15 February 2016

Online Lottery: The Business Opportunity for 2016

Although the online lottery industry is in constant growth, it is still considered to be an untapped market. Mor Einhorn, COO of Lottonetix believes this might be the right momentum to step in the game and reap new fruits from the oldest game in history.

The lottery isn’t similar to any other gaming product; it is a high volume industry, which you might even call a commodity. Today the lottery segment holds a 29% share of the global gambling revenue, but when focusing specifically on the online gambling section, the lottery is responsible for only 10% of the revenues. The forecast is that this gap will be closing rapidly within the next few years as online lottery activity grows.

Online lottery has an added value in comparison to offline lottery. It enables users to extend their variety of lottery products and participate in global draws rather than choose from a limited local selection. Nowadays a South African citizen can take part in the US Powerball draw and a Brazilian based player can participate in the EuroMillions lottery, in just a mouse click. Furthermore, a player can increase his chances of winning by teaming up with other players and by buying a share of a large amount of tickets of one or a combination of jackpots.

Looking back at the Lottery industry, up until 2015 there were mostly B2C operators offering lottery services. Over the past year, we have noticed a growth in B2B companies offering online lottery platforms. As a result, we witness a chain reaction; more B2C brands and more affiliates developing new ways to generate traffic.

The lottery player is not your classic gambler. He is not looking for the thrill in the spin of the roulette wheel nor the river card that gives him the flush he was waiting for. The lottery player is buying a dream; he is buying the chance to be an instant millionaire and is willing to allocate a small sum of money every now and then, hoping to leverage it and possibly win a life-changing prize. Behind each ticket there is a dream waiting to be fulfilled.

Lottery players purchase lottery tickets on a regular basis throughout their lives and thus tend towards long-term subscriptions. A casino operator can easily integrate lottery games through API, increase his existing players’ lifetime and value and be surprised by the high conversion rates considering everyone is a potential lottery player.

Until recently, the lottery messenger service was the most common in the market and did not require any particular license because it acted as a courier service (and increased revenue for the national lotteries). Now that insurance companies have entered the game and are willing to insure the jackpots under their risk factors, B2C operators holding a gaming license get to enjoy a larger profit margin.

As opposed to casinos, lottery operators are not acting as “The house” and are not carrying the operation risk, as they are merely a medium. The national lottery or insurance companies are responsible for paying out the winnings rather than the lottery operator itself.

The future holds a great promise to online lottery. Recent developments focus on connectivity between CRM platforms and affiliate systems in order to support sales and retention capabilities of call centers and online marketing verticals. We also notice efforts assembling new marketing strategies to the end user including bundle packages, syndicates and MLM products that rely on social media.

I believe the next trend in this industry would involve Social lottery. Instead of playing with a group of people you don’t know, you could invite your family and friends to participate together in one or multiple draws. 

Mor Einhorn is the COO of Lottonetix, a leading Lottery platform provider. Mor holds 6 years of experience as a financial and business development manager. She served as an IT officer in the Israeli Army, graduated with honors her BA in Finance & Business Administration and is about to complete her MBA in Tel-Aviv University.