This story is sponsored by BetfairBetfair is to withdraw its betting exchange from the German market after failing to broker a compromise on the 5% turnover tax regime recently introduced for sports betting in the country.
The London-listed operator said today that while its legal and tax advisors had advised it was not an organiser of sports bets under the law as currently written and therefore not liable for the levy, it had been “disappointed” by the failure of the relevant German tax authorities to “agree to an interpretation… that would allow Betfair to continue to offer the exchange product”.
The betting exchange had submitted an expression of interest in obtaining a federal sports betting licence in Germany in September, despite CFO Stephen Morana admitting the 5% stakes tax introduced from July to accompany the new Interstate Gambling Treaty rendered its betting exchange model commercially unviable.
Around 90 companies were informed by the appointed national licensing authority the Hesse Interior Ministry last week that they had been found suitable to progress to the second application stage for up to 20 national sports betting concessions to be issued under the ITG.
Prior to today’s announcement, Betfair had previously declared its intent to continue operating off the licence granted to it by the northernmost federal state, or Land, of Schleswig-Holstein in May, while “paying the relevant taxes to the federal authorities that we believe are due”.
While Betfair said today it believed it had fulfilled all its tax obligations under German law, talks were ongoing with tax authorities over its potential tax liability, if any, arising from activity by German-based customers on its exchange since July, when the new law came into force.
The London-listed operator generated around £40m – or 4% - of total revenue and £6m of earnings (EBITDA) from Germany last year. It said today it expected a minimal contribution from this market once its core betting exchange product was withdrawn from German consumers, and added that it would be reviewing its residual operations in the territory.
The co-CEO of bwin and PartyPoker owner bwin.party, Norbert Teufelberger, said on Friday that his company would continue to offer poker and casino across Germany even if its application for a national sports betting licence was successful.
Article written by Stephen Carter
