bwin.party co-CEO Norbert Teufelberger believes that Spanish authorities “have no claim to ask for four years of back taxes” ahead of the issue of long-awaited online gaming licences there from 1 June.
As reported on Casino Choice this week, the owner of the PartyPoker and bwin brands - the latter of which can be seen adorning the football shirts of newly crowned Spanish champions Real Madrid - is among several European operators hit with large retrospective tax bills just weeks before the Spanish regulator is due to hand out the first long-awaited online gaming licences.
Teufelberger (pictured above) said: “Officially there is no context between the grant of the licence and the taxes they may claim. We are in discussion with the tax office as well, but it is very hard to perceive what the outcome will be.”
When asked by analyst Ed Birkin of Barclays Capital if the company could potentially withdraw its licence application in Spain if forced to pay the retrospective tax bill in full, Teufelberger said: “It’s difficult as it’s hypothetical. I will not disclose how discussions are going with them…We believe they have no claim to ask for four years of back taxes, but again, this is a discussion we have separately with the tax office, and we are talking to the government as well at the same time.”
The company expected to hear whether or not bwin.party was among the first wave of licensees before June, said the Austrian executive: “We expect that will be announced prior to June 1, when the first licences will be handed out, and that’s the last information that we have.”
The bwin.party co-CEO was speaking as the company formed from the merger of bwin and PartyGaming last year unveiled flat revenue for the three months to the end of March, up just 1% year-on-year to €215.9m, a performance well behind peers such as William Hill Online, which grew revenue by 33% and 888, up 25%. Paddy Power is expected to unveil 26% year-on-year growth tomorrow, according to analyst David Jennings of Davy Stockbrokers in Dublin.
The operator blamed the 1% decline in sports betting to €70.6m on a tough margin comparative in the same period last year and having to exit the newly regulated Danish market on 1 January because “[w]e didn’t have the opportunity to get the bwin platform compliant with the regulations there, so we had to shut that down”, according to CFO Martin Weigold. This was despite the company having a Danish licence and the market opening being delayed by a year due to a European State Aid case.
Teufelberger explained the delay on having “chosen to go ahead and integrate the platforms first instead of launching on various platforms in various labels in different countries. That process will be over in six months and we won’t have that issue any more.”
Casino provided the one operational bright spot for a company grappling with the cost and logistics of launching in highly taxed markets across Europe while also integrating platforms and delivering promised merger-related savings of €65m this year. The launch of table games in Italy last July helped lift casino revenue 10% to €71m. Poker however continued its decline, down 3% year-on-year to €52.2m, while bingo was down 15% due to €15.6m due to ” increased competition and cannibalisation of our Italian bingo revenue by the introduction of casino-style games” according to bwin.party’s other CEO Jim Ryan.
The company added it expected shortly to receive a sports betting licence in the German federal state of Schleswig-Holstein - which issued licences to Betfair and two other operators on 3 May - despite the return to power of the Socialist party that opposed the legislation. “It’s not going to be legally very simple to just change the law”, argued Teufelberger. “We have to wait and see what ‘s gong to happen. We have been very upfront, that we had two choices, either go onshore with our Schleswig-Holstein, which is our preferred option, or continue operating in Germany as is.”
bwin.party will also host an analyst briefing later this month on its strategy to enter the social gaming market. Teufelberger revealed “a fairly small acquisition” would form part of the company’s plan.
