Are state lotteries good for the economy?
Gambling : Beware of online lotteries
“Freedom from the lottery - that means no longer having to go to the lottery kiosk every Wednesday and Saturday,” a man shouts into the crowd. Cheers break out. New customers, he continues, are even allowed to play the “6 out of 49” lottery once for free. They owe all of this to the website lottoland.gratis. So much for the commercial.
More and more online providers allow participation in lotteries all over the world: from the Brazilian “Quina” to the German “6 out of 49” to the Spanish Christmas lottery “El Gordo” - everything is possible. But how does online lotto work? And is it even legal?
“Freedom from the lottery”, as the man from the advertising advertises, does not actually exist in Germany. Anyone who wants to offer games of chance in this country needs a state license. The state has a monopoly on lotteries. Only the state-owned companies of the German Lotto and Totoblock (DLTB) are allowed to organize lotteries.
Online lotteries are just bets
Anyone who plays at Lottoland.gratis, Lottoland.com or Tipp24.com does not even take part in a lottery. "The consumer is being suggested that he is taking part in the lottery, but he does not," says Markus Ruttig, lawyer specializing in gambling law. Everything on the Lottoland website looks exactly the same as one is used to at the kiosk: players may submit a maximum of twelve tips with six numbers each on “6 out of 49”. There is also the option of game 77, the Super 6 and the lucky spiral. The possible winnings are just as high as with a real lottery game, from two correct numbers plus a super number to the jackpot. Without the additional games, the ticket costs 12.50 euros - the same as at the kiosk.
But the stake does not go to the class lottery. Instead, the money goes to Gibraltar, where Lottoland Ltd. has its seat. Whoever plays with the online providers takes part in their own bet. For example, Lottolands “6 out of 49” only bets on the numbers from the DLTB draw.
State lotteries are financed by their income, online lotteries are not
The state lottery companies can finance their profit distributions by selling tickets. The DLTB thus earned around 6.9 billion euros last year. 50 percent of the income goes into the distribution of profits, 23 percent goes to the federal states, 16.7 percent is waived as lottery tax, 7.5 percent goes to the acceptance point and 2.8 percent goes to the administration of the lottery companies. The federal states use the income to finance social, cultural and sports expenses.
Industry experts estimate that online providers have to make do with far lower sales. Consumer advocates suspect a problem here. How does Lottoland finance winnings in the same amount as the state lottery without the same amount of income?
According to the Lottoland website, the company is insured against profits that cannot be covered by the income. Lottoland prides itself on having obtained gambling licenses from Gibraltar, Great Britain and Ireland. The competitor Tipp24 also has a British license.
But consumers should know: "Lottoland and other bets on lotteries are clearly illegal," says Tilman Becker, head of the gaming research center at the University of Hohenheim. "The willful participation in illegal games of chance is a criminal offense," explains a spokesman for the Berlin interior administration. In addition, in the event of a win, the payment claims are not legally enforceable. So if the foreign secondary lottery provider refuses to pay out the winnings, the player gets nothing.
The online companies argue that a European license entitles them to offer bets in Germany due to the freedom to provide services. “However, there are now a large number of decisions by the European Court of Justice that contradict this,” says Tilman Becker. Anyone who does play along is therefore in a legal gray area. It is different with the state lottery companies. They justify their monopoly as follows: The regulation combats gambling and betting addiction, guarantees the protection of minors and prevents fraud. "The state therefore does not want any competition in the lottery business," says lawyer Ruttig. Lotteries are still useful because they meet people's instinct to play in a regulated manner. If you limit what is on offer, don't get gambling out of hand.
Online lotteries are growing
But more and more money is being spent. With legal games of chance (including bets, casinos and slot machines), all German providers together generated revenues of EUR 13.5 billion in 2017, with approved lotteries alone accounting for EUR 4.6 billion. This is the result of a study by the consulting firm Goldmedia. While the gaming market as a whole grew, the legal lottery market shrank. Instead, illegal online secondary lotteries grew rapidly. Lotto Baden-Württemberg estimates their sales at 400 to 500 million euros in 2017. In the previous year, according to the supervisory authorities, it should have been 299 million euros.
Although several German authorities have banned the implementation of foreign secondary lotteries, the states can hardly defend themselves against the violations of the law. “As a rule, the providers are based in Malta or Gibraltar. There it is practically impossible to enforce German prohibition orders, ”says the spokesman for the Berlin interior administration.
Anyone who wants to play the lottery legally on the Internet has been able to do so with state lotteries for a long time. At Lotto.de, players can play “6 out of 49” or the Euro Jackpot - without having to go to the kiosk.
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