OPERATORS COULD LEAVE IF GERMAN POLITICS PERPETUATE STATE MONOPOLY
December 13 meeting of German provincial chiefs will be watched carefully
This week's scheduled meeting of the 16 provincial chiefs of Germany to discuss German gambling law will be a political gathering that could have far-reaching effects in terms of European Commission action and the attitude of local businesses.
The politicians are to debate a possible new law to uphold the state monopoly on taking bets and exclude both German and other companies from EU nations from providing gambling services (see previous InfoPowa bulletins).
The Bloomberg business news service reports that some German companies may move abroad if private operators are banned from offering services to German gamblers.
Naming the German lottery agent Fluxx AG and its competitor Tipp24 AG, Bloomberg revealed that both may abandon the home market if the country's 16 states pass a new law to uphold a monopoly on taking bets and effectively ban private operators.
"Wherever we can be active here in Germany, we'll stick around,'' Stefan Haenel, chief financial officer of Fluxx AG, told Bloomberg News in a television interview. "But we're also going to use opportunities outside Germany. We owe shareholders not to give up in Germany without a fight.''
Fluxx said last month it will post a net loss of as much as Euro 3.5 million ($4.6 million) this year due to mounting legal and lobbying costs. The Altenholz, Germany-based company will spend as much as Euro 1 million more than planned to support a campaign by the Federation of Lottery Agents against plans to block private betting firms.
Competitor Tipp24 last month said it's preparing to enter at least one other European market to lessen its dependence on Germany. The company said a proposal by German state ministers to ban private betting operators from the country may "severely restrict or even prevent'' it from doing business.
In 2004 Germany's federal government approved a law that prohibits betting companies with "private or commercial goals'' unless they seek permission from the state and take measures to help limit gambling addiction, Bloombergs reports.
Now state ministers are reconvening to vote on prohibiting all private betting firms after the Federal Constitutional Court on March 28 ruled that the states can only uphold their monopoly if they boost efforts to fight gambling addiction. They also have to rein in advertising for betting, the court said.
"This is going to mean a big cut in revenue for the individual states,'' Haenel said. ``They may even have to ban jackpots'' to show they're serious about fighting addiction, he said.
Germans spend about Euro 27 billion on gambling every year, of which Euro 8 billion is spent on lottery tickets, according to Fluxx's Web site. Fluxx and Tipp24 make a profit by charging state-owned lotteries commission for selling tickets to consumers on the Internet.
Germany's states may also extend the monopoly to include a ban of private sports betting companies. Four German states have already banned Bwin Interactive Entertainment AG, an Austrian Internet sports betting firm, and other private companies.
Critics say Germany's private sports betting market already does more to fight gambling addiction than the state-owned lotteries. Sports betting outlets in the country have blacked-out windows and deny entry to minors, while lottery tickets are sold at kiosks and newsstands.
Charlie McCreevy, the EU commissioner for internal markets and services, has said the German state monopoly on betting breaches European law. The country's government needs to pass laws that apply to everyone equally, both state-run gambling operations as well as private companies, McCreevy told German magazine Der Spiegel in an interview earlier this year.
The decision of the 16 state heads this week will not be the final word of the issue - any new law still has to be approved by the German parliament.
December 13 meeting of German provincial chiefs will be watched carefully
This week's scheduled meeting of the 16 provincial chiefs of Germany to discuss German gambling law will be a political gathering that could have far-reaching effects in terms of European Commission action and the attitude of local businesses.
The politicians are to debate a possible new law to uphold the state monopoly on taking bets and exclude both German and other companies from EU nations from providing gambling services (see previous InfoPowa bulletins).
The Bloomberg business news service reports that some German companies may move abroad if private operators are banned from offering services to German gamblers.
Naming the German lottery agent Fluxx AG and its competitor Tipp24 AG, Bloomberg revealed that both may abandon the home market if the country's 16 states pass a new law to uphold a monopoly on taking bets and effectively ban private operators.
"Wherever we can be active here in Germany, we'll stick around,'' Stefan Haenel, chief financial officer of Fluxx AG, told Bloomberg News in a television interview. "But we're also going to use opportunities outside Germany. We owe shareholders not to give up in Germany without a fight.''
Fluxx said last month it will post a net loss of as much as Euro 3.5 million ($4.6 million) this year due to mounting legal and lobbying costs. The Altenholz, Germany-based company will spend as much as Euro 1 million more than planned to support a campaign by the Federation of Lottery Agents against plans to block private betting firms.
Competitor Tipp24 last month said it's preparing to enter at least one other European market to lessen its dependence on Germany. The company said a proposal by German state ministers to ban private betting operators from the country may "severely restrict or even prevent'' it from doing business.
In 2004 Germany's federal government approved a law that prohibits betting companies with "private or commercial goals'' unless they seek permission from the state and take measures to help limit gambling addiction, Bloombergs reports.
Now state ministers are reconvening to vote on prohibiting all private betting firms after the Federal Constitutional Court on March 28 ruled that the states can only uphold their monopoly if they boost efforts to fight gambling addiction. They also have to rein in advertising for betting, the court said.
"This is going to mean a big cut in revenue for the individual states,'' Haenel said. ``They may even have to ban jackpots'' to show they're serious about fighting addiction, he said.
Germans spend about Euro 27 billion on gambling every year, of which Euro 8 billion is spent on lottery tickets, according to Fluxx's Web site. Fluxx and Tipp24 make a profit by charging state-owned lotteries commission for selling tickets to consumers on the Internet.
Germany's states may also extend the monopoly to include a ban of private sports betting companies. Four German states have already banned Bwin Interactive Entertainment AG, an Austrian Internet sports betting firm, and other private companies.
Critics say Germany's private sports betting market already does more to fight gambling addiction than the state-owned lotteries. Sports betting outlets in the country have blacked-out windows and deny entry to minors, while lottery tickets are sold at kiosks and newsstands.
Charlie McCreevy, the EU commissioner for internal markets and services, has said the German state monopoly on betting breaches European law. The country's government needs to pass laws that apply to everyone equally, both state-run gambling operations as well as private companies, McCreevy told German magazine Der Spiegel in an interview earlier this year.
The decision of the 16 state heads this week will not be the final word of the issue - any new law still has to be approved by the German parliament.
