A draft over Germany’s gambling rules, which is still being considered by German authorities has Betfair Group Plc, a British online gambling site, already calling foul. According to Betfair, the draft will force it to pay over 16% on all stakes and it will also restrict licenses for private betting companies to seven. According to Betfair these new rules would be “discriminatory and protectionist.”
Betfair complained to the European Union this week over this draft proposal. The EU Court of Justice already ruled in September of last year that Germany’s betting monopoly violates European laws because it is not coherent. Currently Germany only allows state-owned companies to offer sports betting.
The current state betting treaty from Germany would completely overhaul the country’s state monopoly on sports betting but some think it is not going far enough. According to Martin Cruddace, chief legal and regulatory affairs officer at London-based Betfair:
“Although the federal states claim to be opening up the market for sports betting, the current draft treaty is riddled with disproportionate, discriminatory and protectionist measures designed to keep private online operators out of the market. If the treaty came into force it would neither set incentives for customers to play with licensed operators nor would it stand up to the scrutiny of the EU Court.”
Germany and the EU have yet to comment on the complaint from Betfair. Germany reached a preliminary agreement on the new rules in April but all the leaders of Germany’s 16 states agreed to delay the final decision until October of this year.
In the past 24 months, we have seen some absolutely huge acquisitions and mergers in the online gambling world. The biggest one of 2016 could already have a timetable set after an announcement was made on the merger of Paddy Power and Betfair. This merger has been officially given the green light by the Competition and Consumer Protection Commission. Now, they expect the merger to be complete on February 2, 2016.
What This Merger Means
This merger means two things for their stock.
Betfair is taking advantage of a law passed in September in California to open an office and start taking exchange bets on horse racing. California was the first in the nation to legalize exchange wagering and the law will take effect in May of 2012. New Jersey also has recently passed a law to allow this kind of betting on horseracing as well.
Exchange wagering in horse racing allows a person to bet on a horse to win or lose even after the race has started.
The UK has some of the most liberal laws concerning online gambling in the world. They have enacted some of the most comprehensive and fair systems regarding regulation and operations but all this has come at a price in the means of taxation and the horse racing levy. This taxation is now causing some companies to consider leaving the legal umbrella in the U.K.
For some companies that are walking the line between profit and loss, the tax in the U.K. can be a big hurdle to overcome.