Lottery service provider Tipp24 acquires Lotto24.
The German lottery industry is experiencing some changes recently. As stated in a press release by Tipp24, an online lottery agent regulated by Zeal Network, they plan to acquire Lotto24. This isn't just about increasing market share but also involves legal considerations in Germany.
Market Consolidation and the End of Second Lotteries
Lotteries remain the most popular form of gambling in Germany, even with the rise of sports betting and numerous online casinos. The numbers don't lie either. For several years, around 7-8 million individuals in Germany regularly participate in state-regulated lotteries, while approximately 22 million individuals occasionally try their luck with the renowned six correct numbers.
With such high numbers, it's no surprise that private lottery providers and intermediaries find the German lottery market appealing. However, the legal situation isn't as clear-cut as one might expect in Germany. The German gambling market is only partially liberalized, which has created a stir in the political arena.
Second lotteries are predominantly from non-German EU countries. These providers aren't directly licensed in Germany but are considered legal under EU law and typically tolerated by federal and state authorities.
What are second lotteries?
Second lotteries are lottery providers in Germany who don't hold official German gambling licenses and, as a result, can't offer lotteries within the country. However, these providers still offer lottery participation via online platforms - including Tipp24 or Lottoland - where players bet on the outcomes of the state-regulated 6 out of 49 lottery. If they win, jackpot payouts are either made through insurance claims or the providers' own funds.
The London-based online gambling company Zeal Network, established as Tipp24 in Germany, intends to take over Hamburg-based lottery provider Lotto24. The acquisition isn't just to enhance the market position - it would increase the company's global customer base to five million - but also to cease the second lottery business under the Tipp24 brand.
The usual issue: tax revenues
Lotto24 currently takes pride in their first place in the online market. As a licensed lottery intermediary, which redirects players to state lottery companies and receives a commission for this service, their standing isn't shabby for providers. However, discussions about liberalizing the German online gambling and lottery market have been a political dilemma for years. Supporters of liberalized gambling argue that the booming online gambling sector is part of digitalization. The competition for Germany's state lottery monopoly is intensifying, and the lucrative tax revenues might be at risk, seeing as other EU countries are more attractive for gambling providers.
"Malta has a tax rate of 5% or less on winnings from gambling." - Sven Giegold, a Green Party member in the European Parliament
In late 2017 or early 2018, the EU had been working on classifying the online gambling sector as cross-border services in Germany. At least, there had been a final decision and demand to do so in over 30 cases at the European Court of Justice.
However, Tipp24 will be unaffected by these developments in the German gambling and lottery market. Instead, Zeal Network intends to acquire Lotto24 through a share swap. One Tipp24 share would be equivalent to 1.6 Lotto24 shares. In Hamburg, they are currently reviewing the offer.
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