Economics of Gambling in Germany - Lottery

Each of the sixteen regional or lander governments has delegated power to set standards for casinos, lotteries and sports betting. Each lander is free to determine its own tax rate. The average gambling tax is nearly 80%, with some as high as 92% of GGR, which leaves the typical German casino operator with very small margins. (Source: GBGC Report, p.319)

German Betting and Gaming Gross Turnover (1999-2003)

Source: Adapted from GBGC Report

The lottery and gaming markets have grown on a long-term basis only in proportion to the growth in gross domestic product.

Source: Submission to the Enquiry from Land Brandenburg Lotto

German Gambling Market Share and Turnover 2003

Games >>> Turnover (€m) >>> Market share (%)
Slot Machines >>> 2,300 >>> 24
Sports Betting >>> 500 >>> 5
Casino >>> 960 >>> 10
Online-casino >>> 150 >>> 2
Lotteries >>> 5,000 >>> 54
Promotional Games >>> 500 >>> 5
TOTAL >>> 9,410 >>> 100

Source: Submission to the Enquiry from Land Brandenburg Lotto

The German gambling market is dominated by the variety of lottery products it offers, although the slot machine share of the market has been growing rapidly.

German Gambling Market by Share 2004:

Source: Centre for the Study of gambling, Salford, own analysis.

German Lottery and Betting Market Statistics 2005 (in mEuro):

Gambling >>> Monopoly Betting >>> Lotto >>> Private Betting
Turnover >>> 430 >>> 7700 >>> 1600
Taxes >>> 72 1284 >>>
Fees/Consessions >>> 86 >>> 1540 >>>
Games Pay out >>> 215 >>> 3850 >>> 1360
Gross Revenue >>> 215 >>> 385 >>> 024
Net Revenue >>> 57 >>> 1026 >>> 240
Advertising / Marketing >>> 11 >>> 193 >>> 40
No. of Distribution Outlets >>> 25.500 >>> 25500 >>> 2500
Average No. of Employees per Outlet >>> 3 >>> 3 >>> 2
Total Employment >>> 76.500 >>> >>> 7500
Investment per Outlet >>> 0.01 >>> >>> 0.02
Total Investment (over 10 years) >>> 255.00 >>> >>> 50.00
Employees income >>> 1913 >>> >>> 177.5
Rental Fee >>> 77 >>> >>> 30

Source: Submission to the Enquiry from German Betting Association

GAMING SECTOR ANALYSIS

Lotteries

Germany has a mature lottery product. The term lottery in Germany includes sports betting, bingo, charitable lotteries and regional lotteries.

There are nineteen separate major lottery organisations (14 Deutscher Lotto- und Toto-Block, Staatliche Toto-Lotto, Baden-Württemberg, Staatliche Lotterieverwaltung, Bayerischer Fussball-Toto, Bavaria, Deutsche Klassenlotterie Berlin, Nordwest Lotto und Toto Hamburg, Lotterie-Treuhandgesellschaft Hessen, Toto-Lotto Niedersachsen, Lower Saxony, Westdeutsche Lotterie, North Rhine-Westphalia, Saarland-Sporttoto, Saarland, Sächsische Lotto Saxony, NordwestLotto, Staatliche Lotterie des Landes Schleswig- Holstein, Lotterie-Treuhandgesellschaft mbH Thüringen, Land Brandenburg Lotto, Nordwest Lotto-Toto Sachsen-Anhalt, Saarland-Sporttoto, Sport-Toto Rheinland-Pfalz, Staatliche Lotterieverwaltung Bayerischer Fussball-Toto, Suddeutsche Klassenlotterie, Verwaltungsgesellschaft Lotto und Toto, South German State Lottery, Mecklenburg-Vorpommern.), which among them cover the sixteen lander, accounting for 90% of the German gambling industries’ GGR. Sixteen provincial lotteries form two blocks: Lotto- and Toto-blocks. Apart from this, there are two Savings lotteries (Gewinnsparen) that run across 16 lander, where a number of bank account holders participate in a lottery instead of receiving interest on their savings. The Saving Lottery (Gewinnsparen) is run by Building Societies and Premium Saving Lottery (PSSparen) is run by banks. There are also two Class lotteries (Klassenlotterien), North west and South German Lottery Blocks that run across 16 lander, where consumers pay a fraction of a ticket in a number of classes of tickets, which should give them a good chance of winning. Furthermore, there are two private lotteries that are run by television stations, where both of them receive permission from 16 landers to operate nationwide.

