Online operators and betting exchanges transforming the German betting market

[key:OELBERMANN]

Online betting is becoming more and more important in the German betting market and is dominated by private operators such as BetandWin. However, meanwhile also operators traditionally focused on the retail business are beginning to add Internet offers to their line of sales channels (e.g., Springer/oneXtwo, Hobiger/Wetten.de, …).

The state operator and the Internet

The online operators Jaxx/Fluxx and Tipp24, both of which serve as brokers for the state operator DLTB, are especially important in this market. A few years ago they took advantage of the DLTB’s weaknesses on the Internet and offered the Oddset bets as well as lottery products of the DLTB via the Internet.

By now the state operators brought together in the DLTB also have an Internet presence, but because of the federal structure of the state-controlled gambling industry they are at a significant disadvantage where costs and marketing are concerned. Thus, Tipp24 and Jaxx/Fluxx dominate the Internet sales of state betting and lottery products, and the DLTB‘s share in the Internet lottery and sports betting market amounts to only ca. 30% with Tipp24 and Jaxx/Fluxx sharing the rest. As a result, Jaxx/Fluxx operates the online offers of many lottery companies, and in spring 2005 the lottery companies of Hesse, Baden-Württemberg, and Rhineland-Palatinate saw their last best chance at establishing an Internet presence in taking over Tipp24 (but due to antitrust laws, the sale of Tipp24 fell through).

Betting exchanges / P2P bets

Anklicken für größere Version
Betting exchanges are a special offering in the sports betting market; they are based on the person-to-person model that has already proven successful in other Internet enterprises (for example, eBay). Betting exchanges use an online platform to broker bets between private users.

Generally, betting exchanges finance their offerings by charging a commission of between 3% and 5% of the users’ net winnings. In particular in the UK P2P bets are the fastest growing market in the gambling sector and many operators work on the international expansion of the P2P model. Thus, the first betting exchanges have appeared on the German market (e.g., Mybet, Bluevex, Spomaxx by Sportwetten Gera, Betbull by BetandWin). However, so far betting exchanges have had a checkered career. On the one hand, the international market leader Betfair makes about Euro 45 million in profit, and on the other Betbull ekes out a bare-bones existence on the lowest rung of the revenue ladder and is now trying to enter the retail betting market.

Need more information?

You can find more information in MECN’s latest study „The German betting market in transition.“ Here you can download the brochure about the study; alternatively, visit www.wettmarkt.mecn.net for more information.