Sports Betting

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Gambling on a Billion-Euro Business in Germany

Punters in Germany get a kick out of betting on soccer. Source: IMAGO
Punters in Germany get a kick out of betting on soccer.
  • Why it matters

    Why it matters

    Germany is in the process of overhauling its sports betting regulations, potentially legitimizing the country’s private bookmakers. But a legal battle for just 20 licenses looms.

  • Facts

    Facts

    • Currently only state-backed Oddset is officially allowed to offer sports betting in Germany.
    • But many private bookmakers based abroad have franchise operations.
    • Up to 90 percent of sports betting in Europe’s largest economy is made on football.
  • Audio

    Audio

  • Pdf

After quitting time, Grzegorz Rabiega usually doesn’t go straight home. Instead, the burly Polish truck driver in blue overalls often heads to his local betting shop in Berlin.

Finding a spot in the back where he could see screens showing sporting results and games, Mr. Rabiega looked carefully at a piece of paper in front of him. “I need to hurry a little,” said the 44-year-old. His shift had just ended, and he actually needed to get home to his wife and child. But there was just enough time to place a few bets on matches for Germany’s top soccer division, the Bundesliga.

The betting shop Topgoal24 in the southwestern Berlin district of Steglitz on this afternoon was bustling. Most of the guests sat for only a few minutes at one of the black tables, filled out their tickets and left again. Mr. Rabiega comes by two to three times per week. He never bets a lot. “It is always just two or three euros,” he said, adding that he mostly bets on soccer matches, just like most of the punters here.

No other sport is as popular among German gamblers: 80 to 90 percent of betting in Europe’s largest economy is made on soccer. Some are showing support for their favorite team by wagering cash, while others are simply looking for a thrill or hoping for the big win.

Unlike in the United States, where sports betting is largely illegal and relegated to online brokers that operate in a legal grey area, sports betting operators are widely tolerated and make good business in Germany. Those actually paying taxes brought in a good €4 billion ($5.2 billion) in revenue in 2013, according to figures from the Finance Ministry. It remains unclear, however, how much sports betting revenue goes unreported to the tax authorities. The Berlin-based consulting firm Goldmedia estimated that income for the sector, including black market betting, topped €6.8 billion ($8.6 billion) in 2012.

Sports betting in Germany is dominated by large chains, which run on a franchise system. They recruit new franchise owners who, for example, operate betting shops across the country and send the wagers on to the main office electronically. Most of the providers have their headquarters abroad, in such places as Malta and Gibraltar. Unlike in Germany, bookmakers in those locations have an easier time getting licenses for sports betting. And they pay less taxes, of course. In Germany, they are operating in a legal gray zone with their franchise betting shops tolerated by the authorities.

“Actually, there should be no private bookmakers here in Germany,” said sports economist Luca Rebeggiani. Officially, only the state-owned Oddset is legally allowed to offer sports betting. Private companies have long had no chance at getting a German license. Only the northern German state of Schleswig-Holstein opted out of the public agreement on gambling in 2012 for one year, enabling it to grant 22 licenses to sports betting firms.

 

It's the special atmosphere in there. Source: DPA
It’s the special atmosphere in there that brings them back. Source: DPA

 

The country’s federal states are currently trying to regulate the market — because they are being compelled to do so. The European Court of Justice declared in 2010 that Oddset’s state monopoly is not compatible with European law. The German states therefore decided to grant concessions to 20 private bookmakers for sports betting shops and online portals. But that is taking a while. The state interior ministry in the state of Hesse, which is in charge of the task, has already been working for two years on awarding the concessions. The ministry said a decision would come “by the end of the third quarter, or beginning of the fourth quarter in 2014.”

The problem is that about 100 bookmakers have applied for 20 licenses. “We assume that the providers who go away empty-handed will sue for a license,” said Luka Andric of the Berlin-based German Sports Betting Association. He said it was not comprehensible how only 20 licenses would be awarded, when many more bookmakers meet the criteria. The consequence will likely be years of legal battles.

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