Reports that the regional Niedersachsen government plans to sell its ten state-owned casinos has gone practically unnoticed in the industry for two principal reasons: the first one concerned the huge kafuffle over the weekend in Great Britain as deregulation approaches, with stories of gerrymandering and US favoured legislation, and the second one for the lack of appeal of gaming in a jurisdiction that taxes the industry between 80 and 92 per cent.

Germany has had a gaming industry since the 18th century when casinos were set up in the country's spa towns such as Baden-Baden and Wiesbaden, where sumptuous gaming halls were built to service the idle hours of the moneyed classes. Most of these casinos were state-owned properties run by concessionaires in the days of top hats and tails, when gambling took place at the Chemin-de-Fer, Baccarat or French Roulette tables and there was not a single slot machine in sight or, for that matter, casinos in nearby countries.

As the years went by, the change in gaming habits and the opening up of gaming jurisdictions in the rest of Europe, where free market economy and sensible tax systems has encouraged investment, left the shackled German gaming industry lingering in the customs of the past century.

As the Niedersachsen government seeks to plug a $2 billion budget deficit with the help of the sale of the region's ten casinos, the story resembles one where jurisdictions really believe they have the goose that lays the golden eggs by owning casinos or licenses to sell. From Mexico to Malaysia, and from Germany to Guam, governments have the misconception that casino licences are cash cows for them to milk every available cent.

The dance of legislations and regulations make it almost prohibitive for gaming investors to consider some jurisdictions and if interest in the German casinos is forthcoming, reportedly from Austria and France, we can only guess that the interest of the first operator would be down to maintaining a presence in the territory rather than decent ROI, while the other could be just about anyone looking for a headache.

If we consider that last year's revenue for the 80 casinos in the country brought in a paltry $1.2 billion, we should assume that the 10 Hanover operations took in close to $100M before tax and operating costs, which may be a bit of a gamble as far as recovering investment is concerned. We know that casinos don't take chances like that, especially as it is also reported that the industry had a 2% contraction owing to a downturn in the German economy and the advance of Internet gambling.

One operator is reported to fear a takeover of the Hanover casinos by overseas operators, and the possible buy-out of other German casinos, indicating that US groups could use their move into the UK as a springboard to move into Germany, as more casino privatizations are likely to follow the one at Niedersachsen.

As the European winter is forecast to become somewhat brutal, one could be excused for asking: "In this weather?" More appropriately, though, the question would be: "With those taxes?"

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