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Betfair Group plc
7 November 2012
UPDATE ON GERMANY
As previously indicated, in July 2012 Germany introduced a law that applies a 5% tax on stakes on sports betting in the country. A tax at this rate, if applicable, would make Betfair's current exchange model unviable. Following detailed opinions provided by its legal and tax advisors, Betfair believes that, in regard to bets placed on its exchange, it is not an organiser of sports betting under the tax law and is not, therefore, liable for the tax.
Betfair has been working with the relevant tax authorities to seek clarification on interpretation of the law and its applicability to exchanges. The company is disappointed, however, that to date the tax authorities have not been able to agree to an interpretation of the law that would allow Betfair to continue to offer the exchange product. Consequently, Betfair has decided to withdraw its exchange product from the German market.
Following this decision, on-going contribution from Germany is expected to be de minimis and Betfair is reviewing its operations in this market. In FY12, approximately 4% of Core Betfair revenue came from Germany and this revenue delivered a contribution of approximately £6 million before the allocation of central costs.
The company believes that it has fulfilled all of its obligations under German law, including the filing of necessary tax returns. Discussions are continuing with tax authorities regarding the potential tax liability, if any, arising from bets placed on its exchange since the law came into effect.
7 November 2012
UPDATE ON GERMANY
As previously indicated, in July 2012 Germany introduced a law that applies a 5% tax on stakes on sports betting in the country. A tax at this rate, if applicable, would make Betfair's current exchange model unviable. Following detailed opinions provided by its legal and tax advisors, Betfair believes that, in regard to bets placed on its exchange, it is not an organiser of sports betting under the tax law and is not, therefore, liable for the tax.
Betfair has been working with the relevant tax authorities to seek clarification on interpretation of the law and its applicability to exchanges. The company is disappointed, however, that to date the tax authorities have not been able to agree to an interpretation of the law that would allow Betfair to continue to offer the exchange product. Consequently, Betfair has decided to withdraw its exchange product from the German market.
Following this decision, on-going contribution from Germany is expected to be de minimis and Betfair is reviewing its operations in this market. In FY12, approximately 4% of Core Betfair revenue came from Germany and this revenue delivered a contribution of approximately £6 million before the allocation of central costs.
The company believes that it has fulfilled all of its obligations under German law, including the filing of necessary tax returns. Discussions are continuing with tax authorities regarding the potential tax liability, if any, arising from bets placed on its exchange since the law came into effect.
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With Betfair building a model that will be promoted as "fixed odds" will make the "exchange" argument more difficult.
That said, all bookmakers are "exchanges" onto themselves.
That said, all bookmakers are "exchanges" onto themselves.
You think they want to kill of the exchange as we know it ?
They have banned betting on greyhounds and horses on here in Denmark. 
Nov 7, 2012 -- 10:57AM, mesmerised wrote:
You think they want to kill of the exchange as we know it ?
No.
The Danish racing thing isn't Betfair's doing - the Danish regulation and legalisation of online gambling explicitly restricts betting on Racing to the Danske Spil state monopoly.
all this stuff is illegal under EU law. The EU is going to resume legal action against the likes of Germany and Dennmark after a hiatus due to a consultation on online gambling.
No they Eu won't, it's being like that in France for years and have done nothing
It seems very odd to me that the UK has to let all the revenues from the big bookies and betfair go to Gib and Malta when countries like Germany, France and Spain dont.
Could the UK government ban the big bookmakers from selling their offshore products here like the other countries?
Could the UK government ban the big bookmakers from selling their offshore products here like the other countries?
@InsiderTrader
On its way:
http://www.hm-treasury.gov.uk/consult_remote_gambling_review.htm
On its way:
http://www.hm-treasury.gov.uk/consult_remote_gambling_review.htm
longbridge 07 Nov 12 14:23
The Danish racing thing isn't Betfair's doing - the Danish regulation and legalisation of online gambling explicitly restricts betting on Racing to the Danske Spil state monopoly.
I didn't say it was Betfair's doing. I don't understand this law, you cannot bet on UK racing with Danskespil anyway. I would imagine not one Dane would be betting on UK racing on here, but it affects the expats. What they want us to do? Bet on trotting or Class 20 gallops. Hold kæft
The Danish racing thing isn't Betfair's doing - the Danish regulation and legalisation of online gambling explicitly restricts betting on Racing to the Danske Spil state monopoly.
