Germany’s states have postponed until early next year plans to propose a law upholding a state monopoly on gambling that may banish private lottery agents and sports betting companies.
State ministers will sign the proposal next year to extend the states‘ monopoly on gambling for four years and notify the European Union’s Commission of the decision, Christian Wulff, prime minister of Lower Saxony, told journalists at a press conference in Berlin today. The planned new law will come into effect in January, 2008, he said.
The Federal Constitutional Court on March 28 ruled that the German states can only uphold their monopoly if they boost efforts to fight gambling addiction. State governments have already banned Bwin Interactive Entertainment AG, an Austrian Internet sports betting company, from operating and are boycotting Fluxx AG to drive out competition.
„The constitutional court gave us clear guidance,“‚ Wulff said. „We want to prevent the creation of gambling addiction and fight existing addiction effectively.“
The decision comes after one of the country’s 16 state ministers, from the state of Schleswig-Holstein, opposed the plan to amend a two-year-old law regulating Germany’s gambling industry to include a restriction on private businesses.
Regardless of the state’s opposition only 13 of the country’s 16 states need to vote in favor of the new law in order for it to be passed on to parliament for approval, Wulff said. And the notification of the European Commission may still „appease Schleswig-Holstein’s concerns,“ he said.
Selling concessions to private companies „would not be possible because that would require aggressive advertising, leading to an expansion of Germany’s betting industry,“ Wulff said.
Fluxx, a German online lottery agent company, has joined Tipp24 AG in saying it may abandon its home market if the country’s 16 states pass a new law to uphold a monopoly on taking bets and effectively ban private operators. Fluxx last month said it will post a net loss this year due to mounting legal and lobbying costs.
Competitor Tipp24 last month said it’s preparing to enter at least one other European market to lessen its dependence on Germany. A proposal by German state ministers to ban private betting operators from the country may „severely restrict or even prevent“ it from doing business, the company said.
The states plan to ban the sale of lottery tickets on the Internet through agents after a transition period and forbid advertising through television, the Internet and the telephone, Wulff said today. Betting companies will have to inform customers about the risks of placing bets and exclude known gambling addicts from placing bets.
As many as 15,000 people in Germany could lose their jobs if plans to uphold the state betting monopoly go through, the Munich-based Ifo economic research institute said in a report published yesterday. Germany could generate an additional 1.7 billion euros in revenue by the year 2010 if it adopts the U.K. system of licensing and taxing private betting operators, according to Ifo.
„There was a broad consensus that the treaty will ultimately be passed,“ said Klaus Wowereit, mayor of Berlin, in today’s press conference. „And we debated very intensively for Schleswig-Holstein to agree with us. It’s necessary that the German states act together.“
Boxing, Golf, Soccer
Germans spend about 27 billion euros (36 billion) on gambling every year, of which 8 billion euros 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.
„Now the German states have enough time to develop a framework that complies with European law and the constitution,“ said Steffen Pfennigwerth, managing director of Neugersdorf, Germany-based Bwin e.K. „We will continue our talks with politicians.“
Vienna-based Bwin accepts wagers on sports ranging from boxing and golf to table tennis and chess. It has taken steps to raise its profile, including a sponsorship accord with Italian soccer team AC Milan.