German Court Upholds Wiesbaden's Higher Slot Machine Tax
Germany's Hessian Higher Administrative Court (VGH) has upheld the city of Wiesbaden's increase of its local slot machine tax, rejecting a legal challenge from arcade operators who argued the higher rate had a "strangling" effect on their businesses.
The court's fifth chamber ruled on September 18, 2026, that the tax increase, effective as of January 1, 2024, is legally valid.
The Tax Increase And The Challenge
Wiesbaden's city council voted in December 2023 to raise its slot machine tax from 5% to 7.5% of stakes, effective January 1, 2024, a change the city said it expected to generate roughly €1m in additional annual revenue, according to the court's own press release.
Arcade operators in the city filed a legal challenge, arguing that the increase amounted to an unlawful "erdrosselnde" (strangling) tax that would consume nearly all of their profits, and that taxing slot halls differently from casinos breached the constitutional principle of equal treatment.
Court Finds No Strangling Effect
The court disagreed on both counts. It found that the tax would be unlawful only if its level made it essentially impossible to run the business at all, and noted that the number of arcades and slot machine operators in Wiesbaden had remained broadly constant since the increase took effect, undercutting the operators' argument.
The court also rejected the equal-treatment claim, noting that taxing authority for casino gaming duties rests with the state of Hesse, while the city of Wiesbaden is separately responsible for the local slot machine tax, and thus the two are not directly comparable.
The ruling is not yet legally final. The court did not allow a direct appeal, though operators can still lodge a complaint against that refusal with the Federal Administrative Court in Leipzig.
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Broader Pattern Of Local Gambling Tax Disputes
The case, filed under docket number 5 C 2480/24.N, is one of several disputes in Germany over how far municipalities can raise local levies on slot machines without crossing into an unconstitutional "strangling" tax.
German courts have generally required operators to show that a tax makes it practically impossible to continue running arcades at all, a high bar that Wiesbaden's operators did not clear in this case.
The Hessian VGH's press office said a full written judgment had not yet been finalised when the ruling was announced.
