Tumbles Most Since U.S. Ban as Germany Proposes Tax digital entertainment Plc, the company formed by last month’s merger of Bwin Interactive Entertainment AG and PartyGaming Plc, fell 16 percent in London trading after German states’ prime ministers proposed a 16.67 percent tax on sports betting.

The drop was the most since the U.S. barred Internet- gambling financial transactions in 2006, sending PartyGaming tumbling. Germany plans to introduce a 16.67 percent levy on sports bets when it opens its sports-gambling market to private companies in 2012, the Saxony-Anhalt state government said on its website, citing a meeting in Berlin today.

The newly merged company gets about 23 percent of its pro-forma revenue from Germany, with half coming from sports, according to David Jennings, an analyst with Dublin-based Davy. Bwin and PartyGaming combined March 31 to enter European markets as they regulate and tax online gambling.

“Clearly the proposals look a lot more severe and restrictive than the operators and the market would have hoped for,” said Nick Batram, an analyst with Peel Hunt who has a “buy” recommendation on the stock. “It would significantly restrict the ability of to make money in the German market.” fell 31.5 pence to 166.4 pence, giving the company a market value of 1.4 billion pounds ($2.3 billion).

“There is still a long way to go, and we are confident in the end Germany will comply with European Union law and implement a commercially viable licensing regime,” said John Shepherd, a spokesman for in a telephone call.

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