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07 April 2011

Bwin.party digital entertainment effected as Germany proposes tax, by Greg Tingle - 7th April 2011

Bwin.party digital entertainment Plc, the company formed by last month’s merger of Bwin Interactive Entertainment AG and PartyGaming Plc, dipped 16% in London trading after German states’ prime ministers proposed a 16.67% tax on the sports betting sector.

The dip was the greatest since the U.S. banned internet-gambling financial transactions back in 2006, sending PartyGaming down. Germany plans to bring ina 16.67% levy on sports bets when it introduces its sports-gambling market to private firms in 2012, the Saxony-Anhalt state government advised on its website, citing a meeting in Berlin yesterday.

The newly merged outfit snatches about 23% of its pro-forma revenue from Germany, with half coming from sports, according to David Jennings, an analyst with Dublin-based Davy. Bwin and PartyGaming combined March 31 to enter European markets as they regulate and tax online gambling.

"Clearly the proposals look a lot more severe and restrictive than the operators and the market would have hoped for," said Nick Batram, an analyst with Peel Hunt who has a "buy" recommendation on the stock. "It would significantly restrict the ability of bwin.party to make money in the German market."

Bwin.party dropped 31.5 pence to 166.4 pence, giving the firm a market value of 1.4 billion pounds ($2.3 billion).

"There is still a long way to go, and we are confident in the end Germany will comply with European Union law and implement a commercially viable licensing regime," said John Shepherd, a spokesman for bwin.party in a telephone call.

Other counties such Australia, Canada, United States and New Zealand look on with keen interest, with politicians and the business sector knowing that gaming is one of the most lucrative markets on a global scale and that full regulation with raise much needed cash for government cofers.

bwin-party's PartyCasino.com remains arguably the world's most popular and trusted online casino brand while PartyPoker.com is not the world's third most popular online poker brand.

bwin.party digital entertainment are currently considering mass media campaigns into a number of new markets, however have to get their legals done first, as to keep their growth on track with appropriate risk management

*the writer has conducted b2b with a number of the companies featured in the article.

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