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A new study conducted by the Düsseldorf Institute for Competition Economics (DICE), has warned that Germany’s proposed 8% slot stake tax could undermine the country’s regulated gambling market.

The study was commissioned by the two German operator associations, the Deutscher Sportwettenverband (DSWV) and the Deutscher Online Casinoverband (DOCV), in response to recent tax recommendations made by the State Finance Ministries of Hesse, Nordrhein-Westfalen, Bayern and Berlin.

The aforementioned Finance Ministries have proposed an 8% tax on online slots and a 5.3% tax on poker stakes. DICE’s report argues that such a high tax percentage could harm Germany’s regulated gambling market as it would make legal gambling too unattractive for players. This would in turn push them to the illegal market, the report argues.

According to DICE, setting the tax level at 8% would mean that games would have to reduce their return-to-player (RTP) rates. An example presented in the report shows that a game with 96% RTP would have to drop to 88% RTP in order to maintain the same profitability if taxes are set at 8%.

DICE has proposed that taxes should instead be calculated based on gross revenue and set between 15% and 20%.