Half Year Report 2011 - Fortuna Entertainment Group EU

The Group is subject to taxation and/or levies in each of the countries in which it operates. The taxation and
levies imposed upon the Group have changed over time. In the past, certain governments considered that
the sports betting and gaming sector was a potential source of additional taxation or other income. As the
recent global economic crisis has led to a decrease in revenues from taxes in the countries in which the Group
operates, some or all of those countries may consider increasing taxes on, or imposing new taxes on, services
and products offered by the Group. For example, in Poland from 1 June 2010 the tax imposed on the total
amount of money paid for bets has been increased from 10% to 12%. Amendments to taxation on sports betting
are also under discussion in the Czech Republic. Any increase in taxation or the imposition of new taxes may
decrease the amount of money customers spend on the Group’s products. Consequently, such changes may
have a material adverse impact on the Group’s revenues and financial results.
Dependence on Licences
The Group conducts activities that are highly regulated. Licences or permissions are required to organize sports
betting or to provide gaming products. Regulations in each of the countries in which the Group operates stipulate
various conditions concerning services organization, marketing, employees, and premises in which products
are sold. The Group makes all reasonable efforts to comply with the terms and conditions of its licences and
to renew licences that are due to expire. Loss of licences or failure to obtain new licences may have a material
adverse effect on the business of the Group, its financial results and prospects.
Restrictions on Marketing & Advertisement
Extensive restrictions apply to the marketing of betting and gaming services in some countries in which the
Group operates. In those countries where such restrictions apply, the Group is forced to limit its marketing
activities according to relevant applicable laws. Such restrictions may have the effect of reducing the Group’s
potential to attract new customers, launch new products, implement common marketing strategy or expand its
market share in affected markets and may lead to the loss of licences.
Crime, Fraud & Security
Like many operators in the betting and gaming industry, the Group faces challenges caused by crime and fraud
in the countries in which it conducts its business. The betting and gaming industry is subject to various pressures
as a result of criminal activity, including organized crime, fraud, robbery, petty crime and theft. As the Group
expands its operations, in the markets in which it currently operates as well as into new markets, the Group
expects criminal activity to continue to present certain challenges, especially in new countries.
The continued activities of organized or other crime, fraud, new criminal challenges or activity to which the
Group is not accustomed or claims that the Group may have been involved in official corruption may in the
future, bring negative publicity that could disrupt the Group’s ability to conduct its business effectively and
therefore materially adversely affect the Group’s business, financial condition, operating results and prospects.
14