January 10, 2013 7:24 pm

Lengthening German odds lift Bwin.party

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Bwin.party boosted its sports betting margins thanks to lengthening odds in Germany and a favourable run of sporting results.

Performance since September was in line with expectations, the online gambling operator said, but sporting results had been very strong in October.

Gross win margins were back to normal levels in November, but the shift to longer odds in Germany ensured that margins were still well above the previous financial year.

Germany’s introduction of a 5 per cent turnover tax has made Bwin.party’s short-priced odds unprofitable and prompted it to stop offering them.

That has hit the amount of bets placed, but the group has benefited from the wider margins on longer-priced odds.

The rate of new poker customers is also coming down as Bwin.party focuses on acquiring players through direct channels rather than affiliates. But it said this reduction would not materially affect revenues.

PartyPoker, the group’s flagship poker brand, is scheduled to be relaunched in the first half of 2013.

The group expected “clean” earnings – before interest, tax, depreciation, amortisation and costs – to be between 19.5 per cent and 20.5 per cent of total revenue for the year to December 31, and to achieve synergies of €65m in 2013.

Bwin.party, formed out of the merger of Bwin and PartyGaming, was boosted last month by gaining a six-year online casino and poker licence in the German state of Schleswig-Holstein.

However, the regulatory picture in Germany is cloudy.

Schleswig-Holstein is planning to revoke the law that established a regulated regime for online sports betting, poker, casino and bingo, and wants to join the gambling regime proposed by the other 15 German Länder, which envisages a restricted online sports betting market.

The European Commission is challenging that plan.

Some analysts reacted with caution. James Hollins of Investec said that with Germany generating 22 per cent of revenue in the first half of 2012, the regulatory issue created “considerable uncertainty”.

Michael Campbell at Daniel Stewart said the German regulatory hiatus meant that “there is likely to be further share price volatility as a result of the uncertainty from the German market”.

Shares by the close of trading were 4.39 per cent down at 106.6p.

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