Bwin.Party Showing Decline in Profits
Bwin.Party, operators of betting sites Party Poker, Party Casino and numerous others, recently released financials that have shown the company’s revenue dropping. The result of this announcement saw a dramatic decline in the company’s stock as it fell 26%.
A big factor in the declining profits is due to the lack of profits but also the pending concerns that the European Union will be applying taxes to online operators. While those operating online already pay taxes, it is generally within the countries they are located and not to the union in general.
A recent article in The Independent, a U.K newspaper, stated that Bwin is struggling with the possible taxation and that new rules pertaining to those who are digital business, will become law come January 1st, 2015. The new tax will apply tax based on where a customer resides, versus where the digital business is located. It is proposed, therefore that the business might be sold off.
It is believed that Bwin will be one of those hit hardest by the new taxation scheme. This is due to a large portion of its revenues coming from Germany, where its current tax rate is 19% and the fact they are Gibraltar based, where there is no tax is place.
Whether the new tax will have a large impact on Bwin will need to be seen. It is suspected that operators will have to adjust their business models to accommodate the additional operating costs. How that will impact players is unknown but when looking closely at online play, most are accustomed to higher paying games than those in traditional locations such as land based casinos. Should those change, businesses catering to the eGaming industry could be hit hard as people begin looking more towards those traditional methods. It is suspected that the majority will simply adjust the way they manage the bonuses, or the size of those bonuses to attract new players and maintain those currently playing under their respective brands.
This may be one of the reasons that the company is looking to sell its properties online. This was recently confirmed by Bwin and they are in the initial stages of talks with a number of interested parties.