Lotteries and Sports Betting Turnover 2000-2004 (in € million):

Year >>> 2000 >>> 2001 >>> 2002 >>> 2003 >>> 2004
Lotto-und Totoblocks >>> 8,127.6 >>> 8,480.6 >>> 8,311 >>> 8,255.6 >>> 8,439.1
Class Lotteries >>> 1,440.9 >>> 1,483.5 >>> 1,336.1 >>> 1,284 >>> 1,376.9
Nordwestdeutsche Klassenlotterie >>> 545.7 >>> 667 >>> 558.3 >>> 523.3 >>> 549.7
Süddeutsche Klassenlotterie >>> 895.3 >>> 816.5 >>> 777.8 >>> 760.7 >>> 827.2
Saving Lotteries >>> 475.4 >>> 462.2 >>> 443.2 >>> 479.8 >>> 514.2
PS-Sparen >>> 313.8 >>> 315.6 >>> 296 >>> 326.4 >>> 349.9
Gewinnsparen >>> 161.6 >>> 146.6 >>> 147.2 >>> 153.4 >>> 165.3
Private TV Lotteries >>> 354.2 >>> 411.4 >>> 427.6 >>> 440.6 >>> 543.6
ARD Fernsehlotterie >>> 68.8 >>> 96.6 >>> 107.4 >>> 101.9 >>> 145.5
ZDF-Fernsehlotterie >>> 285.5 >>> 314.9 >>> 320.2 >>> 337.8 >>> 396.7
Horseracing betting >>> 308.9 >>> 268.2 >>> 231.1 >>> 189.3 >>> 147.6

Source: Submission to the Enquiry from Land Brandenburg Lotto

Market share in Lotteries and Sports Betting Market 2000-2004 (in %):

Year >>> 2000 >>> 2001 >>> 2002 >>> 2003 >>> 2004
Lotto-und Totoblocks >>> 76.6 >>> 77.0 >>> 77.7 >>> 78.0 >>> 77.1
Class Lotteries:
Nordwestdeutsche Klassenlotterie >>> 5.4 >>> 6.5 >>> 5.3 >>> 5.0 >>> 5.5
Süddeutsche Klassenlotterie >>> 8.8 >>> 7.9 >>> 7.4 >>> 7.2 >>> 7.5
Saving Lotteries:
PS-Sparen >>> 3.3 >>> 3.2 >>> 3.1 >>> 3.3 >>> 3.2
Gewinnsparen >>> 1.8 >>> 1.8 >>> 1.6 >>> 1.8 >>> 1.6
Private TV Lotteries:
ARD Fernsehlotterie >>> 1.0 >>> 1.4 >>> 1.5 >>> 1.3 >>> 1.3
ZDF-Fernsehlotterie >>> 3.1 >>> 3.2 >>> 3.4 >>> 3.4 >>> 3.8

Source: Submission to the Enquiry from Land Brandenburg Lotto

Due to the pretty constant winnings percentage, there are no significant changes expected in the turnover or the market percentage in the next five years in the German lottery market.

During 2003 the German lottery sector generated total sales (before payment of prizes) of approximately €10.37 billion, ranking it third in Europe in terms of absolute sales behind Italy and Spain, the latter having overtaken Germany during 2003. However, this only ranked the nation seventeenth in terms of lottery spend per adult.

