MARKET REPORT: Buyers saddle up at Betfair as betting firm strikes overseas deal
Buyers saddled up at Betfair on hearing that it has been given a sports betting license in Schleswig-Holstein, the northern most of the 16 states of Germany.
Shares of the online betting exchange galloped 45.75p ahead to 840.25p as the news helped allay bear case fears that the company cannot get licensed outside of the UK.
Betfair was floated at £13 in October 2010. It is one of only three licenses awarded by the German state to operate its betting exchange, as well as other sports products. Betfair will use this to operate throughout the whole of Germany, paying 20 per cent gross profit tax GPT to Schleswig-Holstein.
Schleswig-Holstein’s laws demand a 20 per cent GPT rather than a more punitive tax on turnover, and also allow for online casino-style gambling, agen sbobet which the other states want to ban. Broker BarCap estimated that the tax payment would equate to about £3million, or about 3 per cent of core Betfair earnings. It has been estimated that the largely illegal German sports betting market is worth at least £41billion. Exane BNP Paribas advised clients to buy Betfair and Bwin Party, which sees 20 per cent of sales from Germany. The close was 5.7p better at 156.1p.
The Footsie kept its head above water with a gain of 8.44 points at 5,766.55, while the FTSE 250 firmed 7.42 points to 11,483.31. As expected the European Central Bank kept interest rates at 1 per cent, but boss Mario Draghi disappointed some operators by rejecting any plans for further long-term refinancing operations LTROs in the short term.
Wall Street traded 83.55 points lower at 13,185.00 in the early stages despite an unexpected drop in jobless claims ahead of today’s crucial non-farm payroll employment report. Initial claims for state unemployment benefits dropped 27,000 to a seasonally adjusted 365,000, the biggest weekly drop since May 2011.
Bulls will be pleased to hear that Investec’s economist Philip Shaw reckons more quantitative easing is just around the corner. He expects the Bank of England’s Monetary Policy Committee will next Thursday sanction a further £25billion of QE, which would take the asset purchase target to £350billion.
‘That would leave the MPC in a good position to end the latest round of QE in August if things do improve, or to continue its programme should economic conditions deteriorate further,’ says Shaw.
Royal Bank of Scotland drifted 0.22p lower to 24.55p ahead of today’s first-quarter trading statement.
Software and computer services group Invensys added 3.4p to 216p as AB&B was added to the list of potential bidders which already includes Siemens and Chinese rail group, China Southern Rail.