Sportingbet dives after Spain tax hit

Sportingbet shares slumped more than 7 per cent yesterday after the online gambling group admitted it faces an unexpected tax bill for its Spanish operations.

The company did not say how great the damage could be, which appeared to spook the market. Its rival Bwin.party digital made a more detailed disclosure, revealing it intends to pay €33m (£27m) to settle the matter with Spain, and its shares firmed 0.6p to 125.1p.

Bwin, formed from the merger of Bwin and Party Gaming, says the Spanish taxman has suddenly ruled that online operators with Spanish customers must pay back taxes under laws from 1966 and 1977. The laws were only previously applied to offline gaming. Bwin hopes the payment will help it gain an eGaming licence in Spain, which is in the process of awarding them.

"Having taken these steps, we believe we have now fulfilled all requirements and look forward to receiving our licence and entering the Spanish market," the Gibraltar-based company said.

Sportingbet said it is in talks with Spain about a potential tax liability covering its operations in the country from January 2009 to May 2011. Its shares tumbled 2p to 26.25p.