Lotto and Toto blocks GGR in mil € (excluding instant lotteries) 2000-2004:

Year >>> 2000 >>> 2001 >>> 2002 >>> 2003 >>> 2004
Zahlenlotto >>> 2,646.4 >>> 2,823.0 >>> 2,654.3 >>> 2,671.1 >>> 2,690.7
Fußballtoto >>> 49.0 >>> 51.6 >>> 47.5 >>> 49.4 >>> 46.6
ODDSET >>> 227.0 >>> 215.5 >>> 227.3 >>> 194.7 >>> 202.2
Spiel >>> 77 >>> 517.3 >>> 543.0 >>> 591.5 >>> 593.0 >>> 607.0
Super >>> 6 >>> 303.6 >>> 323.7 >>> 366.6 >>> 368.1 >>> 378.3
GlücksSpirale >>> 202.1 >>> 171.4 >>> 146.9 >>> 140.4 >>> 132.1
Bingo 1) >>> 14.8 >>> 20.7 >>> 27.7 >>> 27.6 >>> 31.8
TeleBingo 2) >>> 21.3 >>> 17.5 >>> 14.2 >>> 13.4 >>> 14.0
KENO 3) >>> >>> >>> >>> >>> 49.0
Plus 5 3) >>> >>> >>> >>> >>> 6.2
Rennquintett 4) >>> 0.4 >>> 0.3 >>> 0.4 >>> 0.2 >>>
Total >>> 3,981.9 >>> 4,166.6 >>> 4,076.2 >>> 4,057.9 >>> 4,157.9

Source: Submission to the Enquiry from Lotto and Toto Block

In Germany, six of the 16 lander participate in the South German class lottery (SKL). The other ten lander participate in the North West German Class Lottery. The proceeds of the SKL are distributed to the individual lander. The amounts distributed have recently been fixed by a special regional contract among the lander. After the money is handed out to the individual lander following the quotas that have been agreed upon, such funding is used to achieve a wide variety of social, cultural and charitable activities within the framework of the general budget.

GGR of South German Class Lottery Block 2000-2004 (in € million):

Year >>> 2000 >>> 2001 >>> 2002 >>> 2003 >>> 2004
GGR >>> 408.6 >>> 375.5 >>> 370.4 >>> 367.3 >>> 399.1

Source: Submission to the Enquiry from SKL – South German Class Lottery

GGR of North West Lottery (NKL) Block 2000-2004 (in € million):

Year >>> 2000 >>> 2001 >>> 2002 >>> 2003 >>> 2004
GGR >>> 261.4 >>> 319.3 >>> 268.5 >>> 253.4 >>> 266.6

Source: Submission to the Enquiry from Land Brandenburg Lotto

There are two TV lotteries that operate in Germany : ARD and ZDF. ARD, the large public law statutory authority TV station, organises the ARD television lottery. The percentage of the total lottery market held by the ARD in 2004 was about 1.3%. This is an improvement on the previous years.

ARD-Fernsehlotteries GGR 2000-2004 (in € million)

Year >>> 2000 >>> 2001 >>> 2002 >>> 2003 >>> 2004
Turnover >>> 68.77 >>> 96.62 >>> 107.25 >>> 104.67 >>> 146.47
winnings >>> 19.79 >>> 27.76 >>> 32.92 >>> 31.92 >>> 41.96
GGR >>> 48.97 >>> 68.85 >>> 74.33 >>> 72.75 >>> 104.51

Source: Submission to the Enquiry from Land Brandenburg Lotto

ARD’s winning have to be at least 30% of the total turnover. At least another 30% have to be paid out to good causes. And there is a compulsory levy of 16.67% as for all other German lotteries.

ZDF, the other large public law statutory authority TV station, organises another TV lottery – Action Human Being lottery.

