by Anton Johan
Germany's plans to revise its online gambling regulations and tax laws have affected UK gambling groups who rely heavily on the German market for their revenues.
Shares in the newly listed bwin.party digital entertainment group, as well as Betfair PLC dropped significantly just before the weekend over concerns that the German government is set to slap a 16% tax on sports betting turnover.
Both companies believe that if they are required to pay such heavy taxes, they will find it difficult to compete in the German gambling market.
Germany accounts for nearly a quarter of the newly merged Bwin/Party Gaming entity, and changes as proposed by the German government could mean that up to 25% of bwin.party's ebitda (earnings before interest, tax, depreciation and amortisation) could be hit.
At present, Germany's online gambling market is unregulated and UK companies such as bwin.party and Betfair - both of whom operate from Gibraltar - aren't required to pay any taxes in Germany.
However, bwin.party believes that the proposed tax revisions do not comply with European Union law.
"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," noted co-Chief Executive of bwin.party, Norbert Teufelberger.
Bwin.party, which began trading a week ago, saw its shares fall to 142 p.
