New Tax Regulation Might Compel 888Holdings to Exit Germany

888 HOLDINGSIt is reported that 888Holdings might exit the German market in the near future if it continues to get subjected to strict tax regulations and fines by the Government of Germany.

888Holdings had a difficult year in 2017 as pre-tax profits declined by 68% to reach $18.8 million.

The main reason for the drop in profits was mainly due to fine levied by UKGC or United Kingdom Gambling Commission in September 2017 for the failure on behalf of 888Holdings to safeguard the online players.

The company was slapped with the hefty fine amount of £7.8 million for failing to block more than 7000 players who had asked for getting banned from their gambling sites but it rather ended placing millions of debt.

VAT Charges Could Quicken 888Holdings Exit

Apart from the fines imposed by the UKGC, the tax regulations and increasing costs are posing huge threats to the balance sheet of the company. The company is having a debt of $45.3 million for the potential value added a tax on different services offered to Germany earlier in 2015. The payable tax was introduced by policies of European Union that compelled electronic services to get taxed on consumption point instead of the location of provision. Since the casino operator is based in Gibraltar and facing Germany, 888Holdings come under stringent tax regulations.

As per Itai Frieberger who is Chief Executive Officer of 888Holdings, the gambling industry has been receiving regulatory headwinds in the second half of last year. This, in turn, has increased operational costs and has caused unwanted changes.

The CEO made the following statement:

Further regulation, such as the expansion of gaming duty on the casino, poker and bingo free bets in the UK taking effect in the second half of 2017, will increase the cost base for operators in the UK.

Strict Regulations Do Not Make German Market Very Appealing

The Federal Administrative Court of Germany in November 2017 has ruled constitutional the federal bans imposed on online casinos, scratch card and poker games – which affects 888Holdings to a great extent. The company is crestfallen after the decision of the court and looking forward to making an appeal. It is most likely that the casino operator would withdraw its operations in Germany and move out from the country soon.

Germany has not created a uniform gambling framework and the government is pushed by the industry leaders for overhauling the existing licensing procedure. Due to a government crackdown on online gambling and tax regulations, the banking institutions are not allowing gambling related transactions. This, in turn, is causing hardship on 888Holdings to continue offering its online gambling services to the players of Germany.

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