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Industry News

by Brendan Murray |  Published: Feb 01, 2008


€4.3 Million Tax Bill for MultiPoker, an early market leader in online poker in Sweden, has been hit with a €4.3 million tax bill for activities prior to its sale to PartyGaming in November 2005, according to Gaming Intelligence Review (GIR).

Skatteverket, the Swedish Tax Authority, is claiming SEK40 million (€4.3 million) in unpaid taxes against

Despite claiming to be based in the British Virgin Islands, Skatteverket says the founders and shareholders of EPR Investments, the group behind the online poker site, were based in Sweden and that no tax was paid on earnings prior to the sale to PartyGaming. It also says the $14.5 million paid for the company by PartyGaming was deposited in a Swiss bank account and was also undeclared in Sweden, according to GIR.

A number of EPR Investments shareholders were arrested in May of in relation to this case. According to GIR, the Swedish National Economic Crimes Bureau is undertaking a separate investigation of a "suspected severe tax crime."

Norway to Ban Online Gaming?
According to reports in Gaming Intelligence Review (GIR), the Norwegian government has introduced proposed legislation that will prohibit financial institutions from processing transactions for online gaming companies, much like the Unlawful Internet Gambling Enforcement Act did in the U.S.

The legislative process allows for debate on the proposals until mid-February 2008. Subsequently, it is referred to the Parliament, where it will be voted upon and could be passed into law during the spring sitting of the legislature.

GIR states that, if passed, the law will bolster the state-owned gambling operator Norsk Tipping, which generated gambling revenues of €1.16 billion in 2006.

Norway's resistance to European liberalization stems from its concern over problem gambling, and while it is a member of the European Economic Area, it is not a member of the European Union.

EU Raps U.S. Over Gambling Legislation
European Union Trade Commissioner Peter Mandelson has told the European Parliament that the United States continues to exclude foreign gaming firms, and that it needs to change its position on the Unlawful Internet Gambling Enforcement Act, which effectively prohibits them from competing in the U.S.

"What we really need is for the legislation to be put right, and for foreign operators to stop being excluded and discriminated against in the way the present U.S. legislation does," Reuters reported Mandelson as saying recently.

"It has so far opted for compensation to make right what is wrong. I don't think compensation does that job," he said.

He also said he would continue to make these arguments on behalf of the European industry.

Recently, Mandelson met U.S. Rep. Barney Frank, who is trying to have the U.S. law overturned. The EU believes the U.S. is in contravention of World Trade Organization rules, and while it is demanding compensation, Mandelson's statements clearly indicate that free competition is the preferred option.

Betsson Profits Peak
Betsson, the Swedish-listed gaming developer and licensing firm, saw its operating profit grow 416 percent in the third quarter of 2007 to SEK 54.4 million from SEK10.4 in the same quarter of 2006. This was on the back of 147 percent growth in revenues in the same period, to SEK 177.2 million in the third quarter of 2007 from SEK 71.7 million in the third quarter of 2006.

At the end of the third quarter of 2007, the number of registered customers was 869,000, an increase of 12 percent compared to the second quarter of 2007, and an increase of 34 percent compared to the third quarter of 2006. In the figures of the third quarter last year, American customers were not yet cleared out of the customer database. This was done at the end of 2006, when approximately 225,000 clients were deleted in the database.

In the reporting period, launched Italian-, Greek-, and Spanish-language sites.

The company offers poker, with several different poker games connected to Ongame, the largest poker network in the world with close to 12 million registered players.

Poker Pushes Playtech Profits
Playtech, the publicly-traded designer, developer, and licensor of software for the online, mobile, and land-based gaming industry, saw third quarter 2007 poker revenues totaling $7.5 million, up an impressive 266 percent from $2.1 million in the third quarter of 2006.

The company said in a statement, "This has been an outstanding quarter for the Group, which has registered impressive month-on-month revenue growth. This has continued into October, which has recorded the Group's highest-ever monthly revenue figure, significantly higher than September's revenues."

Overall, a record $26.9 million in revenue was generated by the company, representing growth of 81 percent on the $14.9 million in the third quarter of 2006. Casino revenues hit $19.2 million, an increase of 51 percent from $12.6 million in the third quarter of 2006.

Among the company's poker clients are Blue Square and Paddy Power Poker.

Everest Poker Revenues Climb
GigaMedia, the NASDAQ-listed online entertainment software and services provider, experienced growth in consolidated revenues of 88 percent in the second quarter of 2008, year-on-year. Revenues expanded by 11 percent on the first quarter of 2008.

