13 minute read
Lottery
HOW DO LOTTERIES MEET THE INCREASING DEMAND FOR RESPONSIBLE GAMBLING?
FROM INCREASING AGE LIMITS to new certifications, lottery operators are ensuring that they introduce all-encompassing measures to best protect players
BY CHARLIE HORNER
As igaming and online sports betting continue to boom in North America and indeed globally, the focus on tackling rising numbers of problem gambling comes into the fray more and more.
But while the new style of online betting is receiving attention for its role in keeping gamblers safe, it is important to question how lotteries are meeting the increased demands for responsible gaming measures.
Amidst the backdrop of the fourth National Lottery licence competition, which at the time of writing is the subject of a legal challenge, the current incumbent Camelot faced significant criticism from stakeholders, including Members of Parliament, for failing to keep its players safe.
After all, lotteries around the world push the message of goodwill, providing funds to worthy causes and helping communities thrive in times of hardship, something particularly thrust into the limelight in the wake of the COVID-19 pandemic.
Therefore, it begs the question of whether charitable funds are tainted if they are raised through profiting from problem gamblers and, even if not,
whether lotteries have a special duty to reduce problem gambling given their role to provide public good?
Moreover, it is increasingly common to see lotteries veer towards instant gaming with scratchcards, and even providing online gaming, allowing users to gamble 24/7 on their platforms. This poses a significant risk to those who suffer from problem gambling, only magnifying the need for lottery platforms to implement responsible gambling measures.
So what is it that lotteries can do to keep their players around the world safe? More importantly, what are lotteries doing to keep their players safe? firm’s SVP, Marketing, Communications and Sustainability, Wendy Montgomery, commented: “Responsible gaming is ingrained into the fabric of what we do at IGT, from our products to our people and programs, it remains at the forefront of all decisions.
“This recertification from WLA reinforces our leadership and commitment as a responsible vendor, as well as demonstrates the effectiveness of our responsible gaming technologies that we provide to our lottery customers worldwide.”
Another example of this can be seen through the current operator of the UK National Lottery, Camelot, which recently achieved recognition with
the European Lotteries Responsible Gaming Certification and Level 4 of the WLA’s Responsible Gaming Certification, for the fifth time.
In the assessment process, the current National Lottery incumbent demonstrated its ‘ambitions to promote healthy play’, including imposing a ‘decentralised approach’ towards its healthy play program. In particular, it changed the National Lottery rules by increasing the legal playing age from 16 to 18, in line with the legal gambling age for other gambling verticals.
Despite this, Camelot’s RG credentials have been brought into question recently after it received a fine of £3.15m from the UK Gambling Commission for failures relating to its mobile app.
It was found to send out promotional marketing material to both selfexcluded customers and customers highlighted by Camelot as displaying signs of gambling harm.
So whilst industry body RG certification can be a worthwhile tool in promoting responsibility amongst lottery companies, it does not necessarily guarantee that operators will follow suit and ‘practise what they preach’.
Industry certification
Ensuring that lotteries are keeping their players safe, industry-wide bodies such as the World Lottery Association have provided certification with regard to responsible gambling.
By creating a sense of esteem and prestige around WLA Responsible Gaming certification, operators are determined to receive such recognition for the greater reputation that it brings.
For example, lottery industry giant IGT was recently recertified by the WLA for its Corporate Social Responsibility Standards and Responsible Gaming Framework for Suppliers for its work which includes employee training on RG issues and communicating with RG stakeholders.
Speaking of its certification, the
Raising awareness
As well as encouraging lottery operators to maintain high standards of RG policy through certification, the industry uses several key periods of the year to raise awareness of the importance of player protection.
In the US, the National Council for Problem Gambling mobilises state lotteries to participate in Problem Gambling Awareness Month, which this year took place in March.
The purpose of this is to raise awareness of the issues around gambling and how those affected can access RET resources.
John F Davis, Florida Lottery Secretary, commented: “The lottery is proud to join the NCPG and others in our gaming industry to stress the importance of responsible play and to increase public awareness about problem gaming.
“At the lottery, we make it a priority to educate our players, retailers, and employees year-round on what it means to play responsibly – from playing with discretionary income to recognising when help is needed – we believe this leads to a safer playing environment for everyone.”
Furthermore, US state lotteries came together at Christmas to discourage people from buying lottery tickets for those aged under 18 as gifts, citing this as a ‘gateway’ to other forms of gambling.
The National Responsible Gambling Campaign initiative aims to minimise the contact between young people
and gambling from an early age to discourage further gambling activity later in life.
Eric Hagler, Executive Director of the Arkansas Lottery, stressed: “Lottery scratch-off tickets have been shown to present a possible gateway to other gambling activities and, as crazy as it sounds, a number of young people report their first gambling experience occurs around nine to 11 years of age; we certainly don’t condone that.”
Likewise, the NCPG held its ‘Gift Responsibly’ campaign during the Christmas period, encouraging parents to keep their children safe from gambling harms.
“The Gift Responsibly Campaign educates communities about lottery tickets, which are the form of gambling with the broadest participation level,” noted Keith Whyte, Executive Director at NCPG.
“It explains why lottery tickets are not appropriate as gifts for children. The retailers who sell lottery products and the adults who buy them learn that early exposure to gambling activities through lottery gifts, such as scratchoff tickets, increases the possibility that children will develop a gambling addiction as they grow older.”
Individual tools
Finally, lottery operators and suppliers can develop their own RG policy to ensure player protection. As a techdriven space, firms are increasingly
bringing innovation to games, but in the last year innovation has expanded to the RG space.
Neccton’s ‘mentor’ tool is a behavioural analysis mechanism that alerts the operator and can contact players who display alarming gambling activity via monitoring deposit frequency, amongst other advanced metrics.