I didn't say it was Betfair's doing. I don't understand this law, you cannot bet on UK racing with Danskespil anyway. I would imagine not one Dane would be betting on UK racing on here, but it affects the expats. What they want us to do? Bet on trotting or Class 20 gallops. Hold kæft
(Reuters) - Betfair Group Plc (BETF.L) has withdrawn its online sports betting exchange in Germany, blaming a 5 percent turnover tax for making its main product unviable in Europe's largest economy.
Companies in the growing online gambling market complain of a patchwork of different regulatory regimes and tax systems across continental Europe. They are focusing their expansion efforts on those countries where there are clear rules and less onerous tax regimes.
Betfair, which launched 12 years ago and operates an exchange system that allows gamblers to bet against each other rather than the bookmaker, argued it should not have to pay the German tax.
Germany is a relatively small part of its business, accounting for around 4 percent of core revenue in its last financial year.
"The company is disappointed that to date the tax authorities have not been able to agree to an interpretation of the law that would allow Betfair to continue to offer the exchange product," Betfair said on Wednesday.
"Consequently, Betfair has decided to withdraw its exchange product from the German market," it added.
Betfair said contributions from Germany would be minimal following the withdrawal of the product. Besides the sports betting exchange, it also offers poker, casino and more traditional fixed-odds betting there.
Betfair shares initially opened lower but recouped the losses to trade 1.8 percent higher at 765p by 1020 GMT.
Analyst Nick Batram of brokerage Peel Hunt said he had already factored a German withdrawal into his forecasts after previous statements from the company.
"We believe that there is the potential to create a much leaner and meaner business, with the unique exchange platform at the core," said Batram, who has a "buy" rating on the stock.
William Hill (WMH.L), Britain's largest bookmaker, said it no longer offered any kind of service to German residents because of the tax situation.
"We remain licensed in Spain and Italy, and have recently developed a Swedish language website and started advertising in print and broadcast media there," spokeswoman Kate Miller said.
Bwin.party (BPTY.L), the world's largest online gaming group, said last week that the German tax had contributed to a decline in revenue in the third quarter.
Bwin has amended its business model in Germany, its largest market, by no longer accepting very short-odds bets on sports events there.
Companies in the growing online gambling market complain of a patchwork of different regulatory regimes and tax systems across continental Europe. They are focusing their expansion efforts on those countries where there are clear rules and less onerous tax regimes.
Betfair, which launched 12 years ago and operates an exchange system that allows gamblers to bet against each other rather than the bookmaker, argued it should not have to pay the German tax.
Germany is a relatively small part of its business, accounting for around 4 percent of core revenue in its last financial year.
"The company is disappointed that to date the tax authorities have not been able to agree to an interpretation of the law that would allow Betfair to continue to offer the exchange product," Betfair said on Wednesday.
"Consequently, Betfair has decided to withdraw its exchange product from the German market," it added.
Betfair said contributions from Germany would be minimal following the withdrawal of the product. Besides the sports betting exchange, it also offers poker, casino and more traditional fixed-odds betting there.
Betfair shares initially opened lower but recouped the losses to trade 1.8 percent higher at 765p by 1020 GMT.
Analyst Nick Batram of brokerage Peel Hunt said he had already factored a German withdrawal into his forecasts after previous statements from the company.
"We believe that there is the potential to create a much leaner and meaner business, with the unique exchange platform at the core," said Batram, who has a "buy" rating on the stock.
William Hill (WMH.L), Britain's largest bookmaker, said it no longer offered any kind of service to German residents because of the tax situation.
"We remain licensed in Spain and Italy, and have recently developed a Swedish language website and started advertising in print and broadcast media there," spokeswoman Kate Miller said.
Bwin.party (BPTY.L), the world's largest online gaming group, said last week that the German tax had contributed to a decline in revenue in the third quarter.
Bwin has amended its business model in Germany, its largest market, by no longer accepting very short-odds bets on sports events there.
A simple solution would be to xfer the turnover tax to the customers and let them decide wether the prices/odds including the tax are attractive.
here we go 07 Nov 12 15:49
A simple solution would be to xfer the turnover tax to the customers and let them decide wether the prices/odds including the tax are attractive.
that is not a solution , nobody in their right mind would place bets under those circumstances
A simple solution would be to xfer the turnover tax to the customers and let them decide wether the prices/odds including the tax are attractive.
that is not a solution , nobody in their right mind would place bets under those circumstances
Really? it's 5% on stakes. Off-course betting in the UK was taxed at twice that when I was first betting. It's a stupid model compared to Gross Profit Tax, but it didn't top people having a bet in the UK in the 80s and it wouldn't stop them having a bet in Germany now.
If Betfair don't like the tax they can go elsewhere (that's what they tell us about Super PC).
