March 20, 2018 / 1:21 PM / a month ago

UPDATE 1-888 hints at German exit as gambling regulations tighten

(Recasts, adds shares, details)

By Rahul B

March 20 (Reuters) - British online gaming company 888 Holdings hinted it could quit Germany where tighter regulations threaten its operations and a tax liability nearly halved its 2017 core earnings.

Its share price was down almost 5 percent after 888 posted a 48.2 percent fall in earnings before interest, taxes, depreciation and amortization to $41.2 million.

The company put that down to a $45.3 million provision related to potential value added tax (VAT) on services in Germany prior to 2015.

In October, the German Federal Administrative Court confirmed a ban on three types of online gambling: casino, poker and scratch cards, a ruling that 888 said it may appeal at the Federal Constitutional Court, adding that it was “assessing the status and breadth of its offerings in the German market”.

Austrian gambling technology group Novomatic exited the online gambling market in Germany in December, calling for more regulatory clarity.

Last year, the British gambling regulator fined 888 a record 7.8 million pounds for failing to protect customers at risk of gambling addiction.

Nonetheless, 888 posted a 4 percent increase in revenue for 2017, boosted by a 45 percent increase in its sports gambling business which brought in $75.5 million with average revenue per player up 45 percent despite no major international soccer tournament.

888 has missed out on a sector-wide consolidation in the British gambling sector since its failed joint bid with Rank Group to buy William Hill in 2016. (Reporting by Paul Sandle in London and Rahul B in BENGALURU Editing by Sarah Young and Robin Pomeroy)

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