Tipp3 launch could spark German stampede

The German sports betting market has proven to be something of a headache over the past few years, mainly due to an elongated federal licensing process, drawn out further by a raft of ongoing litigation.

However, the regulatory uncertainty which has clouded the German market for the last few years and swayed many to steer clear may well have been lifted by the entrance of a company operating under an Austrian licence.

Sports betting site Tipp3.de, which launched just a few weeks ago, is led by telecommunications giant Deutsche Telekom via the Deutsche Sportwetten joint-venture it’s formed with Austrian operator Österreichische Sportwetten.

State link

Deutsche Telekom, which last year amassed revenues of €62.7bn, making a move into sports betting has got some within the German market asking if they have handed operators a free pass to target Germany-based players.

Almost a third of Deutsche Telekom (31.7%) is owned by the German federal state, a fact which has led observers to conclude that German authorities are now more unlikely than ever to issue sanctions to those found to be operating in the German market.

“This [the Tipp3 launch] is great for the market and the operators because Deutsche Telekom has amazing influence deep into the politics,” one gaming exec told eGaming Review.

So the presence of Deutsche Telekom, which owns 66% of the JV, may well have legitimised a market which, despite a 5% turnover tax and a splinter framework launched by state Schleswig-Holstein, has long been one suited to those with the sufficient appetite for risk.

New entrants

With the goalposts seemingly moved, could there now be an opportunity for the more risk averse to take another look at the vast, sport-loving and technologically advanced market?

“Additional German media companies are now starting to looking into the market,” another exec told eGR. “What we hear is that they are very interested in cooperating with those already offering sports betting – like what happened in the UK with Sky Bet.

“Much will depend on their risk profile but since nobody really expect Deutsche Telekom to move in before official licences were handed out, I think that’s a strong sign [that the risk has been reduced],” he added.

Legal view

“From a legal perspective, nothing has changed – it’s still a grey market so it’s not 100% legal,” Martin Arendts, gaming lawyer at Arendts Anwalte, told eGR.

However, Arendts said the entrance of Deutsche Telekom was significant due to the message it will have sent to those assessing the risk associated with operating in the online German sports betting market.

“It’s still a grey area and operators enter at their own risk but it’s at least clear that for Deutsche Telekom to have entered the market they would have certainly sought legal advice before taking the majority stake in Deutsche Sportwetten.

“They [potential market entrants] definitely see the risk as being much lower now than before and, with licences unlikely to be decided for as long as another two years, now might be a good time to enter the market,” he added.

While the lure of grey market revenues has been reduced in recent years, recent developments in Germany and its reduced risk profile may be potentially too hard to ignore.

Update: Deutsche Telekom today (Tuesday 2 June) responded to an earlier request for comment.

“Deutsche Sportwetten has made an in-depth analysis of its own legal situation as a result of the licensing procedure,” Jochen Weiner, Deutsche Sportwetten managing director,” said.

“Our specific situation might or might not be applicable to other companies already active in the German market or companies that are interested in entering the German market. For Tipp3 it is important that we are offering a transparent and fair product that is easy to use,” he added.