Shares in UK gambling companies Betfair PLC and the newly listed bwin.party digital entertainment group are losing value fast thanks to the German government’s announcement that it will adjudicate a 16% tax on sports betting turnover. Both Betfair and bwin.party say that paying such high taxes will make it impossible for them to remain competitive in the German gambling market.
Germany’s web gaming market is, at present, unregulated, which means that UK operators that are based in Gibraltar do not pay any taxes.
A tarriff on sports betting turnover would mean that both stakes and winnings would be taxed. English bookmakers like Betfair and bwin.party are crossing their fingers that the resulting legislation will be a gross profits tax, wherein the stake less the winnings are the only amount included. Similar models are already used in the UK, Spain and Greece.
For companies like the newly listed bwin.party, which generates almost a quarter of its revenue from the German market, a 16% tax on total turnover could be financially devastating. Its shares fell to 142 p last week.
But bwin.party isn’t rolling over and playing dead yet. The company is arguing that the proposed 16% tax revisions are not in accordance with European Union law.
Said bwin.party Co-Chief Executive, Norbert Teufelberger: "We trust that these proposals will undergo the necessary corrections so that the new regulations will govern the entire German market in a coherent and consistent manner in line with EU law."
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