Online gambling may soon cost more in Europe if regulators have their say.
European lawmakers are looking to tighten the rules on the $37 billion industry — spurring potential cost hikes and deals between major online gambling companies, according to Orr Hirschauge for The Wall Street Journal. Hirschauge reported that potential negotiations between the U.K.’s online gambling site 888.com and one of the industry’s other major online gambling players, William Hill, for $1.1 billion fell through when there was disagreements with a “key shareholder” of 888.
Another possible deal in the works included London-based Bwin gambling outfit that been looked at by a number of companies, according to Hirschauge’s report, which cited that “people familiar with the matter,” indicated Amaya Gaming Group is still involved in acquisition discussions. Amaya is an example of a online gambling company that has experienced rapid growth.
“Amaya was a little-known gambling-equipment supplier in Canada until it made a splash last year, when it agreed to buy the parent company of PokerStars—the world’s biggest online poker operator—for $4.9 billion,” Hirschauge wrote.
As the online gambling industry expands throughout the U.K. — particularly with the increase of smartphone usage — government regulators are looking to drive up costs by adding another layer of rules to regulate the business. With those new rules, Hirschauge said the European governments looking to change the business models hope they can “clear up the legal ambiguity around the industry, clustered offshore in low-tax regimes.” For example, one regulation being added in the U.K. is the introduction of licenses and an online tax. This regulation is on top of the European Union “digital tax” that was added to the industry at the beginning of 2015 that is said to be costing the major online gambling companies millions.
“Each time a market gets regulated, it creates a tsunami of development—things get more complex and costs rise, bringing on consolidation,” Itai Frieberger, chief operations officer at 888, told WSJ.
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