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CONCERNS OVER NEW SPANISH GAMBLING LAW
Friday June 10,2011 : Liberalisation of the Spanish market might not take place in one initiative
Spanish politicians may have passed liberalisation laws on the nation's internet gambling, but it appears there is no guarantee that these will be implemented in a single initiative.
The Guardian newspaper reports this week that analysts are concerned following indications from Spain that approval of online betting exchanges could be delayed.
The analysts reported that a conference was held in Madrid this week during which Spanish regulators gave "more colour on the potential future shape of the online gambling market."
One of the suggestions was that not all internet gambling products would be available in the first licensing wave and some may have to wait, including betting exchanges.
The mere suggestion that this could be the case has prompted some analysts to recommend 'sell' orders on Betfair stock, fearing material impact on 2012-2013 financial forecasts.
"We see this as a three-fold problem for Betfair," opined one analyst. "First, and most obviously, if this approach is adopted, then on regulation Betfair is likely to lose most of its 4 percent or so of core revenue from Spain as well as its key USP, even if it gets a licence for other products; given the high fixed cost base and capex, the impact on free cash flow would be material, in our view.
"Secondly, Betfair may not get early certainty on when exchanges will be allowed and under what terms, making forward investment in the market and product difficult.
"Finally, competing against more settled betting brands and products (with incumbent lobbying power) is likely to be far less attractive than being part of an early regulated 'land-grab', leveraging an existing '.com' presence."
The report also revealed that Italy and France, and possibly Cyprus, Germany and Greece are less than enthusiastic about betting exchanges, and that Betfair had filed a complaint with the European Commission about Greece's draft gaming law, this week, claiming it was unfairly excluded from that market.
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