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Bwin loses German hand

A hit to profits from a renewed round of gambling taxes unfortunately makes our buy tip untenable
July 10, 2012

The uncertain state of European gaming, particularly regulation, and the need to gear businesses up for social networking contributed to a profit warning from Bwin.Party. With Europe in general almost intolerably volatile it is now difficult to be optimistic about Bwin's prospects for the rest of this year.

IC TIP: Hold at 104p

The shares have been under pressure all year after Germany, Bwin's biggest single market, announced a new raft of additional gaming taxes. The tax hit in Germany comes after the company settled a €33m (£26.1m) back-tax bill owed to the Spanish authorities so it could operate legally there. The ultimate outcome is that Bwin expects a hit to profits this year of between €5m-€10m after additional investment in e-gaming and social networking are taken into account, as well as the alarming slide in poker income that all operators seem to be experiencing.