A turnover tax always penalises efficiency. That's why the 'Robin Hood tax' is such a complete con. It's presented as taking from the rich to give to the poor, when it's really taking from the rich, to give to the superrich.
The real effect is a perfect analogy of what happens in the gaming industry: the big operators get free rein to fleece the populace at ridiculous margins.
The real effect is a perfect analogy of what happens in the gaming industry: the big operators get free rein to fleece the populace at ridiculous margins.
Let's hope the European Commission will fix this incompetent bs politician performance soon...
About time the EU realised that there's no need for these middlemen operators and started up an EU run exchange with profits going back to the EU country they were generated in. All other online betting banned.
Nov 7, 2012 -- 3:15PM, longbridge wrote:
@InsiderTraderOn its way:http://www.hm-treasury.gov.uk/consult_remote_gambling_review.htm
I think all this stuff is going to get stopped by the EU. Their plan is get harmony in regulation, so countries can't use bullsht excuses to ban operators licensed in other EU countries.
http://ec.europa.eu/internal_market/services/gambling_en.htm
Too bl00dy true EDead. Having a nationalised exchange or tote pool as the only place to bet on the horses would sort out the sport's funding problems. Bookies say they can do without racing so time to cut them out.
Depressing news. Slowly the map of europe is getting filled with Xs of countries betfair is unavailable or limited in :(
Nov 8, 2012 -- 9:53PM, Just Checking wrote:
Depressing news. Slowly the map of europe is getting filled with Xs of countries betfair is unavailable or limited in :(
The tax offices of various countries are now 'collection offices' that need to come up with ways to collect taxes that were technically not possible before.
It will come down to negotiation once Betfair shows them how much revenue they would make.
It may also force betfair to create 'partnerships' within countries.
The only solution is the tax offices get all the commission. "Cut out the middleman" and we're all happy.
once upon a time people got pretty testy when corrupt government officials created monopolies to expropriate them
often they simply killed the taxman
often they simply killed the taxman
"nationalised exchange"- what a truly insane idea, I mean idiotic, is E group "Red Feck"? The issue here is that originally you had your physical walk in monopolised gambling, betfair (and others) came along and offered a service far better, these countries can't adopt or do control freakery, so shut down their rivals.
"nationalised exchange" is just what these control freaks are doing under a different flag. Under a liberal EU gambling policy you'd have anyone in the EU allowed to place a bet with anyone whoever they prefer, far peferably to sticking 2 quid on with comdrade blah blah and that's your option.
We'd never EVER have anything like betfair under nationalisation or socialism. We need MORE betfairs, not nationisation EU wide. Spider sense tingling. Is E group feck? I think so. "All other online betting banned." Yip, I think so, he was a socialist, despised freedom and anyone doing anything he disagreed with.
"nationalised exchange" is just what these control freaks are doing under a different flag. Under a liberal EU gambling policy you'd have anyone in the EU allowed to place a bet with anyone whoever they prefer, far peferably to sticking 2 quid on with comdrade blah blah and that's your option.
We'd never EVER have anything like betfair under nationalisation or socialism. We need MORE betfairs, not nationisation EU wide. Spider sense tingling. Is E group feck? I think so. "All other online betting banned." Yip, I think so, he was a socialist, despised freedom and anyone doing anything he disagreed with.
"nationalised exchange" is just what these control freaks are doing under a different flag.
That isn't what they're doing at all. They're protecting the revenues they receive from the parasitic middlemen who take the bulk of the revenues. Why do we need these parasitic middlemen? The middlemen (e.g. bookmakers) would be free to ply their trade through the nationalised exchange if they were capable. No doubt we'll now get your "free marketeers" prattling on about nationalised exchange 25% commission rates and such cr@p. All drivel as there's a point at which commission increases bring about a decrease in profits. Sure we'll end up with winners being taxed on their profits but that's already happened on betfair.
It's not that long ago we had Gordon Brown addressing a division of betting industry leaders (i.e. a shower of w@nkers in camel haired coats who'd purchased some off the shelf gambling site software) attempting to persuade them to make Britain their base where punters would be given the protection of the GC (
). How ridiculous was that? Why not just have a nationalised exchange where the government get all the profits and punters would get genuine protection.
That isn't what they're doing at all. They're protecting the revenues they receive from the parasitic middlemen who take the bulk of the revenues. Why do we need these parasitic middlemen? The middlemen (e.g. bookmakers) would be free to ply their trade through the nationalised exchange if they were capable. No doubt we'll now get your "free marketeers" prattling on about nationalised exchange 25% commission rates and such cr@p. All drivel as there's a point at which commission increases bring about a decrease in profits. Sure we'll end up with winners being taxed on their profits but that's already happened on betfair.
