Proposed revision to State Lottery Treaty

7 April 2011

bwin.party digital entertainment plc

('bwin.party' or the 'Company')

Proposed revision to State Lottery Treaty

bwin.party, the world's largest publicly listed online gaming company, notes yesterday's announcement by the conference of minister-presidents in Germany regarding the basic principles of a licensing model. bwin.party believes that this proposal is neither in compliance with EU law nor in-line with market requirements. At the same time, the Company welcomes the decision of the state of Schleswig-Holstein to retain the licensing model already submitted to the EU for notification. This provides for the regulation of all online gaming products and a tax of 20 per cent of gross gaming revenue on sports betting, poker and casino.

Norbert Teufelberger, Co-Chief Executive Officer of bwin.party said: 

"Implementation of the principles presented by the minister-presidents yesterday is just as likely to fail as the outgoing monopoly model in Germany. A proposed tax rate of 16 per cent on the stakes placed in sports betting would make it impossible to offer a competitive product. Furthermore, excluding poker and casino products from this licensing model will continue to drive consumers into the black market. This would mean that the proposed model would fail to meet its objectives of channelling consumer demand, offering player protection and combating fraud." 

bwin.party intends to apply for a licence in Schleswig-Holstein and would also pay the requisite tax there should Schleswig-Holstein continue with its current proposals.

The Company also renewed its appeal to the states to implement a regulatory model in line with the realities of the market. Such regulation would have to include online poker and casino. Only through such a comprehensive regulatory model will it be possible to extinguish the existing huge black market. As far as the 16 2/3 per cent tax on sports wagers is concerned, this will mean that Germany would become another example of a country that fails to deliver a successful regulatory framework for online gaming because of an uncommercial fiscal regime. 

According to H2 Gambling Capital sports betting represents only a small part of the existing online gaming market in Germany. Although online gross gaming revenues generated in Germany in 2010 are estimated at approximately 771 million euros, sports betting accounts for only 293 million euros, with about 190 million euros attributable to the poker segment making Germany one of the world's largest online poker markets. Online casino gaming is estimated to have generated gross gaming yield in 2010 of approximately 263 million euros. Only if all these areas are incorporated into a regulated market will Germany have coherent, EU compliant regulation and be in a position to ensure that players are protected and that online games are secure. 

bwin.party looks forward to considering the final resolutions of the Prime Ministers as well as the final form of the regulations, the necessary notification of the new State Treaty on gaming to the European Commission and ratification by the state parliaments. 

Norbert Teufelberger added:

"We trust that these proposals will undergo the necessary corrections so that the new regulations will govern the entire German gaming market in a coherent and consistent manner in line with EU law."

Conference call

There will be a conference call for analysts and investors to put questions to both Norbert Teufelberger and Jim Ryan, Co-CEOs of bwin.party regarding today's announcement. The details of the call are as follows:

Thursday 7 April, 2011, 3.00pm UK time (4.00pm Central European Time)

Participant Dial No: +44 (0) 203 003 2666

UK Toll Free: 0808 109 0700

Details of 7-day playback

Contacts:

bwin.party digital entertainment plc

Investors

Peter Reynolds +44 (0) 20 7337 0100

Konrad Sveceny +43 (0) 50 858 20017

Media

John Shepherd +44 (0) 20 7337 0100

Matthias Winkler +43 664 305 0000