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GERMAN GAMBLING MONOPOLY ENCOURAGES INTERNET ACTION

5/26/10 - German punters frustrated by their country's insistence on maintaining a state monopoly stranglehold on gambling, with inferior options and odds on offer, will probably be tempted to visit more competitive foreign internet gambling sites in droves as betting fever on the football World Cup intensifies, reports the publication Deutsche Welle.
 
"In a couple of weeks, soccer fans across Germany will be placing their bets," the publication notes. "Some will go down the legal path and use one of the country's sports betting monopolies such as Oddset. Numerous others, however, will place bets, illegally, with private online companies registered outside the country.
 
"Why? The answer is pretty simple: They have more options and offer better odds."
 
The article summarises the German legal situation through which the German State Treaty reserves the business of gambling, and the lucrative revenues flowing there from, to German states.
 
Essentially, the law bans web-based betting, with the exception of wagers on horseracing, and severely restricts other forms of gambling to a limited number of state-run operators, even forbidding the advertising of these services.
 
Deutsche Welle observes that the restrictions have put a hole in state coffers, pointing out that since the introduction of the gambling treaty, the market for unregulated gambling.... particularly online betting....has blossomed.
 
"Of the Euro 7.8 billion that Germans wagered in 2009, only Euro 240 million went to the state-owned sports betting operators and Euro 250 million to the horseracing operators," the publication claims, quoting new market research by Goldmedia. But some 94 percent of the market went to private companies outside Germany.
 
Goldmedia analyst Michael Schmid told Deutsche Welle that younger generations are attracted to online sports betting services. 
 
"Germany is a big market but offers from the state-run operators aren't very attractive," he said. "More players will continue to leave the country in search of better online options. This segment will grow."
 
Some estimates put the number of German online gambling fans as high as 2.2 million and growing, the publication reports.
 
In another study, it notes that Professor Ulrich Schmidt from the Kiel Institute for the World Economy has called for Berlin to completely liberalise the betting market and allow state-owned operators to compete with private companies.
 
"We're losing revenue in Germany," the professor claims. "Why leave this to private companies outside the country? Why not allow them to operate here and pay taxes? In a world of online services, where customers can roam relatively freely, monopolies are vulnerable."
 
The Olympic Sports Federation has also called on Germany to end its sports betting monopoly.
 
Pressure is likely to grow on the government; the State Treaty on Gambling falls due for renewal next year, and numerous politicians, with an eye on tight state finances are discussing the need for change.
 
Some would like to see Germany follow in the footsteps of the United Kingdom and abolish the gambling monopoly completely, the publication observes, noting that the country is also under pressure by the European Commission to hew more closely to EU principles of free movement of goods and services.



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