News

Tuesday, 10 May 2011 00:35

UK bookmakers running online sports betting systems across Europe are furious at new rules on taxation that are being proposed by the German government.

Leading UK online bookmaker BetFair has already said that it would have to block German gamblers from their system and online gambling giants Bwin.Party are spitting feathers as their shares slumped by 16 percent on Wednesday. This is due to the German government's response to the general economic downturn in the European Union. Other countries are similarly looking at amending their system of betting taxation. The German government has decided to alter the way taxes are taken from online sports and casino betting. They favour a model being proposed that would see 16 percent taken in tax from the turnover profits of sports betting bookmakers.

By directly taxing the bookmaker's turnover, the result would be both stake and winnings being taxed. For UK bookmakers operating in Germany, this would mean that if a German punter wagered €10 and went on to win €50, while they may have spent only €10, the bookmaker would have to pay tax on the bet plus the winnings, which is the whole €60. This is seen as grossly unfair by bookmakers who fear they will lose any competitive edge they may currently have.

The hope is that the German government will adopt a system of taking gross profits tax. This method taxes only the stake minus any winnings, otherwise known as "gross bookmaker profit." Several countries within the EU already use this model, including the UK, Greece and Spain. France has adopted an 8 percent turnover tax.

There are also other aspects to the German proposals that are angering bookmakers and online gambling operators alike. Their new policy looks set to ban all in-match betting. This has recently become an immensely fast growing market, especially for UK bookmakers. To add to the problems, online casino betting is also likely to be banned, favouring land based casinos instead.

A spokesman for Bwin.Party has said that there is a long way yet to go on this issue. The company is confident that ultimately, Germany will be in compliance with current EU laws, implementing a commercially viable system of licensing to benefit stakeholders as well as lottery operators.

Lobbying by bookmakers, online casino operators and trade associations may be needed to try and place pressure on the German government in an effort to get them to adopt the more workable gross profit model.