German Lotto and Toto Group Official Supplier of the 2006 FIFA World Cup

11 August 2004

The World Soccer Federation (FIFA) has aligned with the German Lotto and Toto group through a deal that makes the group's online sports betting branch, Oddset, the latest official supplier for the 2006 World Cup in Germany.

Official 2006 FIFA World Cup Partners: Adidas, Anheuser-Busch, Avaya, Coca-Cola, Continental, Deutsche Telekom, Emirates, Fujifilm, Gillette, Hyundai, MasterCard, McDonald¹s, Philips, Toshiba and Yahoo!

Official 2006 FIFA World Cup Suppliers: Energie Baden-Württemberg AG (EnBW), OBI, Hamburg-Mannheimer Versicherung, Postbank and Oddset.

According to press information from FIFA, Oddset is acquiring the rights to "use their vast portfolio of advertising and marketing resources, as well as the official title, official emblem, official poster and mascot. . . Oddset will lend its full support to the volunteer program in particular. Between 12,000 and 15,000 voluntary helpers are to be recruited for the tournament. The Organizing Committee and Oddset have agreed a close collaboration for volunteer selection, training and support."

Above that, Oddset will receive 10 complimentary tickets for every FIFA World Cup match (640 in total). They will also have the option of purchasing up to 200 normal price tickets for each game.

In a separate deal, the Organizing Committee has also decided to involve the German Lotto and Toto group in a public draw for tickets for the 2006 FIFA World Cup.

State-by-State Turnover for Oddset (in Euro millions) - 2001

Baden-Württemberg: 70
Bayern: 86
Berlin: 17.7
Brandenburg: 7.1
Bremen: 4.7
Hamburg: 21.3
Hessen: 41.5
Mecklenburg-Vorpommern: 3.99
Niedersachsen: 40
Nordrhein-Westfalen: 145.6
Rheinland-Pfalz: 26
Saarland: 6.3
Sachsen: 11.9
Sachsen-Anhalt: 8
Schleswig-Holstein: 17.3
Thüringen: 5.4

The German Lotto and Toto Block is a partnership of all the 16 lottery operators in the 16 German states. The purpose of this cooperation is the pooling of the stakes, pay-outs to the winners, common marketing, etc.

The minister-presidents of the 16 German states on Jan. 1, 2002 agreed that the states' lotto companies would lend financial support to the World Championship Football 2006 to be organized in Germany.

The German Football Federation (DFB) will receive 12 percent above the fixed turnover of 2001 for all Oddset betting until 2006. The money, which will not be more than 130 million euro, is to be remitted to the DFB and used for cultural aspects surrounding the World Championship, as well as for the construction and reconstruction of stadiums.

A Violation of Anti-Trust Laws?

Oddset transferred 3.5 millions euro to the World Cup Organization Commission in 2002 and 500,000 euro in 2003. Thus, it is apparent that the budget of 130 million euro will not be remitted to the DFB, and Martin Arendts, M.B.L.-HSG, an attorney well known in the international gambling industry, questions whether there's been an abuse of market dominance.

Arendts offers the following analysis of the situation:

According to a press report of August 3, 2004, Oddset, the sports betting operator of the state-owned Lotto and Toto-Block (DLTB), is the fifth "National Sponsor" of the Football World Cup 2006. The news magazine "Spiegel" beforehand reported that in return, Oddset expected the Bundesliga (equivalent to the Premier League) clubs to terminate their cooperation with private sporting bet operators (with a former GDR license). Furthermore, Oddset and Westlotto respectively have been sponsors of the Bundesliga Club "FC Schalke 04" (although, not even one year ago a private operator was refused perimeter advertising in the same stadium). In addition, Oddset invests millions a month in advertisements and tries to impede private operators' advertisement and marketing efforts (e.g. spots on the DSF-channel)-­in part through political channels.

Is this behavior legally unproblematic? Not so from a point of view of anti-trust law. The abuse of a market dominant position is prohibited by German antitrust laws as well as by European competition rules.

The rules for fair market competition are established by the law against restrictive practices (GWB). Oddset still has a predominant market position, and until the liberalization of the gambling market, there are still "legal" restraints for other companies' access to the market (Art. 19 paragraph 2 GWB). Accordingly, Oddset may not prejudice other businesses' competition possibilities (Art. 19 paragraph 4 Nr. 1 GWB) and may also not constrain the same unreasonably (Art. 20 GWB). Pressuring Bundesliga Clubs to not accept advertisement requests from private operators would therefore clearly constitute a legal infringement.

An infringement should be on hand according to European principles as well. According to Art. 86 paragraph 1 EC-Treaty, competition rules apply to public businesses as well. Oddset and the DLTB have to be considered as such public businesses, since they are granted "special or exclusive rights." Like the Post or a former telecommunications company it could be considered as a company offering "services of general economic interest" (Art. 86 paragraph 2 EC-Treaty). The states' intention to define the state gambling offer as public task (and not only as mere economic activity) speaks in favor of this interpretation.

According to Art. 81 EC-Treaty, all agreements "causing prevention, restriction or distortion of competition within the common market" shall be prohibited. A limitation is existent, if the freedom of action of one or several parties involved (in this case the possibility of gathering advertisement space in the soccer business) is prejudiced. The possibility of competition as such is to be protected (in this case also by foreign bookmakers, as possible advertisement partners).

Legal consequence of such an infringement is (compulsory and automatic) nullity of the corresponding agreement. Moreover, Art. 81 EC-Treaty is to be considered as a protective provision in terms of Art. 823 paragraph 2 German Civil Code. Such an agreement can therefore entail actions for damages in tort. In addition, prejudiced bookmakers may claim nonperformance against the DTLB.

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.