German Punters Prefer Illegal Gambling

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In Germany, the German State Treaty mandates that most forms of gambling be done through state owned monopolies. Online gambling through private operators is prohibited, except for horse racing. Advertising of gambling services is completely banned. As is the case of any state owned monopoly business, quality suffers. The gambling options are few and the odds offered are inferior. This is irritating German punters. Germany is a big name in world football and Germans are looking for the best bets for the upcoming World Cup.

The German publication Deutsche Welle reports, "In a couple of weeks, soccer fans across Germany will be placing their bets. 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."

Deutsche Welle goes on to state that the restrictive attitude of the state has led to a flourishing illegal market for online gambling, in particular for sports betting. Offshore online gaming operators are targeting German players in a big way. New market research on German gambling was carried out by Goldmedia. Deutsche Welle quotes from the Goldmedia report. "Of the €7.8 billion that Germans wagered in 2009, only €240 million went to the state-owned sports betting operators and €250 million to the horseracing operators." 94% of the bets were placed with private operators outside Germany.

Goldmedia analyst Michael Schmid said that there are 2.2 million online gambling fans in Germany. He said that a large number of these are the more Internet savvy younger generation and therefore the numbers will grow. Because these players find it easy to access the better online options offered by offshore operators, the state run operations will continue to suffer.

In order to prevent this from happening, Professor Ulrich Schmidt from the Kiel Institute for the World Economy has called on the German Government to completely liberalize the online gambling market and permit private operators to compete with the state-owned operators. He said, "We're losing revenue in Germany. 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."

In the coming months, pressure will grow on the German government to liberalize its online gaming market. The European Commission is bent on enforcing a common playing field for Internet gambling based on the European Union principles of free movement of goods and services. The change could come next year when the State Treaty on Gambling is due for renewal. Many politicians are aware of both public sentiment and the need to generate additional revenue. The question is whether Germany will choose the French model in which state operators compete with private operators or the United Kingdom model in which the state operators are abolished.

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