Tipico: The history of Europe’s largest betting company

In German-speaking countries there are probably only a few people who have never heard of Tipico. The expensive sponsorship in particular has ensured that almost everyone knows the brand today. However, many will not know how the company “Tipico” came into being and that over the years there have been various voluntary reports to the tax office and many a violation of the law. The news portal “Business Insider” is now revealing these secrets.

“Betting is about being right”

Tipico Co. Limited was founded in 2004 by school friends Mladen Pavlovic, Dieter Pawlik and Oliver Voigt. Today the co-founder and lawyer Dieter Pawlik says that betting is about being right. He never needed luck for that. In any case, the Tipico bosses could not complain about the lack of success at any time. According to “Business Insider”, the group’s annual turnover is around four billion euros.

Tipico has been a well-known player in the football business for many years. Among other things, Tipico was a sponsor of the second division soccer club Hamburger SV. In addition, the company has been a sponsor of the Bundesliga in Austria for over five years and is also a platinum partner of FC Bayern Munich. Bayern stars Joshua Kimmich, Leon Goretzka and Serge Gnabry are currently promoting Tipico.

Tipico Co. Ltd. was founded in 2004 and is based in the Tipico Tower of the same name in the Maltese city of St. Julian’s. Currently around 1,800 employees work directly for the Tipico Group and a total of more than 6,000 employees in the entire franchise network. The management of the company is now the responsibility of the Austrian Joachim Baca.

Did Tipico support tax evasion back then?

As “Business Insider” reports, before the introduction of the sports betting tax between 2007 and 2012 there should have been tax evasion in the “Tipico system”. More precisely, there should be five confidential voluntary disclosures at German tax offices. This should show that Tipico is said to have supported betting agents in their tax evasion. In total, over 20 million euros are said to have been smuggled past the German state as special commissions without tax. In the aftermath, one of the Tipico founders was quietly thrown out of the management. Tipico did not want to comment on the allegations to “Business Insider”.

The first steps to becoming a betting giant

The success story begins quite inconspicuously in a Karlsruhe business school. Here the later Tipico founder Pawlik met his partner, a highly talented number acrobat. After the two couldn’t stand each other at first, the tide turned after drinking a little alcohol on a school trip to Moscow. In contrast to the other students, Pawlik and his partner were only interested in business and not in school.

A little later, the later Tipico founders began to work temporarily in a nearby horse betting office – for eight marks an hour. Looking back, Pawlik sums up this time to “Business Insider” as follows: “During this time we learned the psychology of betting”. Later, the founding trio initially took over the horse betting office. The skills learned here were of course very valuable for the later founding of the company.

With a simple tax trick to the billion-dollar empire

After the founding trio took over the horse betting office, the entrepreneurs noticed that the then valid racing betting and lottery law of 1922 provided that a tax of 16.66% was levied on every bet made in Germany. This betting tax was almost completely passed on to the betting customers, so that a bet of 100 marks always cost around 115 marks in the end.

In order to maximize their own company profits, the later Tipico founders simply organized a sports and horse betting license in Bosnia and Herzegovina and founded the company “Sport-Bet” here. The bets were then transferred digitally to Bosnia and Herzegovina from the German betting office. This bypassed the tax liability and according to Tipico founder Pawlik, the total rate of return could be optimized. Their own customers initially continued to pay the 15% surcharge on each bet.

Private sports bets were banned – what now?

But there was a problem: private sports betting was taboo at the time. But the smart Tipico founders took the legal view that this ban “violates higher-ranking constitutional and European law”. The businessmen then acted and opened several brokerage offices for sports betting. But just a few weeks later the police were at the door with a search warrant. The charge: Section 284 of the Criminal Code. According to “Business Insider”, among other things, servers were confiscated during the police measures and bank accounts were blocked.

284 StGB: Unauthorized staging of a game of chance

Paragraph 1: Anyone who organizes or holds a game of chance in public without official permission or provides the facilities for this purpose is punished with imprisonment for up to two years or with a fine.

In the further course, however, the young entrepreneurs managed to gradually soften the state monopoly on sports betting. As early as 2000, the responsible district court in Karlsruhe-Durlach acquitted the men of all allegations. The court is convinced that sports betting is not a game of chance, but a game of skill, so that the allegation of unauthorized staging of a game of chance cannot apply. In the years that followed, there were numerous legal proceedings with varying outcomes.

When the small island state of Malta joined the EU in 2004, the trio did not hesitate and relocated the corporate business from Bosnia to Malta. Tipico Co. Limited, which is still active today, was founded here in the same year. In the period that followed, several allegations of tax evasion followed. Sometimes it was also about dubious franchisees.

After a few years, the Tipico founders decided to sell the flourishing company. However, in view of the unclear legal situation at the time, this project proved to be difficult to implement. After some time, the Tipico trio then sold 60% of the shares to the private equity company CVC at a price of 1.3 billion euros. The Tipico founders kept the remaining 40% of the company’s shares.

Interested readers can find the article “Inside Tipico” on the “Business-Insider” online portal. Business Insider is a company from New York (USA) that operates several online news sites and has been online since February 2009.
After Tipico had been on the market for many years with an EU license from Malta, the company finally received the long-awaited German sports betting license last October, which was issued by the Darmstadt Regional Council (RPDA – Dec. III 34-73 c. 38.01 / 6-2019 / 4).

Conclusion

Tipico is today the largest and most successful betting provider for a reason. The company was started by three young students willing to take a high risk. The founders Mladen Pavlovic, Dieter Pawlik and Oliver Voigt were rewarded for this willingness to take risks. Today her company is worth billions of euros and is a pioneer in the European betting market. But to this day Tipico is a company that is highly regarded in the sports world, but is still sometimes despised in society.