Bwin has had a really rough few months, with the online gambling company reporting a 21% drop in profits for the first half of the year. While this report didn’t come as much of a surprise, the real question is how things will change in the future. Will revenues plunge again in future months?
What caused Bwin’s losses?
The online casino industry as a whole has had to deal with some major setbacks in the past year. One of the biggest problems they’ve faced is regulation from governments in Europe and the United States. As countries become stricter on enforcing online gaming laws, the casinos lose a large chunk of their loyal players. The players in countries where gaming regulations are not as strict are not enough to make up for lost market share.
Bwin has particularly been affected by regulations set by the European Union. This has damaged the earnings potential of many people in the industry. However, some gaming experts feel there is still hope these regulations will turn around and revenues will pick up again.
Another major problem Bwin faced was the closure of its French casino business. This significantly reduced its revenues.
Bwin has every right to be upset by its recent earnings report. Had these issues not occurred, earnings before interest, depreciation and taxes would have risen by 8%. Bwin is still positive that things may turn around soon, and expects financial markets to be optimistic as well.
The debate in the European Union over online gambling
Currently, many countries in the EU are trying to loosen their policies on online gambling. Germany continues to assert its right to maintain government regulation over the industry. Until Germany becomes more lenient on its policies, gambling sites will have a hard time operating freely. Germany’s position can hold back the industry’s profits and hit share prices in future months. The German government may not clarify its position for a couple of years.
The regulations in the EU will certainly have long-term affects on Bwin and other online casinos. Bwin’s stocks continue to rise, so investors seem to be hoping Bwin’s profits increase in future quarters. They may be waiting in vain, as the regulations will be unlikely to change anytime in the near future. There is still the possibility Germany may make sudden changes to its regulatory policies. Investors and affiliates are going to have to wait it out.
Will future quarters be more promising?
Bwin still feel it has a bright future, and is currently benefiting from the fact that one of its rivals, Full Tilt Poker, is facing the wrath of the Justice Department in the United States. Bwin also feeld that there are other European markets where they can continue to increase its presence and that diversifying into other markets will offset any losses the company has incurred in the first two quarters.
There is definitely a possibility that Bwin will be more profitable in future quarters.
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