A short commentary by o. Univ. Prof. Dr. Dr. h. c. mult. Friedrich Schneider

The press representative for the Sächsische LOTTO-GmbH thinks “…that the new State Treaty will not lead to an extension of the black market, as gambling is not prohibited but only shaped and designed in a diminishing way…” In this context, it must be added critically that in particular the assumption that state-run lottery draws will cover the whole area of gambling is incorrect and that this assumption is not justified or based on any evidence!

The press representative obviously assumes that the limited offers provided by the state suffice (e.g. Toto-Lotto) to provide offers for all players, and in doing so ignores the lack of internet offers and previous experience, in particular with regard to sports betting, which has already led to the liberalisation of horse bets. Should the State Treaty actually be implemented, my study (“Volkswirtschaftliche Analyse des legalen/illegalen Marktes für Glücksspiel in Deutschland“ – Economic analysis of the legal/illegal market for gaming in Germany”), which for the first time quantifies the illegal market, shows the following result:

By means of direct questioning, opinions were collected on the monopoly and the state- run offers for sports bets (micro approach). A majority thinks that the state-run sports betting offers through Oddset are not sufficient and is of the opinion that private and state-run sports bets should as a principle continue to be legal, that the state mainly intends to improve its turnover for the state-run sports bets and that the prohibition of private sports bets would lead to a loss in jobs.

Overall, the segments Oddset, stationary procurement of sports bets, sports betting via the internet, self-service betting machines, horse betting, money gambling machines and gambling houses reached a legal turnover of approx. 19.3 billion Euro in 2005, which increased to 22.9 billion Euro in 2007. The illegal sector in all these areas reached a total volume of a maximum of 4.9 billion Euro and a minimum of 4.6 billion Euro in 2005 and increased to up to 8.0 billion Euro in 2007 (estimation).

Contrasting this development to the figures for 2008, when the new statutory regulation will take effect, the prohibition and restriction in the mentioned segments will lead to an overall growth in turnover of 38% (11.4 billion Euro with the prohibition compared to 8.3 billion Euro without the prohibition) in the described black market areas, and an increase of 433% (3.3 billion Euro with the prohibition in contrast to 0.6 billion Euro without the prohibition) in the areas Oddset, procurement of sports bets, sports betting via the internet and self-service betting machines alone.

This study, which was carried out extensively for the whole of Germany for the first time, clearly shows that what will happen is the exact opposite of what the press spokeswoman (Kerstin Waschke of the Sächsische LOTTO-GmbH) alleged. It would be substantially more reasonable to follow the British example; for reasons of employment politics and tax politics, a liberalisation of the German sports betting market, including the transition of taxation to an internationally competitive level, is therefore to be recommended. This suggestions would be much more reasonable; it would also be possible to use the tax revenue to finance targeted measures in the fight against gambling addiction and other addictive disorders (alcohol, drugs, …).