Germany's 'Internet Dogs' Seek Global Solutions

6 February 2007

German online lottery and sports betting broker/operator Fluxx is spreading its wings internationally. London-based Jaxx UK Ltd., a subsidiary of Fluxx AG established in late 2006, has been successful with its application for a bookmaking license in Great Britain. Jaxx UK Ltd. received the permit Monday from the British licensing authorities, and Fluxx is, thus, entering one of the biggest betting markets in the world.

Britons bet around £45 billion (approx. 68 billion euros) on horse racing and sporting events in 2005 (source: Mintel, 2006), whereas the betting total in Germany over the same period amounted to just 3.5 billion euros.

Fluxx already has sports betting licenses in Malta and Austria; for legal reasons, however, it may not promote products from these foreign markets in England. The British license now gives Fluxx the opportunity to promote its own sports betting offerings in the United Kingdom.

"The British betting market is characterized by a lengthy tradition and a level of acceptance and enthusiasm among the wider public unmatched anywhere else in the world. Betting is one of the favorite pastimes in the United Kingdom," declared Rainer Jacken, Management Board spokesman of Fluxx AG. "The entry into the British gaming market represents a further landmark in the European growth strategy of the Fluxx Group. Now that the German market for sports betting currently holds less appeal due to the protracted ambiguity surrounding the legal position, Fluxx will concentrate its sales activities in the medium term on EU countries that are already liberalized."

Amid the German states' efforts to preserve the country's gambling monopolies, Fluxx joins fellow German operator Tipp24 in its ambitions to globalize. Tipp24 has been active in Spain through its wholly owned subsidiary, Ventura24 SL, since 2002 and in Italy through its wholly owned subsidiary, Puntogioco24 s.r.l, since 2005. Ventura24 acts as a broker of various state lottery products in Spain. In line with Tipp24's offering in Germany, Ventura24 offers customers additional services such as prize notifications, automatic crediting of prizes to customer accounts and subscription tickets. With the Spanish 6/49 number lotteries, Ventura24's gaming system and conditions are essentially the same as the German version. In Italy, Puntogioco24's offering consists of the national 6/90 lottery (SuperEnalotto).

Founded in 1998 and 1999 respectively, Fluxx and Tipp24 AG, were considered the "young Internet gaming dogs" who created a niche market as online betting brokers, working in and for the surrounding of the federal monopolistic states of the German Republic.

Spreading the international growth of Fluxx and Tipp24 is, of course, also spreading the operational risks; nobody knows where the legal birds survive or where they will die. Most recently, the Administrative Court of Appeal dismissed an appeal filed by the state of Baden-Württemberg. In this case, the plaintiff, a sports betting agent, succeeded in the last level of jurisdiction against an order of prohibition issued by the Regional Council of Karlsruhe. This means he is allowed to operate his sports betting business in Baden-Württemberg.

But in another German state, Saxony-Anhalt, business operations of Tipp24 AG were prohibited due to an injunction served several weeks ago. Saxony-Anhalt has forbidden Tipp24 AG from carrying out its business operations in Saxony-Anhalt. According to the wording of the injunction, this affects both the brokerage of participation in lotteries in Saxony-Anhalt, especially as the commercial organizer of lottery teams, and advertising for lotteries that are illegal in Saxony-Anhalt and that can be called up in Saxony-Anhalt. The prohibition had immediate effect.

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.