Tue, Oct 10, 11:21am by Staff Writer
The legal outlook for lottery draw wagering service LottoLand grew dimmer on October 5, when the government of New South Wales (NSW) announced its intention to ban so-called “synthetic lotteries.”
Based in Gibraltar, LottoLand allows punters to place wagers on foreign lottery draws, including Powerball in America and the EU’s EuroMillions among several others. Rather than participate in the lotto itself, which would represent a violation of most local gambling regulations, LottoLand lets players wager on the outcome of those drawings.
Thus, winnings are not derived from the domestic lotto itself, but rather a $100 million insurance policy maintained by LottoLand.
After landing the first gaming license issued to a lotto draw wagering service in Australia – issued by the Northern Territory Racing Commission in January of 2016 – LottoLand set to work capturing market share through aggressive advert campaigns and sports team sponsorships.
In a statement attributed to Deputy Premier John Barilaro, who also serves as Minister for Small Business, the NSW government outlined its intention to “restrict” lotto draw wagering services:
“Synthetic lotteries do not have the same level of consumer protection as domestic lotteries.
Many customers buy tickets in a synthetic lottery, believing they’re entering a lottery, when in fact they are instead betting on the outcome of that lottery.
A domestic lottery has a guaranteed prize pool, and is bound by strict terms and conditions and robust regulations.”
Racing Minister Paul Toole pointed to the insurance-based payout mechanism as a potential breach of NSW gaming regulations:
“Payment of winnings may rely on complex commercial arrangements between the operator and its insurer.
The conduct of synthetic lottery operators may breach existing wagering legislation and the NSW Government is currently assessing options to determine the most effective approach to restrict betting on these lotteries in NSW.”
The NSW government wouldn’t be the first to outlaw LottoLand and related services.
The Independent Gambling Authority of South Australia prohibited LottoLand from the outset, and last month, Western Australia moved to implement a similar ban.
Premier Mark McGowan issued a statement in September which positioned LottoLand as a predatorial company which had no place in the state:
“Organisations like Lottoland give nothing back. And that’s not acceptable to me.
Lotterywest is the best organisation of its type in Australia, probably the world. It makes a big return to community groups and the broader community. We want to make sure it continues to do that.
All that Lottoland does and those sorts of organisations, is suck money out of here, send it elsewhere and not give anything back.”
Calls for a ban in Western Australia came after the state-operated LotterWest program saw revenue fall by $60 million over the last fiscal year.
But in an interview with the Australian Financial Review published on October 6, Lottoland chief executive Luke Brill refuted the domestic lotto industry’s cannibalization claim:
“That can’t just be because of us.
We are less than 1 per cent of the market and we have 600,000 customers. How can that have led to a $60 million fall?
There is a $1.4 billion lottery industry here and we are very much a small player.”
In September, leading domestic lotto operator Tatts Group launched the “LottoLand’s Gotta Go!” campaign to lobby local legislators against the company.
Tatts Group has also been linked to a previous campaign launched by the Australian Lottery and Newsagents Association (ALNA), which claims LottoLand cuts into brick and mortar lotto ticket distributors.
Brill questioned the legitimacy of that argument when speaking to the Australian Financial Review, pointing out that Tatts itself is moving increasingly toward the online model:
“The whole reason they employed [chief executive] Robbie Cooke was that he was from Wotif.com and he had digital experience.
We say we are here to stay and happy to pay more tax.
But you can’t ban progress.”
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