Business climate: Europe’s largest economy returned to growth in 2010 after sharp contraction in 2009. There is a large base of affluent consumers and a skilled workforce. Unemployment remains an issue, especially in the former East Germany.

The story of Germany’s amusements industry over the last half-decade is the resurgence of the AWP.

The number of installed AWPs declined between 1995 and 2005 from 245,000 to 183,000. But a new gaming ordinance then came into effect, prohibiting the so-called fun games that paid out tokens and which it was feared could be used for illegal gambling.

About 80,000 of these had to be removed, freeing up space for more AWPs. This greatly revitalised the AWP market and by the end of 2010 their number was back up to 235,750.

Growth has largely been in amusement arcades, with the number of AWPs in bars and restaurants remaining static, although new locations including airports, railway stations, and roadside service areas form a growing if still small market, to some extent compensating for the sluggishness of the bar/restaurant sector.

Each arcade can have up to 12 AWPs, provided there is at least 12 square metres of space per machine. In restaurants and bars, three are permitted. These maximum allowances were increased slightly in the gaming ordinance that came into effect in 2006.

On average, arcades have 11 machines. The trend in arcades is toward larger premises, often as part of compexes that include bars, cafes, cinemas and the like. This has helped them gain public acceptance, sometimes at the expense of smaller venues.

The number of different AWP games has grown rapidly in recent years, and this has helped to open up new markets such as female consumers – who constituted 19.9 percent of AWP players in 2010, against 10.3 percent in 2007.

Leasing of both hardware and software are becoming more common.

Market size

Amusements manufacturers, distributors and operators together reached a turnover of €5.14bn in 2010, up by 5.8 percent on the previous year. The manufacturers fared particularly well with 7.5 percent year-on-year growth, thanks in part to legal requirements for the conversion of AWPs to conform with a new technical directive. These conversions alone cost operators around €20m.

Yet operators still took the lion’s share of revenue, of course. Manufacturers accounted for €570m and distributors for €520m, while operators brought in €4.05bn from consumers’ pockets. The vast bulk of that – €3.94bn – was derived from AWPs, with €60m coming from amusements without prizes and sport-games machines, as well as a further €50m from Internet terminals.

Non-prize games

In 2010, there were an estimated 38,200 amusement machines without prizes, comprising 22,000 Internet terminals; 10,300 video games; 3650 miscellaneous products such as touchscreen machines and jukeboxes; and 2250 pinball machines. There were also 22,300 sport-games machines, a category covering billiards, darts, table soccer, air hockey and the like.

Taxation

Taxes vary across the country but can be as high as 25 percent of gross revenue.

Casinos

Casinos have lost share of the overall gaming market because of admission controls. There are both land-based and cruise-ship casinos. The land-based part of the sector comprises around 55 venues, with the biggest concentration in Hamburg. Casinos typically have 80-150 slots as well as table games.

Regulatory developments

German authorities are reported to be considering new restrictions on AWPs, including a reduction in maximum prizes. Also on the table are compulsory closing times for gaming arcades, an advertising ban, and the right for individual states to limit the number of operating licences and enforce minimum distances between venues. The federal government is also contemplating a reduction in the maximum permitted number of machines in each pub or bar, from three to two.

The European Court of Justice (ECJ) ruled that the state monopoly on sports betting in Germany was illegal because the same rules did not apply to casinos and slot machines.

The ECJ also released its judgment in a case concerning gaming-hall operator Leo-Libera and the application of VAT on gaming machines in Germany. It said that German laws were in compliance with EU legislation allowing member states broad rights to determine the conditions and limitations of exemptions for VAT on certain forms of gambling. Leo-Libera had argued that its gaming machines should not be subject to VAT. Arcades fall within the category that the relevant law describes as “other forms of gaming”, Leo-Libera said, and are therefore exempt.

But the ECJ said that the gaming machines in question are not in competition with other types of gaming that come into the “other forms” category and enjoy VAT relief.

Printer friendly version

Email this article to a friend

Bookmark this

---