ZDF – Action Human Being Lottery GGR 2000-2004 (in € million) :

Year >>> GGR (€ million) >>> Money paid out to good causes (€ million)
2000 >>> 199.83 >>> 98.1
2001 >>> 220. 39 >>> 111.86
2002 >>> 224.12 >>> 109.96
2003 >>> 236.46 >>> 110.56
2004 >>> 277.66 >>> 132.71
Estimates for next 5 years
2005 >>> 294 >>> 155
2006 >>> 315 >>> 165
2007 >>> 350 >>> 190
2008 >>> 385 >>> 210
2009 >>> 420 >>> 230

Source: Submission to the Enquiry from Land Brandenburg Lotto

Total Germany Lotteries and Sports Betting GGR 2000 – 2004 (in € million)*:

Year >>> 2000 >>> 2001 >>> 2002 >>> 2003 >>> 2004
Lotto-und Totoblocks >>> 3981.9 >>> 4166.6 >>> 4076.2 >>> 4057.9 >>> 4157.9
Class Lotteries >>> 670 >>> 694.8 >>> 638.9 >>> 620.7 >>> 665.7
Nordwestdeutsche Klassenlotterie >>> 261.4 >>> 319.3 >>> 268.5 >>> 253.4 >>> 266.6
Süddeutsche Klassenlotterie >>> 408.6 >>> 375.5 >>> 370.4 >>> 367.3 >>> 399.1
Private TV Lotteries >>> 248.8 >>> 289.24 >>> 298.45 >>> 309.21 >>> 382.17
ARD Fernsehlotterie >>> 48.97 >>> 68.85 >>> 74.33 >>> 72.75 >>> 104.51
ZDF-Fernsehlotterie >>> 199.83 >>> 220.39 >>> 224.12 >>> 236.46 >>> 277.66
Total >>> 4900.7 >>> 5150.64 >>> 5013.55 >>> 4987.81 >>> 5205.77

*These figures exclude Savings Lotteries (PS-Sparen and Gewinnsparen)

Source: Submission to the Enquiry from Land Brandenburg Lotto

Among them, the various German Lotteries offer a full range of lottery products, though traditional lotto remains by far the most popular. Prize payouts vary according to the games offered but generally they vary from 40.4% of total sales for Glücksspirale to 58% for Oddset in the Westdeuctsche Lotterie. The major lotto games vary between 50.0% and 55.0%.

German lotteries are taxed at 16.67% of sales, and much of the remainder after payment of prizes (Gars) are allocated either to the Federal Treasury, or to “good causes,” which includes the arts, culture, charities, education, science and sports. Concession fees and good cause contributions could sometimes be higher than actual taxes, according to Lotto and Toto Block. In Germany, Oddset betting and lotteries are taxed on turnover, in comparison to lotteries and betting in most of the other countries which are taxed on their gross gaming revenue. In addition, the lottery company might need to pay a local council tax, which differs from city to city. Gambling enterprises do not pay VAT in Germany. There is also a fee for renewing licenses.

As an example of the good causes contribution by Lotto and Totoblock, the National Olympic Committee for Germany receives about one-third of its total budget from the GlücksSpirale game.

The National Olympic Committee (NOC) for Germany Revenues from GlücksSpirale Lottery 1999 – 2003:

Year >>> 1999 >>> 2000 >>> 2001 >>> 2002 >>> 2003
Revenue received (€ million) >>> 0.070 >>> 1.500 >>> 1.060 >>> 0.950 >>> 0.839
Percentage of total NOC budget (%) >>> 28 >>> 38 >>> 35 >>> 32 >>> 22

Although German operators work closely together and in many cases share games to generate large prize pools, the country’s lander-based regulation ensures that almost all of them will survive in the short-term. Major legislation would be required to establish a national lottery, which might affect other German gambling sectors such as casinos. However, as lottery products are widely available now online, it may become increasingly difficult to limit operators to their existing sub-national jurisdictions.

