ONLINE betting exchange operator Betfair yesterday announced it had pulled the plug on the majority of its German business after a tax hike made the operation unworkable.
Due to the way Betfair’s model works, with users staking money against each other rather than against the bookie, Germany’s recently-introduced five per cent tax on sports betting has forced the company out.
“A tax at this rate, if applicable, would make Betfair’s current exchange model unviable,” the company said.
Betfair said it had been working with tax officials to see if it could continue to operate its exchange model.
But yesterday it said: “The company is disappointed, however, that to date the tax authorities have not been able to agree to an interpretation of the law that would allow Betfair to continue to offer the exchange product.”
It will continue to offer its casino, poker, and fixed odds operations, although these account for a much smaller part of the business than the exchange system.
Approximately four per cent of Betfair’s revenue came from Germany last year.
The company’s share price was relatively unaffected yesterday, with Betfair having already highlighted the issue at its recent earnings.