Betfair withdraws exchange from Germany
Company faces £6m revenue shortfall as it opts to shutdown exchange in Germany calling 5% tax on sports betting stakes "unviable".
Betfair is to immediately withdraw its exchange product from Germany after calling the country’s 5% tax on sports betting stakes “unviable”, it announced in a statement to the market this morning.
Following a decision by 15 of Germany’s 16 Lander in July to implement a 5% turnover tax on a limited 20 sports betting licences, Betfair, after consulting a number of legal and tax advisors, has said that the current framework would render its “current exchange model unviable” forcing it to withdraw “almost immediately”, according to a spokeswoman.
The company generates around 4% of its “Core” revenues from Germany totalling around £6m a year before costs, however it explained that its on-going contribution from the EU Member State would be “de minimis”, or minimal, in future. It added that it is currently “reviewing its operations in the market” but that it would continue to offer a “small sportsbook, games and poker” despite casino and poker remaining unlicensed and prohibited products under the current State Treaty.
“Betfair has been working with the relevant tax authorities to seek clarification on interpretation of the law and its applicability to exchanges. The company is disappointed, however, that to date the tax authorities have not been able to agree to an interpretation of the law that would allow Betfair to continue to offer the exchange product. Consequently, Betfair has decided to withdraw its exchange product from the German market,” a statement read added.
Earlier this year Betfair become one of the first operators to receive a sports betting licence under the breakaway Schleswig-Holstein regime that is currently in limbo over whether or not to join its neighbours in opting for a more limited federal solution.
The northern most German state has so far offered 12 licences under a more favourable 20% gross profits tax and has said it would also look to approve more operators and possibly begin licensing poker and casino. However, since a new coalition state government gained political power this summer it is increasingly likely that this could be abolished in favour of a return to the largely unworkable State Treaty.
“Betfair believes that, in regard to bets placed on its exchange, it is not an organiser of sports betting under the tax law and is not, therefore, liable for the tax”, the statement said.
“The company believes that it has fulfilled all of its obligations under German law, including the filing of necessary tax returns. Discussions are continuing with tax authorities regarding the potential tax liability, if any, arising from bets placed on its exchange since the law came into effect,” it added.