German Lottery Prize Payout Rates:

Bremer Toto und Lotto >>> 45.0% – 50.0%
Deutsche Klassenlotterie >>> 37.0% – 50.0%
Brandenburg Lotto >>> 43.33% – 51.33%
Lotterie-Treuhand Thüringen >>> 40.0% – 50.0%
Lotterie-Treuhandgeseliscaft Hassen >>> 40.0% – 52.81%
Lotto-Toto Sachsen-Anhalt >>> 40.0% – 55.0%
Nordwest Lotto und Toto Hamburg >>> 40.0% – 55.0%
Nordwest Lotto, Saatuche Lotterie des Landes Schleswig-Holstein >>> 40.0% – 50.0%
Saarland-Sporttott >>> 40.0% – 50.0%
Sport-Toto Rheinland-Pfaiz >>> 40.0% – 50.0%
Staatiiche Lotterieverwaltung >>> 43.0% – 55.0%
Toto-Lotto Niedersachen >>> 40.0% – 55.0%
Westdeutsche Lotterie >>> 40.0% – 58.0%

Source: Submission to the Enquiry from Land Brandenburg Lotto

South German Class Lottery (SKL) Pay out Percentages 2000-2004 (in %):

Years >>> Draws (only 2 per year) >>> Payout %
1999/2000 >>> 106 107 >>> 54.5 54.2
2000/2001 >>> 108 109 >>> 54.05 54.05
2001/2002 >>> 110 111 >>> 53.04 51.69
2002/2003 >>> 112 113 >>> 51.72 51.71
2003/2004 >>> 114 115 >>> 51.72 51.79

Source: Submission to the Enquiry from SKL – South German Class Lottery

North West Lottery (NKL) Pay out Percentages 2000-2004 (in %):

Year >>> Pay out/Winnings (%)
2000 >>> 52.1
2001 >>> 52.1
2002 >>> 51.9
2003 >>> 51.6
2004 >>> 51.5

For many decades there has been a well established structure of distribution of class lottery products through a network of “state lottery receivers”. There are however also purely commercial agents.

The Number of South German Class Lottery Full-Time Employees 2000 – 2004:

Years >>> Draws (only 2 per year) >>> Number of employees >>> Number of «state lottery receivers» (outlets/distributors)*
1999/2000 >>> 106 107 >>> 42 >>> 54,500 54,200
2000/2001 >>> 108 109 >>> 43 >>> 54,050 54,050
2001/2002 >>> 110 111 >>> 43 >>> 53,040 51,690
2002/2003 >>> 112 113 >>> 41 >>> 51,720 51,710
2003/2004 >>> 114 115 >>> 42 >>> 51,720 51,790

* Each of the distributors employs between one and 200 people. Note that because the draws only occur twice per year, this employment is very weakly linked to the lottery.

Source: Submission to the Enquiry from SKL – South German Class Lottery

Number of Full-time Employees in ZDF-Action Human Being Lottery 2000 – 2005:

Year >>> 2000 >>> 2001 >>> 2002 >>> 2003 >>> 2004 >>> 2005
Number of FTEs >>> 50 >>> 56 >>> 69 >>> 85 >>> 94 >>> 94

Source: Submission to the Enquiry from Land Brandenburg Lotto

There is no expectation of further substantial increases in numbers of ZDF Action Human Being lottery’s FTEs before 2010.

German Lotto – and Totoblocks Employment 2000 – 2004 :

Year >>> # of company employees >>> Employees in distribution network
2000 >>> 2,109 >>> 56,883
2001 >>> 2,106 >>> 56,853
2002 >>> 2,113 >>> 56,555
2003 >>> 2,116 >>> 56,757
2004 >>> 2,088 >>> 56,561

Source: Submission to the Enquiry from German Lotto and Toto Block

The German Lotto and Totoblock’s total number of points of sale (sales agencies) was 25,384 as of 31 December 2004. According to German Lotto and Totoblock, there are approximately two people working at each distribution outlet.

