Betfair Frets As Cyprus Bans Online Gambling

Shares in the world’s largest online betting exchange Betfair have tumbled by 4.5% after Cyprus introduced legislation banning online gambling.
UK company Betfair derives around £9 million or 4% of its revenue from the Mediterranean island and recently signaled its intention to expand its Cypriot operation further this year, when news the bill had been passed was announced. Commenting on the new regulations, Betfair’s communications director Jonathan Oates said:
“This particular piece of legislation has been drafted for some while and we were hopeful it wouldn’t come to this..[in fact] we were hoping to expand if the exchange had been regulated.”
It would appear that at the heart of the Cyprus Government’s crackdown on internet gambling is a need for the country to better tax the foreign gaming companies. Betting exchanges like Betfair are “designed to facilitate the receipt or acceptance of bets between players,” with the company then taking a commission for being the intermediary. However, this process causes problems for governments who ordinarily tax gambling by placing levies on businesses which profit from losing punters..
Consequently, it is believed the regulations were passed in order for the government to avoid losing millions in tax revenues to online gambling companies. Nevertheless, Betfair has countered by suggesting the legislation was “inconsistent with European Union law,” and said it was considering legal recourse.
In the meantime, despite shares in Betfair dropping from 34p to 722p, analyst have said the setback was unlikely to impact Betfair’s long-term goals, with Vaughan Lewis from Morgan Stanley commenting:
“While regulatory setbacks are likely to occur occasionally, the broader trend towards European countries regulating online gambling should benefit market leaders such as Betfair in the longer-term.”