Online gaming companies have big, and potentially costly, decisions to make on whether to stick to their core markets or crack 'social gaming' and Bwin's recent investment in Spain shows its desire to be involved.
The Spanish government needs every penny it can raise at the moment to avoid sinking into a Greece-style debt mire. So, as part of its regulation of online gaming, authorities in Madrid are charging companies vast back taxes in order for them to operate legally in the country in the future. Earlier this month,
But is it worth it?
Whatever the ultimate outcome in Spain, the industry's strategic priority is how it cashes in on the boom in social gaming, fuelled by the likes of Facebook, to attract the next generation of punters. More interesting from a corporate perspective, is how much money is being invested by gaming companies in social media and e-gaming. Bwin.Party, for example, topped its Spanish tax bill with a $50m (£32m) investment in social gaming, which included $23m to buy assets from software services and e-gaming companies Velasco Services and Orneon. How serious Bwin.Party is about cracking the market is clear from the additional €5m-€10m in additional costs the company is prepared to incur in 2012 and 2013.
Bwin's share price is currently behind our long-standing buy recommendation (145p, 28 Jul 2012) but the PE rating is now only nine and, the despite its investment, Bwin still has plenty of cash in the bank. Buy at 121p.
visible-status-Standard story-url-Gambling analysis Spain taxes 30 May 2012.xml