by Renee Israel
Betfair, the London listed online betting group, became one of the first
companies to be awarded an online gambling license by the German state of
Schleswig Holstein.
As a result of the announcement, Betfair saw its share prices climb
significantly by 45p to 839p on Friday last week.
With Betfair awarded a German gambling license, it means the online
betting exchange is allowed to offer a full range of sports betting services in
Germany, with online casino and poker facilities to follow in the future.
Analysts from the financial firm BarCap said that the license was a
"significant positive" and added that this was "further evidence that Betfair
can become the market leader in European sports betting."
They also predicted that Betfair's new German gaming license would give the
firm greater leverage in terms of one day being able to enter the US online
gambling market once it is regulated and licensed.
Betfair was one of only three online betting operators who were lucky enough
to be awarded a German license, although other groups such as bwin.party digital
entertainment hope that they, too, will be granted licenses in the future.
The UK gaming firm will be able to use the license to offer its betting
exchange and other sports products throughout the whole of Germany.
Betfair to Pay 20% GPT to Schleswig Holstein
Under the terms of the license agreement, Betfair will pay Schleswig Holstein
20% gross profit tax in exchange for the right to operate its services in the
country.
The new laws introduced recently by Schleswig Holstein demand 20% GPT instead
of taxation on the group's turnover. Moreover, the laws allow online casino
games, which is exactly what the other states in Germany are seeking to ban
altogether.
Analysts estimate that Betfair will be paying around £3 million in tax
payments to Schleswig Holstein - around 3% of its core earnings.
Germany's sports betting market (most of which is deemed 'illegal') is worth
over £40 billion.
An analyst for Morgan Stanley, Vaughan Lewis said that Schleswig Holstein's
government had received applications for 23 sports betting licenses and 14
online gaming licenses.
Lewis said that they "expect bwin.party to be amongst the second round of
operators that are licensed."
As such, share prices for bwin.party digital also went up before the weekend,
in anticipation for the coming changes. Around 20% of bwin's revenues originate
from the German market.
