Thu, May 4, 11:49am by Staff Writer
International lottery industry disruptor LottoLand has made its recent raid on Brisbane-based online lotto ticket distributor Jumbo Interactive official, per information found within filings to the Australian Securities Exchange (ASX).
Back on April 20 the “Street Talk” column published by the Australian Financial Review revealed that 2.25 million shares of Jumbo Interactive stock had been sold off one day earlier.
At the time, the “Street Talk” reporting team stated that Lottoland was “believed to be the buyer,” but the company declined to offer additional comment.
On April 24, however, Lottoland’s lawyers filed Form 603: Notice of Initial Substantial Holder with the ASX.
The document shows that Lottoland obtained 3,117,224 shares of Jumbo Interactive – effectively absorbing a 7.07 percent equity stake in the OzLotteries.com.au operator. The stock closed at AUD$1.99 at the end of trading on Wednesday, and accounting for the 28 percent premium added to the price, LottoLand ostensibly paid AUD$7.94 million for the acquisition.
As revealed by Form 603, however, the original 2.25 million shares which were swapped came at a price of AUD$2.55 per – lending that aspect of the transaction a concrete value of AUD$5.73 million.
In a statement announcing the purchase, Nigel Birrell – chief executive officer for the Gibraltar-based lotto clearinghouse – expressed confidence that Jumbo Interactive’s assets would position his company strongly within the lucrative Australian lotto sector:
“This is another example of Lottoland long term commitment to the Australian market, building on the success of our first year we are looking at many opportunities to accelerate our growth.”
Founded in 2013, LottoLand offers players the opportunity to participate in lottery drawings held in various global locales. Punters in the U.K. can enjoy major American lottos like Powerball and Mega Millions, for example, while Australians can win European jackpots, and so on.
To escape the reach of local lottery laws, which tend to prohibit sales to players living outside of the jurisdiction, LottoLand utilizes an innovative insurance system.
By maintaining a policy valued at €100 million (AUD $150 million), which is underwritten by Insurance-Linked Security, LottoLand essentially acts as its own banker. Players aren’t really entering the actual lotto itself, but rather purchasing sets of numbers and wagering that those will match the appropriate drawing. Thus, the odds of winning remain intact, with LottoLand’s insurance policy – and not lotto organisations themselves – paying out prizes and jackpots.
Birrell has previously commented on his company’s desire to penetrate Australia’s thriving gambling market, and in January of last year LottoLand became the first lotto ticket exchange of its kind to earn a license from the Northern Territory Racing Commission.
Soon afterward, LottoLand drew the ire of domestic lotto shops like Tatts Group, which alleged that the new competitor was using overaggressive advert campaigns and deceiving customers.
That adversarial relationship between LottoLand and Tatts Group makes the former’s acquisition of Jumbo Interactive stock an intriguing development.
As the first online lotto ticket distributor to stake a claim in Australia, Jumbo Interactive has spent the past 15 years compiling the country’s most extensive database of player data.
According to Jonathan Wilson – an analyst with the Clime Smaller Companies Fund who recently published a report on Jumbo Interactive stock to The Australian – the company did business with 376,000 active users, who spent AUD$335 on average.
Those tickets were sold through OzLotteries.com.au, the website powered by Jumbo Interactive technology which accounts for roughly 25 percent of all Tatts Group ticket sales.
As Wilson revealed to The Australian, 13 percent of Australian lotto tickets are sold online today, which doubles the rate from just five years ago, and should double again in the foreseeable future.
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