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The price of protectionism paid by German online gambling company Jaxx AG, was showcased again this week when the company announced financial results that included a consolidated loss of €16.9 million, largely due to the implementation of the German State Treaty On Gaming.
The Treaty shields the German states which monopolise gambling in the country from fair competition by private companies.
The Jaxx statement revealed that the firm had written down €15 million in investments in its German operations and closed its Jaxx Gmbh Hamburg subsidiary as a result of the new Treaty legislation, which came into effect in January and prohibits online lottery agency operations.
“While terrestrial agency business via supermarkets and filling stations is still fundamentally possible subject to certain restrictions, in virtually every instance permits have been refused for reasons that have not been fully explained,” read a statement from Jaxx.
Despite its significant impairment charges, Jaxx revealed that its overall business was growing with consolidated sales up 67% to €123.5 million alongside cash flow from operating activities of €3.7 million. In addition, Jaxx stated that its cash and cash equivalents after investing and financing activities amounted to €13.2 million, slightly down on 2007’s €13.8 million, and its equity ratio was 44.2% leading to a balance sheet total of €48.6 million.
“Although serious doubts have been cast on the lawfulness of the State Treaty On Gaming by the European Commission and by experts in constitutional law and European law, the new legislation has prohibited lottery agency operations on the Internet since the start of 2009,” read the statement.
“All investments in that field have been written off except for the few instances where permits have been granted.”
Jaxx has relocated many of its operations to London.
Source: InfoPowa News