German Law Changes Will Have A Major Impact In Online Gambling
For online gambling companies that are regulated in jurisdictions where the tax rate is low, operating in companies where regulations do not exist is a gold mine. The companies offer their services to gamblers in the unregulated country, and have to pay no taxes on the revenue generated.
In Germany, this is how UK and other foreign-based companies have operated for years. That may soon change, however, with German lawmakers considering regulating their Internet gambling industry. A proposal is on the table that would make gaming companies pay a sixteen percent tax on revenue.
Just the news of such regulations has made investors squirm. The top gaming companies on the London Stock Exchange all took a hit when the possible German regulations were announced. Betfair PLC and bwin.party digital entertainment both saw their stocks drop with concern growing that Germany is serious about the regulations.
Germany would become the latest in a growing list of European countries that have addressed their online gambling industries in recent years. Italy, France, and Spain have all agreed to open up their gambling markets to foreign companies. The opening of the industry is good for foreign companies, but large tax bills are another story.
Many of the companies that would be affected by German regulations have pulled out of the largest online gambling market in the world, the US. Legislators in the US are working towards regulating Internet gambling, and if that occurs, foreign companies would likely enter the market.
Already, Wynn Resorts, Station Casinos, and Caesars Entertainment, have partnered with foreign companies in preparation of online poker regulations. Caesars has launched several online casinos in jurisdictions where regulations are in place.