Banking for 7 billion and 7 million

GLOBAL INVESTOR 3.06 Enrichment — 49
Liberalization
of sports betting
in Europe
The 2006 FIFA World Cup turned out to be the biggest event in the history of sports betting, at least
for the European market. Betting turnover and the number of individual bets placed are continually
rising with the proliferation of broadband Internet access. The betting business is still controlled by
the state in many EU countries. We expect to see an increasing trend toward liberalization.
Markus Mächler, Equity Sector Analyst
The discussion about liberalizing the betting and gaming market is
not new, but it is gaining fresh momentum as the Internet enables
easy access across country borders. There are conflicts of interest
standing in the way of European market liberalization, since governments
control gambling in many countries and also want to prevent
problem gambling. We fear the state authorities will lose more
control over the gambling and betting market if no action is taken
because betting activity will increasingly move towards the gray
market and beyond the control of the authorities. A liberalized market
would allow technical conditions to be placed on gaming companies
that would likely be just as effective at preventing gambling
addiction as the current system, if not better. Whatever the near
future may bring, it seems that liberalization will be a long-lasting
trend, despite limited support from politicians.
The betting and gaming business has traditionally been controlled
by the state. Government regulations vary widely from country to
country and are even contradictory in some cases. Australia is one
of the world’s least-regulated betting markets. Roughly 2% of
GDP is spent on betting and gaming there, compared with 0.5% in
Europe and 0.8% in the USA. Current European gaming volumes
could quadruple over the next 10 years if the liberalization of gambling
makes it as popular in Europe as in Australia. The annual
market volume for betting and gaming in Europe currently amounts
to around EUR 40 billion. Within Europe, the UK, Greece, Austria
and Gibraltar have the most liberal gambling regimes. Numerous
online operators like BetandWin (NR 1 ), PartyGaming (NR 1 ), 888
(NR 1 ) and others have already settled in alongside traditional bookmakers
in these countries. The Internet knows no borders, and
these online betting operators are attracting customers from less
liberalized countries such as Germany, France and Switzerland.
The USA is less liberal regarding foreign online betting companies,
as seen recently when it arrested BetOnSports CEO Carruthers.
BetOnSports is based in Costa Rica and generates over 85% of its
turnover from US citizens. Carruthers was arrested on racketeering,