Sports betting has always been a popular pastime and millions of people all around the world place bets on the outcome of different sport events. Helen Fletcher spoke to some of the key companies within the sector to see what the odds are of a lucrative future...

So you want to place a bet on your favourite sports team winning that all important match or maybe you want to take a chance on the underdog, but where do you do it? Do you go down to your local betting shop, sit at home in front of your laptop, or do you order a cappuccino at your local coffee shop and use a betting terminal? The choice, it would appear, depends not only on customer preference but what the legislation in the country you live in will allow.

In the US, for example, until recently the regulation of gambling as a whole was left entirely to the discretion of the states. But with the advent of online gambling confusion surrounding jurisdiction has been created and whether online sports betting is illegal is now a bit of a grey area. There are only explicit laws against online betting in three states, Nevada, California and Louisiana, but you will be hard pushed to find an American online sportsbook based in the US, with the majority based offshore. Better to be safe than sorry, right?

Within western Europe, sports betting has over the years been consistently popular, with the UK and Austria in particular considered as stable markets. Patrons are largely allowed to place bets through any media, whether it be the internet, a betting shop or betting terminals, but this varies depending on customer choice rather than legislation restrictions as each offers a different betting experience.

Technology

However, as technology advances and the popularity of the internet grows, it is only a matter of time before these media take over in the popularity stakes, with online betting in particular expected to take a considerable stake in the overall market. The key to its success falls with the reliability and security of the online sites, which with the growth of technology should not be a problem.

CBC-X was one of the first providers to appear in the sports betting market and occupies an important position in it. Founded in 1985, the group supplies equipment to betting cafés, shops, online shops and modern betting terminals in Austria and Europe.

Juergen Paierhuber, director of marketing and public relations, argues that: “Betting shops and terminals will remain strong as shops are more personal and offer a different range of possibilities and options, allowing customers to enjoy betting on sport events with friends. Some shops even offer catering and special events around specific sport events. Betting terminals on the other hand are simple to use and offer a fantastic array of betting opportunities at a glance.”

Udo Nickel of German company Cashpoint, which supplies software to the sports betting sector, added: “Terminals will have their place within the market as well as online betting but terminals are particularly important because you can put them anywhere, like shops or arcades. Our cabinet, which we are launching later in the year, pays out coins and banknotes, meaning no manpower is needed.”

Monopolies and legislation

However lucrative the sports betting market may be, in some countries there can be problems for private companies that wish to be part of the market as the state holds a monopoly over all betting activity. Up until recently, Italy’s sports betting market was controlled by a monopoly with the argument behind it being one of public order and consumer protection. However, the Italian monopoly over the years increased its promotion of offerings to an extent and intensity that showed no concern for public order or consumer protection. Its operations were totally commercialised with advertising campaigns, sponsorship and other branding activities and it was suggested the market should be subject to competition like any other service industry in the EU.

What followed was the opening of the Italian sports betting market to competition from private betting operators based on the freedom of establishment and without discrimination on grounds of nationality or specific monopolies. UK based bookmaker Ladbrokes was awarded 142 betting licences spread geographically across Italy, consisting of 33 dedicated horse racing licences, 58 dedicated sports betting licences and 51 non-dedicated sports betting licences. In addition, the company successfully applied for remote betting licences for horse racing and sport, which were issued on a non-competitive basis to companies that complied with regulatory standards.

And German company Merkur Interactive was awarded with licences for 76 betting offices and 157 sales points in northern Italy. In addition a licence for internet-based gaming in all of Italy was obtained.

“It is very gratifying that the Italian government was courageous enough to liberalise the sports betting market,” said Paul Gauselmann, chairman of the management board of Gauselmann, “thus complying with the demands of the European Union to eliminate the corresponding monopolies in the EU member countries. This raises hope for Germany that the governments of the federal states will also give up blocking a responsible liberalisation of the betting market and will start to acknowledge the reality of the EU regulations and draw the necessary political consequences.”

