## Virtual Gaming Halls – The Supreme Instrument in a Difficult Marketplace

The German online slots permit operators’ approved list has been controlled by firms with a physical presence in Germany, making recently licensed Rootz an outlier. Nico Reussenzehn, Rootz’s Country Manager for Germany and Austria, discusses the company’s market entry and why advertising is the only instrument to combat the illicit market that has already effectively taken the lead.

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**The Supreme Instrument in a Difficult Marketplace**
Rootz stands out from most of the already permitted brands.

Seven of the first ten permitted brands are linked to the land-based giant Gauselmann Group. Novomatic is also associated with several early licensees. Add to this Jokerstar, owned by Kling Automaten, and retail betting giants like Tipwin and Tipico, and the list is dominated by brands with a physical presence in Germany.

Is this a setback for Rootz? On the contrary, Reussenzehn says that in a market with a similar lack of permitted businesses, being a virtual casino expert can be a chance.

“Of course, it’s a bit different because most of the permitted casinos, apart from us, have a very long history with their land-based casinos and are obviously very well-known in Germany,” he said.

Conversely, I also perceive this as a chance, since with our extensive experience in the online slot game sector and the top platform available, we provide players with a superior and more varied gaming experience, and now we are bringing it to Germany.

The ultimate tool
So why pursue a license now? In numerous markets, the benefits of acquiring a license are clear. However, Germany continues to offer a transitional framework, where operators do not face enforcement action as long as they adhere to the country’s Fourth Gambling Treaty.

The licensing process is undoubtedly not straightforward.

“Honestly, it’s a very lengthy process, and it’s entirely new to us,” said Nico Rusenzehn, Rootz’s Country Manager for Germany and Austria. “The demands of the new state treaty are very stringent. Close collaboration with our legal firm in Germany and effective communication with the authorities have significantly simplified the licensing process for us.

“My primary responsibility is to work closely with our compliance team, coordinate internal procedures, and find answers or solutions to all inquiries raised by the authorities.”

Rusenzehn stated that the most significant advantage is that licensed businesses can promote their products.

“I want to use this opportunity to highlight how crucial advertising will be for licensed providers in the future,” Rusenzehn said.

This is a potent instrument to combat the illicit gambling marketplace. It’s the sole method to spotlight legal goods and deter players from venturing into the clandestine market.

Securing an official permit in one of Europe’s largest online gambling markets and adhering to the directives of the German Gambling Authority assists us in promoting our offerings and demonstrating to our patrons that they are utilizing a secure and dependable product that prioritizes their well-being.

## Product Drawbacks

Marketing is one of the sole tools legitimate enterprises possess to combat the black market, particularly since businesses within the regulated sector recognize they are at a substantial disadvantage when it comes to providing services.

A 5.3% levy on online slots presents a significant obstacle for the industry. Given that slot machines feature a high return-to-player (RTP) characteristic, the tax rate doesn’t merely signify operators will generate less revenue. Instead, they must devise strategies to ensure the product’s functionality.

“The novel tax exerts a substantial influence because 5.3% of all wagers in Germany are allocated to the government,” stated Reussenzehn. “In other European nations, it’s a percentage of earnings. Here, the actual sum of money wagered is taxed.

“The elevated tax compels us to diminish the RTP value of online slots so we can maintain our operations.”

This certainly presents a challenging situation for online casinos in Germany, compared to their underground counterparts. Underground casinos provide a wider selection of games and offer more favorable payout percentages.

Naturally, Germany’s stringent regulations extend beyond tax rates. One of the most prominent regulations is the €1,000 deposit cap, which applies uniformly to all operators, not on a per-site basis.

“Beyond the substantial tax burden, the €1,000 deposit limit across all providers, the five-second rule, and the €1 per round wagering limit have a considerable impact on the gaming experience and financial viability.

“We are obligated to adhere to the rigorous stipulations of the new state treaty while competing with online casinos operating in an unregulated space. They operate under entirely different circumstances.”

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