Lottoland targets Tatts in Uber-style betting shake-up

The Tatts Group-controlled lotteries monopoly may be on the cusp of an Uber-style attack.

Gibraltar-based operator Lottoland has captured headlines in the past few days after giving Australians the chance to punt on the $US1.5 billion ($2.1 billion) Powerball jackpot in the US for the first time.

Lottoland CEO Luke Brill says Australia’s lotteries industry is ripe for a revolution.
Lottoland CEO Luke Brill says Australia’s lotteries industry is ripe for a revolution.  Photo: Edwina Pickles

But it's closer to home where the online lotteries operator sees huge potential to muscle in on Tatts' turf.

"Australia's lotteries industry is ripe for a revolution," said Lottoland's Australian chief executive Luke Brill. "We're doing a similar thing to the lotteries industry like Uber is doing to the taxi industry. It's a disruptive product."

Gibraltar-based operator Lottoland has captured headlines in the past few days after giving Australians the chance to ...
Gibraltar-based operator Lottoland has captured headlines in the past few days after giving Australians the chance to punt on the $US1.5 billion Powerball jackpot in the US for the first time. Photo: AP

After receiving a five-year Northern Territory wagering licence on December 24, the lotteries operator is eager to start cashing in on the millions of Australians who buy a weekly Lotto ticket. 

From a corporate perspective, it's salivating over the near $2 billion of revenues Tatts earned in 2015 from its lotteries division.

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Tatts operates every state and territory lottery apart from Western Australia's, which is still run by the state government.

Mr Brill realises Tatts is hardly about to back off without a fight.

"The incumbents are not big fans of us and we understand that," said Mr Brill. "But my view is the global lottery market is crying out for innovation. Half the population play the lotteries and in that sense it is much bigger than sports betting – but it's been a sleeping giant in lots of jurisdictions including Australia."

If fighting Tatts for a share of its business wasn't enough, the online player may also be on a collision course with state governments, with New South Wales, Queensland and Victoria sharing about $1 billion between them in tax receipts from lotteries in 2015.

Investment bank CLSA said it expects a fight from both Tatts and the states should Lottoland tap into its markets, arguing it poses the first real threat into its monopoly licences.

"We expect Tatts to challenge Lottoland's use of any existing trademarks as well as any copyright associated with their lottery products," said CLSA gaming analyst Sacha Krien​ in a report to clients. "Alternatively, Tatts and the states could seek federal legislation on lotteries, overriding Northern Territory law."

Lottoland works by offering punters the chance to bet on the outcome of the lottery rather than purchasing an actual ticket for the draw.

Should a punter hit the jackpot or divisional prizes, Lottoland will pay out the equivalent of the prize money, as if the customer had a ticket for the draw.

In the case of this Thursday's US powerball draw, that means that should any Australian gamblers choose the correct numbers it would be Lottoland rather than the US lottery operator which would ultimately pay out the expected bumper prize.

Lottoland holds insurance policies with companies including Lloyd's of London to cover any major payouts, which Mr Brill said is the company's single largest expense.

But punters pay for the privilege of being able to tap into global lottery pools that have previously been off limits.

Betting on the US powerball competition costs $US14 for Australians, compared with paying $US2 a ticket if you live in the US.

CLSA said in Australia Lottoland gamblers will pay a 160 per cent premium to bet on the cost of one OzLotto game, compared with buying a regular Tatts ticket at the newsagent.

"While Lottoland's pricing looks steep, the potential attraction for Australian players is access to overseas products where jackpots are often substantially bigger than Australia's national draws and the odds of winning are in some cases better," said Mr Krien.

Mr Brill, the previous local boss of UK bookmaker Betfred, said the idea for expanding Lottoland's offering into Australia came from an ill-fated foray by Betfred into the local market where it tested a similar lottery product.

While Betfred withdrew from Australia in late 2014 due to strong competition from its rivals, Mr Brill said the idea of disrupting the domestic Lotto system lingered.

"We saw some really good traction at Betfred and now we have the platform at Lottoland to deliver it."

The company, which only started operations in 2013, boasts more than 2 million players globally and said it has registered more than 30,000 customers in Australia in the past two days alone.

"We've struck it lucky by launching this week [with the powerball] and we are hopeful those customers will stay with us and look at Australian products."

Tatts declined to comment.