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CASHPOINT…

 

It is, simply, the use of online terminals through Germany, hooked up to central systems in Malta and Austria.  And now the company, based in Vienna, plans to export the program to other legal jurisdictions.

     

It was nine years ago that Josef Muenzker, owner of some betting shops in Austria, discovered that while it was illegal to have an Online Betting system in Germany, it was quite legal to base it in another country and use terminals in Germany.  He wasn’t the first to try it, but quickly became the best – Cashpoint now has the largest turnover of online sports betting companies in Germany.
      In that comparatively short period, Cashpoint has built up a chain of 400 betting shops and more than 2,500 terminals in Germany, Austria, Belgium, Romania and Croatia.  The bulk are in Germany and in order to ensure that the quality of service from the four appointed agents is kept at the highest level, the two owners brought in Oliver Meincke, highly experienced in touchscreen online games, to look after it. 

Although the bulk are in Germany, he recognized the ability of the sports betting terminals business to ‘travel’ and brought in another expert, industry veteran Udo Nickel, another German with long experience in the industry.  Nickel is now investigating a number of foreign markets for Cashpoint and handling the key accounts in Germany.
      The invasion of Cashpoint into Germany did not go unnoticed by the status quo and is being challenged by the established government-owned lottery organizations.  That challenge is due to come to a head at any time now in the German courts, but Muenzker and his colleagues have excellent legal advice which shows that the practice is perfectly legal under European law.


      Said Oliver Meincke: “It is illegal to have a server based in Germany, but not illegal to operate terminals.  So the server is based in Austria and Malta.  It means that if you have an internet connection you can get the machine online.  It works just as well with an individual machine or an entire shop.  The bet on the terminal is sent to the server instantly decides on a risk management basis whether to accept the bet.  The information comes back to the player in the form of a ticket.  The process takes seconds.”


      There is a maximum prize of £ 15,000 and a minimum of £ 1 bet and the bets may be on any sport which is listed daily by Cashpoint’s bookmakers operating from the company headquarters in Vienna.  “It might be the full time score in a soccer match, or the half-time, or who will score next, or bets on horses, dogs and even camels!” said Meincke.  The company prints a weekly ‘newspaper’ on its own presses in Vienna, showing the principal games or races it will cover and the starting odds.  “We might use tennis, Formula One motor racing, skiing, rallying, whatever, but there is always a wide range of bets available to the players accessed on the terminal or in one of the shops.”

     

Josef Muenzker was joined in his venture by a partner, Michel Wondra, in 1999 and together they built up what they saw was a growing market.  Their adventurous spirit overcame many inherent problems, such as the absence of horse racing meetings at times when players would want to bet on them.  So they have a huge library of artificially-created horse races available, based on real film footage.
      Oddest, the official lottery in Germany, is unhappy at this intrusion into its monopoly.  “They run things similarly to ourselves,” said Meincke, “but of course they pay out less of the overall prize money back to the players than we do.  There are other companies based outside of Germany also challenging Oddset’s position, but Cashpointis the market leader.”


      What will be tested by the German courts is the validity of European law as a superior force to German law.  Cashpoint is satisfied that it cannot come to any other conclusion.  “If we are based in an EC country where our activities are legal, then we are free to operate in any other EC country,” said Meincke.  “It falls under the Freedom of Goods and Services regulations – a license in one country is a license throughout the Community.”
      The second point, he said, which will be tested by the German courts is whether the monopoly which is in place is there to protect the public.  “The monopoly cannot be valid from that point of view because oddest is constantly advertising its own product throughout the country.  Thirdly, our advice is that our activities are not gambling at all, but the application of skill and knowledge and those elements will directly affect the outcome of the event.”


      So far the lower courts in Germany have come out in favor of Cashpoint’s arguments.  Only in Bavaria, where the headquarters of Oddest are located, did the outcome go the other way.  But the lower courts are now waiting on the judgment of the highest court in the country, the Bundesverfassungsgericht.  That decision is due to be released as this issue of InterGame’s Austrian Special issue was going to press.
      Whatever the outcome, it is likely to be some time before the operating methods are finalized.  “The terms and conditions for the operations for the operation of online betting terminals in Germany will have to be worked out following the successful conclusion of our case,” said Meincke.  “There is no doubt that the outcome- assuming it goes Cashpoint’s way – will herald an influx of major bookmaking companies into Germany.  Companies like William Hill and Ladbrokes are sitting on the sidelines watching this situations carefully.  Then there are major international gaming machine companies also looking at the subject, people like Novomatic here in Austria or the Gauselmann Group in Germany itself.  We have no doubt that they will attempt to capitalize on our success.”


