bwin.party down sharply on back of German sports betting proposal
Newly merged entity's share price tumbles as Germany's federal states propose 16.66% turnover tax that would make the market unprofitable for private operators.
Newly merged bwin.party’s share price fell 16% today as the majority of Germany’s states proposed a restrictive opening for sports betting based on an unworkable 16.66% turnover tax.
The market reacted unfavourably to the German proposals of a five-year “test period” for seven sports betting licences in Germany combined with a 16.66% turnover tax “ approximately 23% of the group’s revenue in 2010 was from Germany. Online casino will be restricted to land-based casino operators, again for a five-year test period.
The news saw the new entity’s share price drop 14% in a five-minute spell this afternoon on only its fourth day of trading. The stock ended up 15.92%, or 31.50p down at 166.40p.
A Bwin.Party spokesman called the proposals “even more inconsistent” than the current German state treaty. “This will face further criticism from the European Commission for not complying with EU law.”
Germany’s 16 federal states were previously split into three camps over whether or not to open up Germany’s lucrative sports betting and egaming market to private operators.
The northern state of Schleswig-Holstein said in December that it planned to forge ahead with issuing online sports betting, casino and poker licences to private operators from 2011 with a view to operators being up and running by 1 January 2012 when the current State Gambling Treaty banning the offer of games of chance over the internet in the country lapses.
The bwin.party spokesman added that if Schleswig Holstein’s proposal to the European Commission, based on a 20% gross profit tax, is approved then the new company would apply for a licence there.
A group of around five Christian Democrat Party-led states were known to be in favour of opening the country’s sports betting market to private operators, while another of Social Democrat-governed Länder, including Rhineland-Palatinate and North Rhine-Westphalia, wanted to uphold the existing state monopoly on lottery and sports betting.
Last December German gaming law authority Wulf Hambach, of lawyers Hambach & Hambach, told eGaming Review the split between the Länder would mean Germany’s egaming market is likely to regulate on a state-by-state basis, resulting in “a domino effect”.
“There is a long way to go in our view but we are confident that in the end Germany will comply with European law and implement a viable licensing regime to the benefit of all stakeholders and not just the monopoly operators”, said the Party.Bwin spokesman in an official statement.
The proposed treaty still needs full ratification, and even then would only come into force on 1 January 2012.
Germany’s non-ratified sports betting proposals
16 Länder met today and set out initital proposals
7 five-year licences to be issued
16.67% turnover tax
Live betting but only on final result. No in-play
Only land based casinos would be able to operate online casino
Sports betting advertising only allowed on or in sports arenas and club shirts and not on television