The Hessian Higher Administrative Court has upheld Wiesbaden’s decision to increase its gaming machine tax from 5% to 7.5%, rejecting objections from arcade operators who argued that the higher rate threatened the financial viability of their businesses.
The ruling, issued in Kassel on 18 September 2026, confirms the validity of the tax increase introduced on 1 January 2024. The measure was approved by Wiesbaden’s city council in December 2023 as part of its efforts to strengthen municipal finances, with the city expecting approximately €1 million in additional annual revenue.
The court found insufficient evidence that the revised tax rate placed an unlawful economic burden on gaming hall operators. However, the decision is not yet legally binding, and the applicants retain an opportunity to pursue further proceedings.
Operators Challenge Tax Increase Over Financial Impact
Andreas Braun, who operates four gaming halls in Wiesbaden, challenged the tax increase in April 2025, arguing that the additional financial burden consumed operators’ profits and threatened their ability to remain in business.
His complaint referred to established German case law limiting the taxation powers of municipalities. Under that principle, a tax may be considered unlawful if its financial impact effectively prevents operators from earning a livelihood through their businesses within the municipality.
Braun maintained that Wiesbaden’s revised rate approached this threshold, placing excessive pressure on licensed gaming establishments.
The legal challenge also raised procedural concerns about the approval of the tax increase. The operators argued that members of the public had been excluded without sufficient justification from part of a preparatory meeting of the city council’s finance committee.
A separate objection questioned whether the different tax treatment of gaming halls and casinos violated the constitutional principle of equal treatment.
Court Finds No Evidence of Unlawful Tax Burden
The court rejected the operators’ objections, concluding that the increase did not have the economically destructive effect alleged by the applicants.
Judges pointed to the number of gaming halls operating in Wiesbaden, which had remained largely stable following the introduction of the higher rate. The court considered this evidence inconsistent with the claim that the tax had made gaming hall operations economically impossible.
The alleged procedural irregularity involving the finance committee was also found insufficient to invalidate the municipal tax regulation.
Regarding the equal-treatment argument, the court distinguished between the taxation responsibilities of different authorities. Gaming machines are subject to municipal taxation, whereas casinos fall under the taxation framework administered by the German state of Hesse.
Consequently, the different arrangements did not establish that Wiesbaden’s tax increase breached the constitutional principle of equal treatment.
The city’s gaming machine tax is an entertainment levy calculated on the amount wagered by players. Operators are responsible for calculating and paying the tax under the applicable municipal regulations.
Although the court has upheld the revised rate, the applicants may challenge its refusal to permit a further appeal. Such a challenge would be examined by the Federal Administrative Court in Leipzig.
Illegal Gambling Concerns Add to Wider Industry Debate
Braun’s original complaint also raised concerns about the potential consequences of restrictions on Germany’s regulated gambling market.
He referred to research indicating that nearly half of surveyed respondents were considering using illegal gambling services because of restrictions affecting licensed operators.
The finding concerned respondents’ stated intentions rather than confirmed participation in illegal gambling. It does not establish a direct connection between Wiesbaden’s tax increase and the use of unlicensed services.
The wider debate over Germany’s illegal gambling market has gained attention following a major law enforcement investigation into an alleged unauthorised online gambling operation.
German authorities recently targeted a suspected illegal gambling network believed to have facilitated approximately €5.86 billion in wagers over a 30-month period.
The German Sports Betting Association (DSWV), which represents licensed sports betting operators, welcomed the enforcement action.
DSWV President Mathias Dahms said the investigation illustrated the substantial scale of illegal gambling activity in Germany and reinforced the importance of action against unlicensed operators.
The enforcement investigation is separate from the Wiesbaden tax dispute. For the city’s gaming hall operators, the immediate consequence of the court’s ruling is that the 7.5% tax remains in force, subject to any further legal proceedings.