Eye on Europe - Nov. 15, 2006

15 November 2006

German Developments -- Attorneys Wulf Hambach and Konrad Miller, LL.M., of the German law firm Hambach & Hambach recently co-wrote an article stating that as consequence of the decision of the German Federal Cartel Office of Aug. 23, 2006, the German state-run lottery companies are now obliged to accept lottery tickets from private intermediaries. They also see the recent decision of the Federal Cartel Office as positive development for private operators. "The court stated that it considered the state-run lottery companies to be operating in furtherance of their own economic interests rather than in furtherance of the state in general," they wrote. "The court also found that the active addiction prevention measures, as specified in the sports betting decision of the Federal Constitutional Court, were not in place. The existing private ticket acceptance points which are licensed by the state were also considered to be acting in their own economic interests and seeking to gain as many customers as possible." In the meantime the German states will still try to block foreign operators and on December 13, the 16 minister presidents will decide on the introduction of the new gambling treaty.

Out! -- Ján Pociatek, the successful Slovakian finance minister, overnight replaced the whole board of directors and the supervisory board of TIPOS (the national lottery company). This means an exit for Ing. Stanislav Žiacik, general director and chairman of the board of directors, and Peter Malik, chairman of the supervisory board. Their replacements, respectively, are Peter Kapusta and Roman Ozvold, neither of whom have any experience in the gambling industry. TIPOS, a joint-stock company with a single shareholder, the ministry of finance of the Slovak Republic, was established by the foundation deed concluded on Dec. 11, 1992. The company commenced operations on January 1, 1993. The nominal capital at the time was US$142.24 million; today it is $391.16 million. GDP of the Slovak Republic has risen in the second quarter of this year, year-on-year, by 6.6 percent. The country of 5.5 million people recorded the second highest economic growth in the European Union this year.

OPAP -- The management of OPAP S.A. and Intralot, jointly with its fully owned subsidiary, Betting Company S.A., have finally agreed on the necessary preparatory actions for the in-house undertaking of the risk management and operation of the Pame Stihima sports betting operation in Greece, which should start on Jan.29, 2007. Betting on football was prohibited in Greece until July 2006. Several football and basketball clubs that participate in Greek leagues are now allowed to be included in fixed-odds sports games coupons. Any Greek football league game is available for sports betting in combination with at least two games of foreign leagues. OPAP will supply the staff and technological infrastructure for the new agreement.

France (Foreign) Operators -- From the lawyers Thibault Verbiest and Evelyn Heffermelh, Ulys, I received "Games of Chance: the French Senate highlights the inconsistencies of the French gaming policy." It is a follow-up to the 2002 report titled, "The evolution of games of chance and games for money's worth-the French model under scrutiny." Senator Trucy, the author of the report, notices after helping the casino industry that an inequality between operators has been created. The report also describes, according to Verbiest and Heffermelh, the current problems linked to gambling: gambling addiction, the growth of the online gambling market and the uncertainties of the current regulatory framework. Last but not least, Verbiest and Heffermelh say the report calls on the state to confront the current crisis linked to the success of online gambling by entering into a dialogue with national and foreign operators and by making modern and realistic choices that allow it to have serene and efficient communications with European bodies.

FLUXX -- Fluxx is a card game, played with a specially designed 84-card deck. The name also belongs to gaming specialist FLUXX AG, which recently published its results for the third quarter and the first nine months of 2006. The report reveals that revenue rose by 123 percent in the third quarter to euro 11.8 million euros. As expected, the third quarter was unable to match the high level of revenue in the sports betting segment in the second quarter, during which the football World Cup took place. The costs for legal consultancy and lobbying activities in particular continued to rise against the backdrop of an ongoing political and legal debate on the future shape of the German and European gaming markets. The consolidated earnings in both the third quarter and cumulatively for the nine-month period are consequently negative. The fourth quarter of 2006 will continue to be dominated by the debate concerning the future shape of the German gaming market. If the new German treaty takes effect on Jan. 1, 2008 in its present form, there would be marked negative consequences for private lottery agents. The growth target of 110 to 130 percent for 2006 as a whole still appears to be realistic. With regard to earnings, the management board of FLUXX AG now expects losses of between 2.5 million 3.5 million euros due to political and legal factors. The expectation had previously been that the company would break even for 2006 as a whole.

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.