2. INITIAL SITUATION FOR THE ACQUISITION IN 1999
2.1 FRAMEWORK CONDITIONS
At the end of the 1990s, three major upheavals that would affect the gaming business were foreseeable or given:
- The emergence of internet business models due to technological change
- Liberalization in the gaming sector
- Worldwide boom in growth markets
Emergence of Internet business models due to the change in technology
The possibility of mapping new business models, through which providers and customers could be anonymously and quickly brought together via the Internet, has also appealed to the gaming industry. Betting shops and amusement arcades often had a bad reputation at the end of the 1990s. Playing poker, casino or skill games or sports betting anonymously on the Internet was a novelty.
Another advantage of the Internet business models was that one platform could reach a large number of customers around the world and not have to set up numerous branches with sometimes high investment costs, as in the classic retail business. The advantages of sales over the Internet were, in addition to the above-average degression of fixed costs, unlimited scalability and the possibility of an integrated value chain.
Liberalization in the gaming sector at the end of the 1990s
The betting business was originally heavily regulated and was subject to legal and socio-political evaluations. With regard to regulation or monopoly, the gaming market can be divided into three segments:
- In certain jurisdictions, for example in China, gambling was generally prohibited.
- In Europe betting transactions were either wholly or partially prohibited or required a license. In Germany, for example, there was a state monopoly on lotteries, betting, sports betting and casinos.
- In some countries, such as England, gambling could also be carried out by private providers under strict supervision.
With the advent of internet business models and the freedom to provide services, discussions about liberalization regarding the gaming industry also increased. At that time there was no uniform, Europe-wide legal regulation for betting transactions that were operated via the Internet (Note 1). On the one hand, the Internet medium only had a relatively short lifespan; on the other hand, there was no reliable knowledge of the application of national laws to content and services distributed on the Internet. Several lawsuits were pending at the European Court of Justice for violation of the guaranteed freedom to provide services due to the state monopolies in the gaming market. It was expected that the market in Europe would be liberalized and thus with open access to the market for private providers.