There has also been an ongoing debate in the Spanish regions about the corresponding bills and it is thought a decision will be made soon to create a liberalised but controlled market. However, a definite timeline for the implementation is not foreseeable at the moment.

As just mentioned, Germany is also a major talking point at the moment as the Bavarian law currently only allows sports betting by the state lottery organisation. However, a commercial bookmaker who was prohibited from offering sports betting recently challenged this. The Supreme Court ruled that the Bavarian law is not compatible with the German constitution as it keeps a monopoly without proper justification.

The ruling says that the state-controlled sports betting monopoly can continue until a new law has been adopted. However, the state sports betting operation would have to comply immediately with the court’s findings, i.e. cut back on advertising. The new law could then either result in an opening up of the market or the opposite, a tighter policy towards the marketing of sports betting.

Hubert Hufer of Austrian company Best Gaming Technology told InterGame: “Germany is difficult at the moment as it is prohibited by a state monopoly and we are waiting to hear whether an open market is likely. If this happens then we certainly plan to co-operate with Germany in the hope of becoming part of the sports betting market there. A lot of private companies are fighting for the market at the moment but I think it will be a slow process and there needs to be a clear decision.”

It would appear, however, that even if Germany does follow in the footsteps of Italy and its sports betting market becomes an open market, it is a country to keep an eye on rather than focus business on completely, especially when other markets also look promising.

Paierhuber of CBC-X said: “The sports betting market is a highly dynamic one and there are always lots of new developments to be made, lots of new markets to step into and lots of opportunities to be taken. The legal situation adds some confusion to the dynamics going on at the moment, especially in some of the key nations in western Europe, such as Germany, France, Spain and Italy, as private sports betting is pretty much against the common law since the federal lotto providers have a monopoly on all kinds of betting activities.”

In the eastern European market, it will come as no surprise that the legal situation is less prohibitive than that of western Europe. “We will be concentrating all efforts on this market over the next year and some of the recently added EU members such as Poland, Latvia and Romania, as well as Russia,” said Paierhuber. “There are a lot of partners who are willing to invest considerable amounts of money into implementing a sports betting infrastructure in these countries. We like to believe that eastern Europe is the way to go and it is possible sports betting could become a really big thing over there.”

Eastern Europe may appeal to companies due to minimal or no legislation, but this does not make it a safe bet as the countries come with their fair share of problems. Firstly, because of this lack of legislation there is always the risk that anything could change at any time and companies could find they are restricted from operating there.

“Problems are also caused due to the technology in these countries,” said Hufer. “It is not as developed as in western Europe and the regions are smaller, making stable internet connections difficult to achieve. This would affect the more sophisticated ways of placing bets on terminals, but this is something that could change over time.” It would appear then that sports betting has always been popular it is just the way in which people place a bet that is seemingly changing. So what does the future hold for this market? Will it continue to grow or will it hit a brick wall in the form of state monopolies?

The future

“Sports betting has always been popular as people like to consider the results of a game or match based on their favourite players or a combination of circumstances,” said Tomas Holec of Evona, which exports its online betting terminal, Bet X, to both western and eastern European countries. “The global market is using new technology such as online or GSM sports betting that is less time consuming for users. And I see that the number of people betting on sports will increase with the use of the latest technology such as betting terminals making it unstoppable, especially in Europe. It is just a matter of time before betting terminals overtake the classic betting shops in some countries as it gives advantages for both users and operators.”

Paierhuber of CBC-X added: “The market as we see it is continuously increasing, what with the eastern European market still widely lacking regularly maintained and reliable betting systems. As long as there are sports, there will be people willing to bet on the outcome of the event, just for kicks and the hope to win some money. So I believe that the market will continue growing for a long time yet.

“In terms of betting options it seems obvious that accumulated solutions i.e. terminals that offer sports betting, live betting, a TV screen, horse or dog racing and so on, will become more and more popular among both franchises and final customers and we are prepared for this.”