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Business

German Gambling Faces Good Odds

After a slow start, the gambling business in Germany has begun to boom. The growth will likely be accelerated by an expected liberalization in the sports betting market and the Soccer World Cup in 2006.

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Germans spend billions of euros each year on gambling

German pay-TV channel Premiere has placed a huge bet on growth in the gambling sector -- and the odds are looking good. On August 1, the company started a new channel, Premiere Win, which will exclusively broadcast betting sports.

Logo Premiere World

The Premiere pay-TV station recently launched all-betting channel Premiere Win

So far the young channel has shown horse races from around the world, but plans to branch out into other sports -- soccer, handball, Formula 1 racing -- are in the works. Premiere Win viewers can go online and place bets with Premiere partner Betandwin, a private bookmaker.

The move was a natural one for Premiere, which broadcasts all the matches of the German Bundesliga soccer league live and has the rights to live broadcasts of all 64 World Cup matches in 2006.

All aboard the gravy train

"It was just a question of being the first one to get on the train," said Dietrich Wüstehoff, head of PR at Premiere Win. Premiere is just one of many companies looking to take a seat at the betting banquet. Others include the German Football League (DSL), commercial TV station RTL and sports channel DSF.

"The German sports betting market is right on the edge of taking off because of the liberalization expected in the near future," Wüstehoff said.

Wettbüro William Hill in London

William Hill Betting office syndicate, London, Great Britain

Currently, state-run German bookmaker Oddset has a monopoly on most sports betting, but that is being challenged in the courts, and a hearing is slated for Nov. 8. When the decision comes early next year, it is widely expected to open up the betting market for competition -- just in time for the World Cup games.

Changes afoot

In addition to Oddset, five other firms hold licenses to operate in Germany, including Betandwin, whose license dates back to the East German era. In addition, numerous small bookmaking parlors, whose businesses are incorporated in other countries, have sprung up in Germany in recent years. Mostly present in Berlin, they operate in a sort of legal grey area.

If the market is opened up, these betting parlors can expect to become completely legitimate. In that case, industry insiders say, Germany's betting scene will look more like England's.

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"We assume that in the long term, 10,000 betting offices will open up in Germany," the European Betting Association’s Norbert Teufelberger told the Internet portal Focus Money. The German Association of Bookmakers has said the market liberalization could create as many as 30,000 jobs.

On the down side, the competition from private betting agencies means a smaller share of the pie for the state-run betting companies, and thus less money flowing into government coffers.

Big spenders, big business

Betting in Germany is already big business. Gamblers spent three billion euros ($3.6 billion) on sports bets alone in 2004. That could grow to 5 billion euros ($6.1 billion) by 2010, according to a study by Munich-based MECN consulting group published in Capital magazine. The same study showed 30 billion euros was spent on other types of gambling, such as Internet poker, official numbers picking (lottery games) and state-run casinos.

Everyone agrees that the advent of Internet gambling, which allows punters to place bets without having to get out of their bathrobes, has played a large role in the growth of the industry. Worldwide, surfers spent some 300 billion on Internet gambling in 2004, with all signs pointing to continued rapid growth.

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Stephan Schröder, head of PR at the Cologne-based sports research company Sport & Markt, notes that many gambling Internet sites have been made so easy to use that "I hate to say it, but even an idiot can understand it."

Room for growth

Despite the large sums already being spent, a report put out by Sport & Markt shows there is still a lot of room for growth in the sector. Of the 65 million Germans over age 14, just seven million have placed sports bets, the study showed.

"That’s a lot of people, but it leaves a large untapped market," Schröder said.

Surprisingly, the recent, much-reported scandal involving soccer referee Robert Hoyzer -- he was involved in a Croation gambling ring and fixed several games -- has also given sports betting a boost.

"Our numbers have leapt since the scandal hit the newspapers," Marcus Meyer, marketing chief for Betandwin, told the Handelsblatt newspaper recently.

"The Hoyzer case was a big topic on TV every day last spring. In the reports, sports betting was explained," he said. "Now it seems people want to try it for themselves."

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Sport & Markt's Schröder agrees that in terms of the gambling business, any news can be good news. "In Germany, people are relatively new to sports betting. Wherever they hear about it, it means they might want to try it out," he said.

One other factor may stand behind the growth in Germans' willingness to plunk down a few euros for a chance at big money: the ailing economy.

"When people aren't doing well, there's more of a tendency to try and win big," said Schröder. "More people have less to lose, and they wish they could change their lives in an instant."

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