Eye on Europe - Aug. 22, 2006

22 August 2006

Business as Usual -- The Lebanese national lottery, La Libanaise des Jeux sal, restarted on Aug. 17, 06. The last draw of toto numbers, before military actions began in Lebanon, was on the July 13. The lottery, which has a semi-weekly draw (Mondays and Thursdays) is a member of the World lottery Association (WLA). With a network of more than 1100 points of sale, LLDJ is currently working on its expansion, the setting of new technologies (Internet and GSM). Apart from Lotto, the Finance Ministry is also responsible for sweepstakes and scratch tickets. LLDJ's Web site is in French, English and Arabic.

Privatization -- Chaos has been the long-running theme for Totalizator Sportowy Sp. z o.o. in Poland and Compania Nationala 'Loteria Romana' S.A in Romania; politicians and incompetent managers in the two countries want to stay close to the flow of money. Poland is ranked 74th on the 2005 Corruption Perceptions Index and Romania 87th. Transparency is needed for the two lottery organizations, as well for nearly all the former East bloc states, and the best tool is privatization. According to Gambling-Privatization.com the advantages are: to scale down the government's direct initiative in economic activities and correspondingly its administrative load; to promote competition and improve the efficiency of enterprise operations; to encourage wide ownership of shares; to promote the growth of capital markets; to minimize the involvement of government bureaucracy in enterprise operations; to promote transparency; to stimulate both local and foreign investment; to promote new capital investment; and to derive capital incomes for the Treasury.

Going Backward -- According to the Warsaw Business Journal, Polish state-owned sports betting company Totalizator Sportowy (TS) is going through a tough time. At the end of July the company posted revenues of US$393.5, which is 8 percent lower than revenues for the same period in 2005. Analysts claim that the decline is mostly due to mismanagement rather than market conditions. When Law and Justice (PiS) took office, it wanted to rapidly change the CEO, and it sidestepped regulations in doing so. TS consequently has no official president and is managed by Waldemar Milewicz and Slawomir Lopalewski, who have not been able to improve the company's fortunes. Their main plan was to increase the price of the Duzy Lotek's lottery ticket by 60 percent in hopes that it would increase revenues by US$6.5 million; however it is apparent that the price increase has not been compensated for by the loss of clients. They also wanted to increase the sales of lottery tickets, but July's results show that these also fell by 33 percent. Analysts say that TS needs new games and distribution channels. And how about a clean privatization?

European Marketing Tool -- In Austria, where you can "buy" a sports betting license for a bank guarantee of 72,000 euro, the soccer teams are having great times. Nearly all 90 sports betting organizations in Austria are after sports sponsor contracts, or better "soccer shirt advertising." The soccer club SC Untersiebenbrunn has a contract for three years with Interwetten.com. Austria's Admiral, Cashpoint (London), tipp3 and even bwin have additionally concluded sponsor agreements. Meanwhile in the United Kingdom, Betfred has inked a deal with Manchester United, while Sportech will become Everton's partner for the season. Leagues in Spain and Portugal are taking part as well. 888.com has a deal with Primera Liga club Sevilla, and in Portugal, bwin has become the sponsor of the Portuguese soccer association. bwin is, of course, by far the biggest user of sports sponsorships as a marketing tool. It has additional deals with well known professional soccer teams Werder Bremen, 1860 M√ľnchen, Borussia Dortmund, VfB Stuttgart and several amateur teams. The company also has deals with handball, basketball and hockey leagues. All of the clubs sponsored by bwin display the bwin logo on their jerseys.

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.