It is no secret that Lottery is a giant, the World Lottery Association have it pitched at almost $300bn each year, and in Europe, more than 70% of consumers play on a regular basis. It should therefore go without saying that egaming operators would want to take a piece of the action.
For more than a decade, the so-called ‘agency’ model has had some moderate success, but with more than 99% of tickets sold through official sources, barely a dent has been made in the potential.
The key to unlocking the potential, and offering more choice (and ultimately changing player behaviour) is looking at lottery in a more disruptive way. Many operators have tried and failed, but today, secondary lottery is starting to become mainstream, offering operators a chance to compete with state lotteries like never before.
Insurance is the key word, and insuring the jackpots (by placing a bet on the outcome) is used rather than purchasing an actual ticket. The experience is familiar to millions and players are offered choice and variety with instant access to thousands of draws per year from around the world.
You would be forgiven for rolling your eyes at this point, as this is nothing new, but never before has technology, insurance, risk management and consumer behaviour converged to a point where a brand had the ability to leverage the market globally.
State operators have to sell millions of ticket to offer millions in prizes, but with insurance, you could sell a single ticket and still offer a multi-million Euro jackpot. If a player wins, the insurance company covers it.
For operators, it is a win/win, lottery can drive engagement, and retention (especially for subscription products) is unparalleled. Lottery players are among the most loyal; they play with the same brand week in week out, month in month out, for years on end. In the highly promiscuous world of online casino and sports betting, this is a powerful tool.
In addition, lottery can act as the glue between casino, sports, poker, live, bingo and other game verticals. Casual players are comfortable with lottery – some have been playing for decades – but are unfamiliar with other game options. With the right approach to marketing, operators can successfully cross-sell online lottery players to other products.
On our own Insight platform, we measure player retention in months and years, and some secondary lottery brands are reporting more than 3 million customers from a standing start only a few years ago. The giants are waking up, and in 2017, we will see the first large operators launching their own secondary lottery products, thanks to institutional insurers now offer policies with a solid pay-out record.
For us, Risk Management is the first and last question you should ask – imagine being liable for a $1.4bn jackpot, but institutions such as Lloyds are now actively seeking this type of risk which is allowing mainstream entry to the market.
When looking for a platform, or a provider, we believe in giving our partners the choice of whether to use one of our insurance policies or their own, and have the experience to guide them through these options as well as all other aspects of launching and running a successful secondary lottery.
An alternative to traditional insurance, the ILS (insurance linked security) has had a lot of press but should be treated with caution when you don’t know who the investors involved are. With more than 20 multi-million pound jackpots to cover on a Saturday night, it is vital to get this right and risk management becomes the most critical aspect.
The next 12 months will see online lotteries, including secondary and synthetic products, enter the mainstream for the first time. It presents a huge opportunity for iGaming operators, affiliates, and other businesses to engage with their consumers, excite them with a disruptive product, foster loyalty, and increase revenues.
But as the saying goes, you first have to be in it to win it.