One of the great disruptive influences on the long-established lottery markets has arrived in recent times. Since being founded in 2013, Gibraltar-based Lottery betting company Lottoland has really set the cat among the pigeons when it comes to traditional lottery companies and how they do business. Named as one of Europe’s fastest growing companies in 2017 by the Financial Times in their FT1000 Report, it is clear that this lottery betting company is here for the long haul.
Let’s take a closer look at how the site dubbed an ‘industry-killer’ has revolutionised the world of lotteries.
A traditional lottery company sells ticket for a draw which is exclusive to the residents of a specific state, country or group of countries. This has the way that lotteries have operated for hundreds of years, which perhaps explains the unhappiness felt by existing providers upon the arrival of Lottoland. There are online services offering to buy lottery tickets from foreign countries on behalf of players living in different countries, but this is not how Lottoland operate. Instead, rather than allowing their members to take part in a lottery, they provide a platform whereby people can play lottery online even if they don’t live in the country in question.
The principal innovation introduced by Lottoland is that it takes advantage of Insurance Linked Securities so as to be able to pay out major jackpot prizes which could amount to hundreds of millions of dollars. ILS is normally used to insure against low-risk but high-cost eventualities such as natural disasters, but Lottoland uses the system to cover jackpot wins instead. Where traditional lottery operators must pay out their winnings from the sale of tickets for a draw, Lottoland can offer to pay out jackpots based on a number of huge international lottery jackpots using this insurance model. Smaller cash prizes are simply paid out using revenue generated by the site from bets.
Lottoland currently offers just more than 25 lotteries on its site, allowing members to bet on EuroMillions, Powerball, MegaMillions, Oz Lotto and a host of other international lotteries. The site also offers customers additional features to enhance their bets, such as the opportunity to bet for double the current jackpot, the option to protect their numbers so a jackpot win will not be shared and the ability to subscribe to a particular lottery so as not to miss a draw. Today the site also boasts a range of alternative online gaming options such as video slot games, casino table games, instant win games and scratch-cards to complement its lottery business.
Established lottery operators tend to feel about Lottoland in much the same way that taxi firms do about Uber, or the way hotel chains regard Airbnb. Lottoland have effectively disrupted the existing market, capitalizing on the fact that many of these monopolistic national lotteries are unused to facing competition and may have become somewhat complacent in the way they do business. In the UK there has been push-back from National Lottery operators Camelot as well as local news-agent lobbies, both fearing that the newcomer will impact negatively on their businesses. Having welcomed their six millionth customer in early 2017, Lottoland show no sign of slowing down. The group are looking to expand into different countries, and even Brexit has not seemed to cause this Gibraltar based company any concerns. According to Lottoland CEO, Nigel Birrell. “[The Brexit] result does not change our firm commitment to staying here. Our business is thriving and the benefits of staying in Gibraltar remain very strong indeed.”
So it appears as though established lottery operators had better get used to having Lottoland around, and the impact of this relatively new company may yet cause a revolution in the way lotteries are conducted around the world.