exclusive
Fraudsters are said to have massively evaded taxes for years through manipulated slot machines. NDR/WDR/SZ research provides insight into such a suspected million-dollar fraud. Although authorities are aware of the scam, it could still be used today.
Without help, the investigators would probably never have uncovered the alleged arcade fraud to this extent. For years, operators of more than 30 arcades, especially in North Rhine-Westphalia and Berlin, are said to have defrauded the tax authorities by falsifying the sales of their slot machines.
As a result, they are said to have evaded a total of more than 40 million euros in taxes, according to the Bochum regional court upon request. A trial begins there on October 9th against four people who have to answer for gang-related tax evasion and gang-related falsification of technical records. The defendants' lawyers declined to comment when asked. The presumption of innocence applies.
Research by NDR, WDR and Süddeutscher Zeitung with investigators, financial authorities and in industry. And that this is apparently still possible in a similar form today – with a low risk of being discovered.
Ex-investor provides crucial information
The fact that the defendants will soon have to stand trial in court is also due to the fact that a former business partner contacted the investigators in 2020. He provided them with documents, files and film and audio recordings from the defendant's environment.
The 48-year-old native Israeli Chanan Goslan once invested in the gambling halls of businessmen who investigators suspect of tax manipulation. At the time, he was looking for an opportunity to invest money from another scam. He had cheated the nursing care insurance fund out of millions for years by applying for benefits from the insurance companies for pensioners who were actually still healthy and then sharing these with accomplices and the pensioners without actually caring for anyone. In 2016 he was arrested for his foster care fraud and subsequently sentenced to seven years in prison.
From business partners betrayed
His scam was still running in 2010, and at that time he wanted to invest the money somewhere. Goslan finally bought shares in ten arcades for 1.9 million euros and was allegedly promised a monthly payout of 50,000 euros by his business partners. But from the beginning he received less money than agreed, Goslan says today. He had the feeling that he was being made fun of and ripped off.
Goslan began doing his own research, wired himself up and even hired a private detective agency. “I knew I would get to the bottom of it sooner or later. I just didn't know how big the swamp was,” Goslan said NDR, WDR and SZ met him for a conversation in Berlin a few days ago. In 2013, he was convinced that his business partners were betraying him. He got out of the arcade business.
hand over evidence
It was only years later, in 2020, that he contacted investigators from the open prison system. At this point, they were already investigating eight arcades in the defendant's area. Goslan says he found out about it through his brother. He gave the investigators two moving boxes full of files, photos, videos and audio files because he “had a lot to make amends to” the German state.
The evidence he collected pointed to a much larger dimension: He said that it involved more than 30 arcades, a suspected large-scale tax fraud in which he could serve the people behind it and their scam on a silver platter. The investigators later noted something similar in the investigation file NDR, WDR and SZ could partially see. Shortly after his statement, investigators bugged phones, searched numerous houses and ultimately charged a total of nine people.
Rigged slot machines
From the investigation files it can be reconstructed that the defendants operated more than 30 legal arcades throughout Germany and systematically adjusted the tax burden downwards. Goslan says he didn't know anything about it when he got into the arcade business. It was only through his own research that he understood how the fraud system supposedly worked.
The basis for taxation is a reading strip, which is similar to a receipt and is automatically printed out by every machine. With the help of software, the perpetrators are said to have reduced the sales on these selection strips by around 50 percent – less sales, less taxes.
The black money is said to have disappeared into the pockets of business people – possibly not an isolated case. In recent years, cases of tax evasion through manipulated slot machines have repeatedly made headlines. Research by NDR, WDR and SZ show that the scam would theoretically have been possible on any of the many thousands of gaming machines in Germany, up to and including 2021. Only from this point onwards is a so-called fiscal data storage supposed to have made the machines tamper-proof.
Technical retrofitting with pitfalls
This fiscal data storage is intended to ensure that the sales of a device are digitally signed and thus made tamper-proof. Research by NDR, WDR and SZ at the state finance ministries show, however, that there are still loopholes. Upon request, for example, the Lower Saxony Ministry of Finance wrote that manipulation of the fiscal data was already known. Some federal states report that the checks of such and other data are only carried out selectively or have only been possible since 2024 for technical reasons. Others answer that they are technically well equipped.
The review is a matter for the states and therefore depends heavily on how well the authorities are staffed and technically equipped. This offers criminals the opportunity to continue to manipulate, even if the risk of being discovered has apparently increased.
Illegal gambling even more lucrative
In addition to manipulating machines, criminals have long since discovered that there is an even more lucrative market: illegal gambling. Unlike the case that is now being heard before the Bochum regional court, this involves illegally operated slot machines, mostly in the back rooms of catering establishments, which lack any seal of approval and were set up without official approval. Their income completely bypasses taxes. According to investigative authorities, organized crime is spreading in this area. According to estimates, income from illegal gambling amounts to around three billion euros per year.
Criminals apparently hardly have to fear controls. In Germany, the public order offices are responsible for checking illegal arcades and slot machines. It is a task that overwhelms many municipalities in terms of personnel.
Low Risk of detection
In addition, according to Tobias Hayer, gambling researcher at the University of Bremen, inspectors often don't dare to go into dubious back rooms alone. “If I were to work for the public order office, I would simply have one thing: fear,” says Hayer. The police also seem to have little action against the perpetrators, as an internal report from the LKA North Rhine-Westphalia shows NDR, WDR and SZ could see. It states that there is a lack of trained staff and the necessary technology to combat illegal gambling.
In addition, other supervisory authorities involved are so overloaded with staff that combating illegal gambling is not the focus. As a rule, there were no investigations into money laundering or serious tax evasion. The risk of detection for criminals is low, the report said.
Harsher penalties called for
In view of the horrendous winnings that manipulated or illegal machines make possible, there is currently not enough focus on gambling, criticizes Oliver Huth from the Association of German Criminal Investigators. We have to get on the perpetrators' feet and police, customs and public prosecutors must work together more often. But there is a lack of political will for this, says Huth.
Closer cooperation between law enforcement authorities and tougher sanctions, such as higher fines or personal liability, make sense, says gambling researcher Hayer, for example. The Federal Drug Commissioner Burkhard Blienert also calls for this in an interview NDR, WDR and SZ “much harsher penalties in the illegal sector. It cannot be the case that many get away with a fine.”
Gambling has long since become a billion-dollar source of income for professional fraudsters in Germany and without insiders like Chanan Goslan, the state currently has little chance of systematically preventing illegal income.
The complete one NDR story “Tatort Corner Bar: On the trail of the gambling mafia” can be found in the ARD media library.
