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German issues weigh on Gauselmann despite international growth

8th July 2014 7:18 am GMT

German gaming giant Gauselmann Group will continue to focus on increasing its operations outside of its home market of Germany, after warning that its core gaming offering in the country will be substantially impacted by the current State Treaty on Gaming.

Gauselmann revealed that more than 40 per cent of its total 2013 turnover of €1.85bn was generated through its international businesses.

This comes as the company continues to focus on its new business divisions of sports betting and online gaming, with the company creating a new position on its management board last week to recognise the growing importance of the products.

Gauselmann has also been expanding other business areas, such as its own games, gaming machines and arcades, into international markets due to the situation in its home market of Germany.

Gauselmann’s core business in Germany includes commercial gaming machines with low stakes and prizes, which it has been operating for more than 60 years under what it calls “reasonable” legal parameters.

But the company says that its operations are being threatened by new laws and regulations under the 2012 State Treaty on Gaming, which would “eradicate” commercial gaming in Germany in 2017 when the transition period for the current State Treaty comes to an end.

In a statement, Gauselmann argued that if these laws are not prevented from being implemented, the industry will see the loss of more than 50 per cent of its 70,000 workforce.

“The goal must be to find a solution that enables the many millions of players in Germany to continually enjoy attractive, regulated and value-for-money gaming and at the same time to offer qualified responsible gaming and furthermore secure an economic livelihood for the operators,” said the company’s chairman Paul Gauselmann.

He said the industry is presenting a united front against the demands of the German government, through lawsuits as well as negotiations to introduce voluntary certification for all arcades.

The Association of the German Gaming Machine Industry (VDAI) has also been vocal in challenging the current gaming regulations which it describes as “unconstitutional.”

It said earlier this year that the 2012 State Treaty on Gaming introduced “severe” restrictions compared to the previous regime, including the requirement for minimum distances between gaming halls, possible restrictions on the overall number of gaming halls allowed within a municipality, as well as limits on the number of gaming machines per location and restrictions on offering food and drink.

“In view of the numerous political challenges from the state level to the federal level, that greatly affect the business results in Germany, we are satisfied with this result as we began focusing on international business at the right time,” continued Paul Gauselmann.

Gauselmann's turnover rose 3 per cent to €1.85bn in 2013, a year which saw the company make its first move into the German casino market after winning a tender for a licence in the state of Saxony-Anhalt. Gauselmann, together with its Swiss partner Stadtcasino Baden AG, received a casino licence for the Grand Casino Vienna.

Last year the company also launched its first online casino, Merkur-spielcasino.de, following approval from regulators in the German state of Schleswig-Holstein. Gauselmann noted, however, that the online casino will be “without lasting economic success” as the licence expires in 2017 and is unlikely to be renewed due to the state's decision to abandon its “separate path” and join the State Treaty. 

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