It's not that long ago we had Gordon Brown addressing a division of betting industry leaders (i.e. a shower of w@nkers in camel haired coats who'd purchased some off the shelf gambling site software) attempting to persuade them to make Britain their base where punters would be given the protection of the GC (
). How ridiculous was that? Why not just have a nationalised exchange where the government get all the profits and punters would get genuine protection.
And any problem gambler who wanted to exclude themselves would only need to tick a box to achieve that.
Any nationalised gambling always seems to rips off consumers though. Lottery margins etc. Dutch nationalised football betting is about 15% margin I believe (toto).
The whole point of nationalised gambling is always in practice monopolisation (often under the guise of protecting people from unscrupulous operators).
We might see this happen in Asia/USA in decades to come (although pretty unlikely), in which case Betfair would lose out massively to the huge liquidity pools there if they did it properly. They will probably manage to mess it up royally with the usual government bureaucracy and lack of business sense though.
This is based on history. Lottery operators are allowed to pay themselves ridiculous sums. If you are allowed to run a monopoly business that generates huge profits by default, you should not reap huge financial benefits. Same applies to the banking oligopoly.
I don't think banks should be nationalised, but I think that with things like creating money out of nothing and then lending it to people at interest, the bank should be seen as nothing more than a government agent and be rewarded as such. A banking licence should also come with a requirement to build up a fund for failed banks (mandatory insurance, just like car owners are required to have), rather than the taxpayer guaranteeing peoples deposits for the banks for free. It's always the rich that profit from these measures rather than the consumers it is supposed to help (same with tax breaks on mortgage interest).
The whole point of nationalised gambling is always in practice monopolisation (often under the guise of protecting people from unscrupulous operators).
We might see this happen in Asia/USA in decades to come (although pretty unlikely), in which case Betfair would lose out massively to the huge liquidity pools there if they did it properly. They will probably manage to mess it up royally with the usual government bureaucracy and lack of business sense though.
This is based on history. Lottery operators are allowed to pay themselves ridiculous sums. If you are allowed to run a monopoly business that generates huge profits by default, you should not reap huge financial benefits. Same applies to the banking oligopoly.
I don't think banks should be nationalised, but I think that with things like creating money out of nothing and then lending it to people at interest, the bank should be seen as nothing more than a government agent and be rewarded as such. A banking licence should also come with a requirement to build up a fund for failed banks (mandatory insurance, just like car owners are required to have), rather than the taxpayer guaranteeing peoples deposits for the banks for free. It's always the rich that profit from these measures rather than the consumers it is supposed to help (same with tax breaks on mortgage interest).
For horse-racing, a nationalised exchange, or one run by non-profit racing authorities is the way to go for the future funding of the sport. Bookmakers like Fred Done have already said they barely need racing now they have FOBTs. So withdraw their licence to lay racing bets and leave them with the machines and football.
margins for german nationalised sports gambling company oddset are almost at 50%. often they won't allow singles and live betting is entirely out of the question as their highly skilled government-bookmakers (so called Galitzins) of course are unable to compute those odds in real time
so any backward pro-nationalisation socialist/fascist will happily do a 3 way bet to support government salaries/bank bailouts in the future
so any backward pro-nationalisation socialist/fascist will happily do a 3 way bet to support government salaries/bank bailouts in the future
Bad news for our German betting brothers, but nationalised pools have worked fine in plenty more countries.
@Galitzin
Have worked fine for whom?
That´s the fundamental question here. We all know the answer.
Have worked fine for whom?
That´s the fundamental question here. We all know the answer.
fixed, Oddset do take single bets on a number of markets not just soccer. I do it several times a year when they make their ricks in Biathlon and Cycling.
For the record, Oddset offer perhaps the worst sportsbetting product ever known to man and is an absolute disgrace.
For the record, Oddset offer perhaps the worst sportsbetting product ever known to man and is an absolute disgrace.
"For horse-racing, a nationalised exchange, or one run by non-profit racing authorities is the way to go for the future funding of the sport."
They already have one. It's called The Tote and it's rubbish.
Or
Are you advocating the governement purchases Betfair's racing exchange marginalising the sport even further?
Or
Are you advocating the goverment start their own exchange and compete in the market place? which wouldn't compete and just be a money pit.
They already have one. It's called The Tote and it's rubbish.
Or
Are you advocating the governement purchases Betfair's racing exchange marginalising the sport even further?
Or
Are you advocating the goverment start their own exchange and compete in the market place? which wouldn't compete and just be a money pit.
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