Bwin talks about the Czech online gambling market
One of the most recognized names in the EU
online betting industry, bwin Interactive Entertainment AG (WBAG:BWIN)
continues to operate in the Czech Republic through a loophole.
Czech law forbids local betting company to take real money
wagers online, but it says nothing about foreign Internet
betting ventures. Below is an interview with the company's
attorney Jindøich Rajchl, by Mrs. Irena Fuková:
Q: Can you give me some financial data
about bwin in the Czech Republic?
A: The company doesn’t publish data for individual
countries. It publishes its overall revenues and its overall
number of clients. Currently, the company has more than 3
million clients worldwide. It’s number one on the European
online betting market.
Q: Bwin’s headquarters in Austria reported a company loss,
after tax and minority interests, of E 539.6 million for the
financial year 2006, against a profit of € 6.4 million for the
previous year. What’s behind the loss?
A: It was because of the investment in company Ongame,
which bwin acquired. Ongame is the third biggest operator of
online poker operating Web pages such as pokerroom.com. This
investment has a long-term recoverability.
Q: Where does the company operate?
A: When you're on the Internet it is always hard to say
where exactly the company is operating. Bwin has 21 language
versions and is mainly focused on continental Europe, as in
Great Britain the betting market has a long tradition and has
already been divided up. Bwin, however, has decided to enter the
British market through an already announced acquisition. There
are negotiations between bwin and London-based Sportingbet,
which is the European number two [in online betting]. If [the
negotiations] are successful, a market giant will appear.
Q: In how many of these 21 countries do you have licences to
A: We only have licences in countries where it’s possible
to get one. In the Czech Republic, the problem is with the
Ministry of Finance. They tell us our business is illegal as we
don’t have a licence, but at the same time they say they’ll
never permit online betting.
Q: What’s the situation like in other countries?
A: The constant problem is the conflict between
individual countries’ internal legislation and European
legislation. The EU has basic principles saying there is freedom
of movement of capital. Based on this, the ECJ in Luxembourg
stated any company headquartered in one EU-member country with a
license in the state of its origin is allowed to provide its
services without requiring further permissions in other EU
countries. Countries, however, don't respect this.
Q: Which countries take the toughest line toward online
A: France, for instance, is very aggressive. In Germany
the situation is different from state to state. If you look at
[German football club] SV Werder Bremen, which we have a
sponsorship contract with, then you see that if the team plays
in Stuttgart the team can have the bwin logo on its strip,
whereas when it plays in Munich it can’t. The European
Commission (EC) has already initiated discussions with the most
problematic countries such as France, Germany and Italy, asking
these countries to explain why they regulate the online betting
market. But, for instance, in non-EU state Turkey we had to end
our online betting activities as they are prohibited.
Q: Wasn’t part of one ECJ verdict a statement that it’s in
the competency of individual states to regulate gambling?
A: That’s a clear misinterpretation of the Ministry of
Finance. Any limitation of the market is possible only if it’s
in the public interest. The court clearly stated what the public
interest is. And it said the country is allowed to assess
whether the limitation [of online betting] is in harmony with
the public interest. But it’s impossible for the state to create
its own new public interest criteria, for instance the necessity
to pay taxes in the country.
Q: The ministry frequently argues that there’s inadequate
control of underage online betting. What do you say to this?
A: It’s a purpose-built argumentation of the ministry
that hides the main reason [for why they are against online
betting], which is state budget incomes. I have to say we have
better guarantees in [the age control area] than some betting
offices. If you want to obtain your prize you have to send a
copy of your passport or ID card. Another thing is we don’t
accept cash and younger people don’t have credit cards. In Czech
betting offices nobody asks after a person’s age or identity. In
addition, nobody regulates the slot machines, which any child
can play. We can only ask why as last year the income of the
state budget from these slot machines was Kč 50 billion, which
is five times more than the income from the whole betting
business. Furthermore, I don’t know any person addicted to
sports betting, but I know many people addicted to slot
Q: How can you judge, since you operate in a different
A: We did a study of preventing addiction with Harvard
University [Massachusetts, U.S.] and we’ve observed this matter
carefully. Furthermore, we don’t intend to damage our clients.
There is a limited sum which they can put in and lose. For
instance, the monthly limit in the Czech Republic is € 5,000.
We’re also able to limit different clients in various ways. We
can be very interactive. If the client bets regularly, we send
an e-mail with questions the client has to answer. If we
conclude from the responses that there’s some sort of addiction,
we’re able to work with the client further.
Q: How frequently do you come across such a client?
A: Infrequently. Sports betting isn’t addictive. Ninety
percent of our clients bet small amounts once a week. Of course,
if the frequency increases, we’re able to help the client by
limiting his betting or even stopping it.
Q: What about the fact that those who bet with your company
actually behave illegally and could be punished under Czech law?
A: If there is any legal proceeding against any citizen
of the Czech Republic I’m ready to represent the person
personally for free and to guarantee a victory in the court
proceeding–even at the European Court of Justice if necessary.
My certainty derives from the fact that so far all such
initiatives [of the Ministry of Finance] have been postponed by
police and state attorneys. Today, only one such civil
proceeding is taking place. (Editor’s note: according to the
Ministry of Finance, a person can be fined up to Kč 50,000 for
taking part in online gambling.)
Q: What is the major source of bwin’s income?
A: It's definitely sports betting, which has quite a long
tradition in Europe. Last year for the first time, the turnover
from live betting exceeded fixed odds betting [in Europe]. Live
betting means that you can bet during a match for several things
such as whether a particular tennis point is about to be won or
Q: What are the differences in betting based on nationality?
A: Traditionally South European nations bet the most.
Greeks follow their heart more, whereas, for instance, Czechs
follow rather their minds. I always give the example of if
[Greek football club] Olympiacos C.F.P plays Barcelona, half of
Greece will bet on Olympiacos, whereas if [Czech football club]
AC Sparta Praha plays Barcelona, I won’t know of any Czech
person betting on AC Sparta Praha.
Q: What is bwin’s client potential in the Czech Republic?
A: Some 400,000 people. It’s typically 4 percent of the
population [in a European country]. You can immediately subtract
all women, as the bwin executive says–96 percent of men bet and
4 percent of men bet on the credit cards of their women.
click here. Interview segment reprinted with permission from
Czech Business Weekly.