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Annual Report & Accounts 2016 - Regulatory overview
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Regulatory overview 1. UNITED KINGDOM Tax rate1 15% 2016 Market size2 €5,983m 2016-21 CAGR3 8.0% 9. GREECE Tax rate 35% 2016 Market size €300m 2016-21 CAGR 8.1% 2. AUSTRIA Tax rate 2% S turnover 40% C P B 2016 Market size €256m 2016-21 CAGR 3.6% 10. IRELAND Tax rate 1% S 23% VAT C P B 2016 Market size €973m 2016-21 CAGR 0.6% SPORTS (S) CASINO (C) POKER (P) BINGO (B) EUROPEAN AND US REGULATED AND REGULATING MARKETS TAX LANDSCAPE 12 GVC Holdings PLC Annual Report 2016 United Kingdom Italy Ireland France Germany Denmark Spain Belgium US (New Jersey) Greece Netherlands Austria Czech Republic Romania Bulgaria Poland 5,983 1,124 973 1,234 1,449 473 535 345 181 300 212 256 261 75 34 176 Total interactive (excluding lottery) gross gaming revenue (€m) The regulatory landscape is changing at a rapid pace, particularly across Continental Europe. Whilst we welcome sustainable legislation, the national regulatory regimes across the EU Member States differ significantly due to the lack of harmonised gaming rules at an EU level. Within the EU, we work with the industry and those committed to upholding the open market values of being part of the union. In 2016, approximately 69% of our pro forma NGR was derived from territories where we currently pay gaming taxes/VAT or where a licensing structure is in the process of being implemented. The Group is currently licensed in more than 18 territories. In Germany, bwin was among the 20 successful applicants for a sports betting licence in 2014. However, this process was subsequently suspended after being challenged by operators who failed to secure licences and licences were never granted. Nevertheless, all 35 operators (including bwin) that fulfilled the minimum criteria in the licensing procedure will receive temporary sports betting licences on 1 January 2018. Further, the Second Amended State Treaty on Gambling is scheduled to enter into force on 1 January 2018. With the exception of the state of Schleswig-Holstein, licences for online casino/poker are still not available in Germany. However, it was announced in November 2016 that the German federal states agreed to evaluate a legal framework for the regulation of online casino and poker. This evaluation will most likely be concluded in the autumn of 2017. In this context, the state of Hesse has an extraordinary termination right to the German State Treaty on Gambling which is linked to the satisfactory solution of the online casino and poker situation until 30 June 2019. The Group pays betting tax/VAT on all of its German revenues. In 2016, the Group received a permanent licence in Romania having previously operated under an interim licence. A licence application has also been made in the Czech Republic following new legislation that came into force on 1 January 2017. The Group will consider applying for a licence in Poland in light of amendments to their gaming legislation. In August 2017, the UK government will commence levying the point of consumption tax on gross gaming revenue on all online gaming products (previously just betting) as opposed to net gaming revenue. If this had been in place at the start of 2016 the estimated incremental tax payable by the Group would have been approximately €7m. Also in the UK, the CMA (Competition and Markets Authority) is undertaking a review into the advertising of gaming and operators terms and conditions, particularly in the area of promotions to customers. Brexit Beyond the impact of currency movements there has been no visible impact on the business from the UK's decision to seek an exit from the EU. The Group has greater sterling costs than revenues and therefore the impact from the recent sterling weakness is a net positive. The detail of how the UK intends to exit the EU is yet to be decided, however, management believe GVC's global footprint gives it significant flexibility to face any challenges that may arise. REGULATORY UPDATE 1. % of GGR unless otherwise stated. 2. H2GC estimates for sports, casino, poker and bingo GGR, January 2017. 3. H2GC estimates, January 2017. 4. A licensing regime for online sports betting has been proposed in all 16 states but no licences have yet been issued. Taxes on sports betting are at 5% of turnover on all German revenues. Taxes on poker and casino are being paid at 20% of GGR on revenues generated by Schleswig-Holstein residents and 19% VAT on all other German gaming revenues. 5. Draft legislation.