A significant driver of growth was Everest Poker. Revenues were $21.8 million, up 265 percent on the same period last year, and 14 percent on the first quarter. Poker software represented 75 percent of second-quarter revenues.

The company's quarterly report stated, "Approximately 154,000 active, depositing, real-money customers played on our poker platform during the second quarter, up 12 percent from the previous quarter. During the quarter, approximately 54,000 new, depositing, real-money poker players were added.

Bwin Growth Continues
The latest quarterly figures for Bwin, the Viennese-listed gaming firm, show gross gaming revenue up 20.1 percent to €86.2 million from €71.8 million in the same quarter of 2006, excluding U.S. and Turkish operations.

Poker was a significant driver of growth, with like-for-like (excluding the U.S. and Turkey) revenue up 46.2 percent to €20.7 million from the third quarter of 2006.

Net gaming revenues (gross gaming revenues less all deductions, such as betting duties, casino taxes, and bonuses granted to customers) amounted to €75.5 million in the third quarter of 2007, up 21.9 percent from the same period in 2006.

This was attributable mainly to an increase in net gaming revenues from poker to €18.5 million, up 51.2 percent compared to the previous period in 2006, excluding U.S. and Turkish operations.

The number of active poker customers in the third quarter of 2007 grew 90.8 percent to 227,038, from 118,986 (excluding the U.S. and Turkey) in the same period of 2006.

Bwin recently completed the purchase of the Ongame network, renaming it Bwin Games.

Ladbrokes Launches 3-D Poker is set to launch its new 3-D virtual-reality poker offering. Players are given the option of creating a customizable 3-D avatar with "human-like" movement, as well as being able to talk to others using Voice over Internet Protocol (VoIP).

The new software will be integrated with the existing software, allowing players to choose whichever they wish to use. The new software has interactive tutorials and a practice mode, allowing players to try out the software.

Ladbrokes eGaming Managing Director John O'Reilly said, "This is a major step in the convergence of video gaming technology and online gaming, and we're pleased to be the first leading poker site to go 'virtual.'"

Elsewhere, in a four-month trading statement, Ladbrokes said net revenue grew in sportsbook, casino, and games, but this growth was partially offset by slightly weaker margins and lower poker net revenue in what it described as "a very competitive market."

Harrah's Considering UK Online Move
The Associated Press has reported that Harrah's is considering taking the World Series of Poker brand into the online poker market in the UK and Europe.

The newswire said that Harrah's chief Gary Loveman made the comment at the Global Gaming Expo, America's largest casino industry trade show.

"If you take a look at the legal landscape in continental Europe and the United Kingdom, there are countries where it's demonstrably legal and there's absolutely no encumbrance," Loveman told the AP. "Those are areas that are very attractive to us."

Harrah's tournament spokesman Gary Thompson reportedly said the company would not enter the online poker market "where there are any gray areas."

Betfair Appoints New Poker Manager
Betfair has appointed Bruce Stubbs as director of poker. Previously marketing director at Paradise Poker, Stubbs recently worked as the Betfair project manager at the World Series of Poker Europe. He also played a significant role in securing the sponsorship of 19-year-old Norwegian starlet Annette Obrestad.

Betfair Media Director Niall Wass said, "This appointment is further evidence that we are taking our online poker business very seriously. Bruce has an impressive pedigree in the space and has already proven that he can deliver results. We look forward to feeling his impact on the development of our poker strategy."

Stubbs added, "Betfair is a unique organization that I have admired for some time. The brand values that Betfair extols fit with my personal views on how an online gaming site should operate, and I think that they put Betfair in a unique position to become a major player in the online poker sector."

Cantor Partners With 24hPoker
Cantor Gaming, the UK-based online and mobile gaming services provider, will launch new poker sites on 24hPoker's network, 24hNetwork, in January 2008.

The company operates in conjunction with Punch Taverns, which runs 9,000 pubs in the UK. Poker will be added to the site by the end of January 2008 before being added to and other sites.

Manu Gambhir, media director of Cantor Gaming, said, "We're delighted to be working with 24hPoker, one of the world's leading poker platforms. We look forward to providing poker to our customers, and especially our high-net-worth players who want comfort in knowing that they are transacting with a highly regulated group."

Peter Åström, CEO of 24hPoker said, "Cantor Gaming is a well-respected company in the industry, and we are proud that they have chosen to partner with us."