      As it happens, Cashpoint is already working with the Gauselmann Group, operating its terminals in some of the 190 Spielothek arcades dotted around Germany.  A visit to a couple of Viennese Cashpoint shops proved interesting.  The brightly-lit yellow and black company logo and livery is supplemented inside by spotlessly kept tables and chairs, a cashdesk, vending machines and a range of up to 20 terminals or television monitors upon which the various bets available that day are listed changes of odds are separately indicated and live action can be viewed on over-sized screens.

     

There are also AWP machines – Vienna is one of the three provinces of Austria where they are legal – but to comply strictly with local regulations, they are housed two to a ‘room’ and each room is accessed directly from the street and not from the betting shop.
      “This is also possible in Germany,”  said  Meincke.  “The current regulations in Germany permit up to 12 AWPs in each ‘arcade,’ so many of the bigger locations split themselves into separate rooms and license each as an arcade by itself.  There is nothing to prevent those 12 AWPs having betting terminals alongside and there is no limit to their numbers.  We commonly have two-to-five betting terminals in German arcades and in one case, at Wuppertal, near Dusseldorf, there are 15 terminals in one arcade alongside eight AWPs.  The interesting thing is that the income of the eight AWPs is not affected by the betting terminals; they appear to attract different customers.”


      The German operation, overseen by Meincke, has distributors in Berlin, Frankfurt, Bochum and Heidenheim with a fifth coming on stream at Rosenheim.  They are sales and service centers where new customers are trained in the operating systems.  Outside Germany and Austria itself is a relatively new area for Cashpoint.  The company is acutely aware that its pending legal success- the company is supremely confident – in Germany will unleash a flow of heavy competition which it is happy to take on, but prudence and a natural entrepreneurial flair dictates that it should spread its message elsewhere.  That is where Udo Nickel comes in.  His long association with coin machine operators all over Europe over the past 25 years, gives him the contacts and the intimate market knowledge to assist in this project.


      “We have had an immediate success in Belgium,” said Nickel, “mainly with shops so the next step is to put terminals into there working through the local bookmakers.  So far the traditional coin machine operators have been very interested but concerned that they may offend the licensing authorities who are very keen in Belgium.  The German court decision should help that, because what works in Germany with European legislation will equally work in Belgium.
      “We have looked at Italy.  The situation there is that you need a bookmaker’s license and they are not issued very often or very widely – and with such an uncertain gambling market you are never going to know whether they are still going to be valid the next month!  Spain is certainly a marketing which we will attack.  It has the problem of separate testing and licensing and licensing in each province, but the density of terminal installations would be there.


      “But there is no way that this process can be rushed.  We have to look at each market individually and see how our product would fit into it.  Take the UK, for example.  It has 50,000 pubs with outdated (in terms of stakes and prizes) AWPs and those locations would love betting terminals.  The difficulty immediately is that each pub would have to apply for a bookmaker’s permit.  This appears to be without a solution to begin with, but we are talking to people there to investigate how it might be done.”
      He envisages the kind of ready acceptance of Cashpoint Sportswetten gambling that already exists in markets like LasVegas, where the casinos have sportsbook installations.  The casino market itself if therefore a target for the company.  The German casinos are already very interested in it and there is no reason why the same level of interest should not come from casinos in other parts of Europe.”

      The principle started nine years ago has proved itself.  Cashpoint has had the courage to take on the government monopolies and would appear to be not unreasonable in feeling confident that they will be proved legally correct.  The major bookmakers and huge gambling companies are viewing the Austrian company’s present undertaking in Germany with acute interest, because a victory for Cashpoint will open up prospects for them all over Europe.  Even so, it will take time, but as Oliver Meincke said when the point was made to him “we have time

 

 

 
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