German Lotto – and Totoblocks Employment 2000 – 2004 by Region :

Bundesland : Year >>> No of company employees >>> Employees in distribution network
Baden- Württemberg : 2000 >>> 151 >>> 9,123, 2001 >>> 157 >>> 9,178, 2002 >>> 166 >>> 9,365, 2003 >>> 171 >>> 9,370, 2004 >>> 169 >>> 9,358
Bayern : 2000 >>> ca. 300 >>> ca, 10,500, 2001 >>> ca. 300 >>> ca, 10,500, 2002 >>> ca. 300 >>> ca, 10,500, 2003 >>> ca. 300 >>> ca, 10,500, 2004 >>> ca. 300 >>> ca, 10,500
Berlin : 2000 >>> 178 >>> 4,433, 2001 >>> 175 >>> 4,437, 2002 >>> 179 >>> 4,441, 2003 >>> 184 >>> 4,506, 2004 >>> 181 >>> 4,552
Brandenburg : 2000 >>> 109 >>> 1,208, 2001 >>> 108 >>> 1,208, 2002 >>> 107 >>> 1,158, 2003 >>> 111 >>> 1,167, 2004 >>> 110 >>> 1,187
Bremen : 2000 >>> 37 >>> n/a, 2001 >>> 37 >>> n/a, 2002 >>> 35 >>> n/a, 2003 >>> 32 >>> n/a, 2004 >>> 33 >>> n/a
Hamburg : 2000 >>> 79 >>> 1,575, 2001 >>> 75 >>> 1,553, 2002 >>> 79 >>> 1,485, 2003 >>> 86 >>> 1,433, 2004 >>> 83 >>> 1,355
Hessen : 2000 >>> 105 >>> n/a, 2001 >>> 107 >>> n/a, 2002 >>> 104 >>> n/a, 2003 >>> 104 >>> n/a, 2004 >>> 104 >>> n/a
Mecklenburg-Vorpommern : 2000 >>> 39 >>> ca, 1,400, 2001 >>> 41 >>> ca, 1,400, 2002 >>> 42 >>> ca, 1,400, 2003 >>> 39 >>> ca, 1,400, 2004 >>> 37 >>> ca, 1,400
Niedersachsen : 2000 >>> 182 >>> n/a, 2001 >>> 179 >>> n/a, 2002 >>> 172 >>> n/a, 2003 >>> 172 >>> n/a, 2004 >>> 167 >>> n/a
Nordrhein-Westfalen : 2000 >>> 346 >>> 10,438, 2001 >>> 347 >>> 10,448, 2002 >>> 355 >>> 10,383, 2003 >>> 344 >>> 10,240, 2004 >>> 330 >>> 10,033
Rheinland-Pfalz : 2000 >>> 213 >>> 3,885, 2001 >>> 211 >>> 3,923, 2002 >>> 206 >>> 3,875, 2003 >>> 205 >>> 4,355, 2004 >>> 207 >>> 4,443
Saarland : 2000 >>> 81 >>> 1,900, 2001 >>> 84 >>> 1,900, 2002 >>> 84 >>> 1,900, 2003 >>> 82 >>> 1,900, 2004 >>> 83 >>> 1,900
Sachsen : 2000 >>> 92 >>> 3,443, 2001 >>> 89 >>> 3,408, 2002 >>> 88 >>> 3,275, 2003 >>> 89 >>> 3,253, 2004 >>> 90 >>> 3,300
Sachsen-Anhalt : 2000 >>> 80 >>> 4,885, 2001 >>> 79 >>> 4,810, 2002 >>> 80 >>> 4,710, 2003 >>> 80 >>> 4,610, 2004 >>> 76 >>> 4,510
Schleswig-Holstein : 2000 >>> 50 >>> 2,193, 2001 >>> 49 >>> 2,175, 2002 >>> 48 >>> 2,143, 2003 >>> 50 >>> 2,135, 2004 >>> 51 >>> 2,125
Thüringen : 2000 >>> 67 >>> 1,900, 2001 >>> 68 >>> 1,913, 2002 >>> 68 >>> 1,920, 2003 >>> 67 >>> 1,888, 2004 >>> 67 >>> 1,898