reels 1-6, with the special Collect symbol awarded by landing on the sixth reel.

Activate free spins by landing three or more scatters, with 10 free spins awarded in the base game and more retriggering 10 additional spins if three more scatters land.

The game showcases Blueprint Gaming’s ability to provide additional features to a beloved series while maintaining the core characteristics found within its previous critically acclaimed titles. It also is the latest example of its capacity to develop first-class content based on a multi-genre IP that crosses cinema and multimedia platforms.

Jo Purvis, Director of Marketing & Relationships at Blueprint Gaming, said: “The latest addition to The Goonies series adds Megaways™ to player’s pursuit of One-Eyed Willy’s treasure, and this shows we are committed to evolving the licenced games in our portfolio. We’ve retained the familiar feel the wildly popular branding brings while still ensuring the features and gameplay offer the engagement players demand.

“The game’s artwork stays true to the cult film, following its beloved design and symbols, and we’re sure players will enjoy the immersive experience provided by the soundtrack, as well as the special new bonus round.”

The post Uncover more treasure in Blueprint Gaming’s The Goonies Megaways™ appeared first on European Gaming Industry News.

Continue Reading

Latest News

HBA Media Partners with Genius Sports

Published

on

Reading Time: 2 minutes

 

HBA Media announced a new partnership with Genius Sports to launch “Crown Jewels Racing Fantasy” (CJRFantasy) – the first international horse racing fantasy game.

As the established leader in the international distribution of horse racing media rights, HBA Media works with broadcasters worldwide representing renowned races including Royal Ascot, the Saudi Cup, the Breeders’ Cup, Hong Kong Jockey Club, as well as premium UK horse racing through HBA’s partnership with Racecourse Media Group.

CJRFantasy has been launched to help unify the global horse racing calendar, providing broadcasters and their fans around the world with a new platform to enhance their knowledge, compete with family and friends, and engage with the world’s most prestigious races.

For each race, players must select three horses, designating who will finish first, second and third. Double points will be assigned to one horse chosen as captain, while players must also answer a tie-breaker question on the winning distances. Each horse is assigned an XP where the lower their score, the more likely the horse is to win the upcoming race. Horses with higher XP who win will deliver more points, encouraging players to select from the full field.

HBA Media will promote the new CJRFantasy game through the international broadcast feed across the calendar year, connecting their gamification strategy with millions of horse racing fans worldwide. On-air graphics will encourage and engage viewers in the joys of the CJRFantasy game, which offers unique raceday experiences and VIP merchandise as prizes. In addition, on-screen talent and ambassadors that include horse racing’s finest Nick Luck, Michelle Yu, Tom Stanley and Frankie Foster will also host their own competitive leagues, enabling viewers to take on the professionals.

CJRFantasy is powered by Genius Sports – a global leader in building highly interactive and engaging fantasy, trivia and predictor tools for the NFL, FIFA, World Rugby, European Tour and MLB.

Frank Sale, Managing Director for HBA Media, said: “We are continually looking for innovative and exciting ways to promote, engage and connect with new and existing audiences. Working in partnership with Genius Sports has enabled us to provide our clients (racecourses, federations and broadcasters) with a powerful and entertaining interactive tool. We are delighted to be able to launch CJRFantasy for the prestigious Dubai World Cup this Saturday.”

Judd Goldstein, Global Commercial Lead, Fan Engagement at Genius Sports, said: “HBA Media plays a central role at the heart of the global horse racing ecosystem, and we’re thrilled to be helping them directly connect with fans around the world. CJRFantasy will bring the world’s showcase horse races into one connected free-to-play gaming destination, allowing horse racing fans to engage with the sport like never before.”

The post HBA Media Partners with Genius Sports appeared first on European Gaming Industry News.

Continue Reading

Latest News

Playson diversifies portfolio with Wild West theme in Arizona Heist: Hold and Win

Published

on

Reading Time: 2 minutes

 

Daring masterminds launch train robbery to take home big prizes

Playson, the fast-growing digital entertainment supplier, is taking players on the wildest adventure of their life in its debut Western-themed title Arizona Heist: Hold and Win.

A weathered team of criminals feature as symbols in this unpredictable slot. A revolver, backpack, and boozy supplies are all packed ready for this adrenaline-fuelled heist.

The high-energy mission is reflected in three Bonus Game boosters. The Plus booster reveals a random value of up to x10 and adds it to each symbol below it. The Multiplier randomly multiplies up to x10 and adds to all icons on the grid. The Gold booster transforms one Bonus symbol into a Bonus Gold symbol on the reel below. Additionally, the Collect feature collects all values from Bonus and Bonus Gold symbols during the Bonus Game.

In-game jackpots return in the form of a golden safe. Collecting two, three, four or five Bonus Gold symbols during the Bonus Game offers one of four corresponding jackpots. Two Bonus Gold symbols triggers a mini jackpot of x20, three symbols award a x50 minor jackpot, the major jackpot of x100 lands if four symbols are achieved. The grand jackpot of x5,000 is given if five Bonus Gold symbols appear.

The Double feature results from filling all 20 positions in the Bonus Game and doubles all symbol values.

Reflecting the scene of the crime, three or more train Scatters symbols trigger 10 free spins. A further three trains during free spins issues a further five free spins.  During the free spins round, Wild symbols multiply all combinations they are part of, with the Wilds’ multiplier amounts depending on how many Scatters appear. For three Scatters, the Wild offers x2, for four it is x3 and for five it is x5.

The Extra Bonus feature grants a chance of adding Bonus symbols in quantity enough or more to activate the Bonus Game during the Main Game or Free Spins.

Tamas Kusztos, CCO at Playson, said: “The Wild West is known for its unpredictability and adventure, which is what we evoke in Arizona Heist: Hold and Win. We are delighted to introduce this lively new theme into our portfolio, with an exciting array of enhancing features to inject even more excitement.

“The graphics and atmospheric music convey a sense of the unknown, as our players seek to run away with great riches from the train’s bursting safe.”

The post Playson diversifies portfolio with Wild West theme in Arizona Heist: Hold and Win appeared first on European Gaming Industry News.

Continue Reading

Trending

We are constantly showing banners about important news regarding events and product launches. Please turn AdBlock off in order to see these areas.