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Betfair Suffers A Pre-Tax Profits Drop Of 22%, Withdraws From Greece And Germany

Online sports betting giant Betfair suffered a 22% pre-tax profits drop in the first half of 2012, but group revenues increased from £191 million to £200m.

On announcing the results, Betfair said it had a three pronged attack to "reinvigorate" its business: focussing on regulated jurisdictions to increase sustainability of revenues, investing in products and the brand to enhance its competitive position and drive growth, and to introduce greater accountability and become a leaner and more dynamic business.

Part of that refocussing will be to withdraw from Greece. The FT reports the exit was prompted by the fear of criminal action by the Greek authorities and the threat of financial penalties after the country’s gaming commission earlier this month clamped down on operators taking bets without a permit.

Betfair has not applied for a Greek permit because its value was unclear and it considered the country's gambling legislation to be inconsistent with European law, the FT reported.

The conditions of applying for a Greek permit, such as potential payment of historic taxes, made its market “economically unattractive”, said Betfair. The Greek market was providing Betfair with a contribution of £7m to operating profit this financial year.

Betfair has already exited the German market after it found the new 5% turnover tax on betting stakes to be prohibitively expensive.

In Thursday's statement, Betfair said it would also claw back some money by pulling out of investment on LMAX, a foreign exchange trading exchange, and Kabam, an online gaming company.

Breon Corcoran, Betfair's chief executive, said in a statement the review carried out by the management over the past four months had revealed the company was facing exposure to markets with an "uncertain regulatory future".

"Creating a simpler product that retains the key advantages of the exchange, combined with investment to return the brand to its previously strong position, will allow us to increase our audience and accelerate revenue growth," he continued.

"I'm excited to be leading Betfair through this change and proud of what we've achieved over the last four months."

Business analyst for Company Watch Nick Hood told Huff Post UK he was glad to see Betfair had maintained its marketing spend as its showed the CEO recognised the highly competitive environment in which the business operates.

“Betfair can look to take advantage of a strong, cash-rich balance sheet to generate further success. Combining this with its consistent profit record produces a robust financial health rating of 79 out of a possible 100 on the seven key measures we calculate from companies' published results," he added.