Germany's current treaty on gambling bans online pokerImage: AP
May 21, 2011
People who play online poker in Germany are operating in a gray zone. Internet gambling is technically forbidden, but it's almost never prosecuted. The lure of easy money is too much for many people to resist.
Thomas Bollhöfer lives in a peaceful suburb of Cologne with his parents. The 25-year-old has been playing online poker nearly every day for about four years.
"It's not about the money. Sure the money is nice, but for me, it's about the game. It's just fun," said Bollhöfer.
Many other Germans agree with him - though technically, they're breaking the law, according to Wulf Hambach, a Munich lawyer and online gaming expert.
"On paper, it's illegal to play for money - that goes back to a treaty enacted in 2008, which stipulates a total ban on online gambling: lotteries, sports betting and online poker as well," he said.
The money problem
Online gambling is a huge industry. Research conducted by the European Commission estimated that online gambling had a turnover of about 8.3 billion euros ($11.8 billion) in 2008 - a figure that was expected to increase in the coming years.
In the UK, where online gambling is legal and tightly regulated, the government makes about 250 million pounds (286 million euros/$407 million) a year from taxes, says Leighton Vaughan Williams, the director of the Betting Research Unit at Nottingham Business School. Gamblers themselves don't have to pay tax on their winnings, but 15 percent of all profits made by operators from their clients must be paid to the government.
The models works, said Vaughan Williams, because even offshore operators want to be licensed in the UK so they can advertise. In exchange, they're obligated to meet certain requirements, like ensuring players have proof of age, usually in the form of a passport. They are also forbidden from offering the sorts of "near miss" games that researchers say are especially addictive.
But the German government's approach has meant it hasn't been able to share in the profits.
Operators, many of whom are based outside the country, don't pay taxes to a government that has forbidden their games. And when it comes to taxing the players, there's a conflict between the legislature's definition of poker as a game of chance and the tax authority's interest in collecting revenue from online gaming, says Hambach. Most players don't pay taxes because in Germany poker is considered a game of chance, and winnings from such games are tax-free.
A game of chance?
The fact that it's possible to consistently earn a profit from online poker would seem to suggest that it's more than a simple game of chance, like slot machines or roulette.
"In a small number of hands, I could probably beat the poker world champion," said Vaughan Williams. "But the more hands you play, the less it's about chance, the more about skill."
Germany's current treaty governing online gambling expires in 2012. At that time, the 16 states may revise the legal status of online gambling. But in the meantime, online poker player Thomas Bollhöfer isn't too worried about German authorities cracking down on his favorite hobby.
Lawyer Wulf Hambach agrees that the risks to players are relatively low.
"If it were a crime, you'd have to put about 5 million people in jail. That wouldn't be a politically popular move."