Foreign Competition

Lottery May Run Out of Luck

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  • Why it matters

    Why it matters

    A growing offering of foreign lottery and gambling games is threatening revenue of German state-run monopolies, and could lead to lower tax proceeds and lower social spending.

  • Facts

    Facts

    • Private providers in foreign countries run games such as Lottoland and Tipp 24.
    • On the games’ online sites, customers can essentially bet on the official games run by state lottery companies.
    • For now the profits of state lottery companies are still stable across Germany. Revenues in 2014 were €6.9 billion, or about $7.45 billion.
  • Audio

    Audio

  • Pdf

The state lottery in Bavaria made €400 million, or $432 million, in profits last year on sales of €1.1 billion. But Erwin Horak, the Bavarian lottery chief, isn’t happy.

That’s because private providers are beginning to lure away customers – and some of the easy millions that state governments in Germany have long collected on games of chance.

“There is a clear danger that sales and, as a consequence, contributions to social programs will fall if nothing is done about illegal lotteries,” said Mr. Horak, who leads the second largest German lottery company. Only Westlotto has higher revenues.

In Mr. Horak’s opinion, games such as Lottoland and Tipp 24 – run by private providers in foreign countries – are illegal in Germany. On the games’ online sites, customers can essentially bet on official games run by state lottery companies. But the state-run games don’t see any of the revenue.

For a quarter-century, Rolf Stypmann led state lottery companies in Lower Saxony, Mecklenburg-Western Pomerania and Schleswig-Holstein. Now the former judge works as a kind of top lobbyist for Lottoland, and sees nothing wrong with the new private lottery sites.

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