Neccton has a strong presence in the German lottery market. The most recent lottery to enlist its tool is Lotto Hessen, which has long aimed for a ‘scalable solution’ to its player protection mechanisms.
Bernhard Ebersohl, Head of Online Sales at Lotto Hessen, commented on the Neccton deal: “We were looking for an advanced, scalable solution that ultimately provided real player protection – and that’s why Neccton was chosen. We look forward to many years of successful co-operation with Dr Auer and his team.”
Operators are also setting goals, whilst implementing an RG strategy, in order to effectively monitor progress. Sisal is a prime example; it has committed to a ‘zero problem gambling’ policy by 2030.
Publishing its Sustainability Report last year, the operator outlined that it reduced spending and deposit limits on its online channels throughout 2020 and developed AI to notice problem gambling patterns among its user base.
Budget setting and deposit limits appear to be a key weapon in the arsenal of lotteries in terms of player protection. The operator of the French National Lottery, Groupe FDJ, has produced four television adverts encouraging its players to be more aware of how much they can afford to spend and to budget accordingly.
It is clear to see that lotteries are increasingly reacting to the threat of problem gambling by implementing RG measures. However, with the increasing volume of online play available, and the increase in problem gamblers that it will inevitably cause, it must be a priority for operators to adopt a proactive approach to RG.
Politicians certainly have a major responsibility in providing a regulatory framework for lotteries to work from when it comes to RG. But as lottery consultant Jari Vähänen explained, state lotteries can focus on RG to improve the livelihoods of those in need of funding, while also trailblazing in terms of reducing gambling harms in their respective jurisdictions.
Or, has he succinctly summarised: “‘Lotteries – ‘the most responsible gambling companies in the world’ could be a global brand.” •
Jari Vähänen, lottery consultant
GLOBAL LOTTERY GROWTH: THE OPPORTUNITIES AND NEW CHALLENGES
INTERNATIONAL EXPANSION
is a pertinent issue for many lotteries around the world as they seek to thrive in their field and drive for longterm success. But how do the challenges measure alongside the opportunities provided?
BY NICK WARE
Traditionally, lotteries have operated on a one-country basis, exclusively selling their products with influence, direct or indirect, from the state. However, that school of thought is becoming more and more outdated as operators seek to push the boundaries and open up to different areas.
The term ‘international expansion’, by its very nature, conjures up a positive emotion and one of anticipation for any business, and lottery operators are no different. Some of the benefits are obvious, but important to note nonetheless.
By expanding into new countries and continents, lotteries are increasing the size of their potential audience, and thus opening up a platform to grow its brand. That, in turn, helps to increase its visibility and the chance to welcome as many new players as possible. Economically speaking, that can lead to higher revenue streams to ensure the profitability of the company is maximised.
Last year, Lottery.com signed numerous deals to expand its international coverage, offering its lottery products in countries like Nigeria, Turkey and Ukraine, while also expanding its operations in Mexico and throughout Latin America with the acquisition of lottery companies JuegaLotto and Aganar.
Speaking on the Bell2Bell Podcast, CEO Tony DiMatteo noted the limitations of being solely US focused: “It’s about an $80bn market domestically, and right now less
than 1% of all lottery sales in the US are done online. So, there’s a huge expansion opportunity there. As we look at the international market, it’s around $400bn in total lottery sales globally.”
In March 2022, Lottery.com published its full-year accounts for FY2021, enjoying revenue growth of 819% year-on-year up to $68.5m.
Maximising digital freedom
Digitalisation has enabled businesses to grow exponentially by reaching new audiences at a fraction of the cost, as renowned Finnish gambling consultant Jari Vähänen told Lottery Daily: “Economies of scale work very well in the gambling business. Expanding market areas will do little to increase costs for selling games on digital channels. Adding new gambling verticals to the product range increases costs one-time, but these additional costs are also marginal compared to the volume of the total operations.”
Perhaps the biggest benefit of expansion in the digital age can be drawn from the COVID-19 pandemic, which initiated the first lockdown measures at the beginning of 2020. With households forced to quarantine, retail-only businesses took a huge hit. Small companies were among the most affected as their sources of income became hugely disrupted, forcing them to either dramatically change their operations or close, in some cases on a permanent basis. Thus, those that could adapt were the ones who survived and had the opportunity to thrive. Now, as restrictions begin to cease or reduce around the world, lotteries are looking far and wide to reach new audiences.
International expansion can also be viewed as a conservative measure, despite the risks it can entail in terms of becoming operational in a different part of the world. There is always likely to be a level of uncertainty somewhere - for example, while COVID cases may be on the wane in some countries, or states, others may be harder hit and their respective government’s implement stricter approaches. For companies, expansion of operations helps to protect against the unpredictability of business and the world.
Internationalisation methods
So how does one go about implementing internationalisation? One model is to expand B2C operations to other countries, such as Czechbased Allwyn, which was recently named as the preferred applicant for the fourth UK National Lottery licence. The company has bought holdings in several other European countries, such as Greece and Italy.
Another method is to sell gamblingrelated technology to other gambling companies, with Vähänen using Groupe FDJ and IGT as leading examples. “For IGT, this has been the company’s core business, but for the FDJ, it is a significant change in which the traditional lottery has expanded into another industry.
“Years ago, the FDJ made acquisitions to acquire technological know-how aimed at developing better tools for its operations. As FDJ developed a larger entity from its technical solutions, the company established a new subsidiary, FDJ Gaming Solutions, to sell these technologies primarily to other lotteries.”
State pushback
Vähänen also commented upon the power struggle between lotteries and certain states that have rallied against expansion.
“Traditionally, the lottery world has sought to resolve issues through legislation, which has been primarily a defensive struggle in which states have sought to secure the status of their ‘dairy cows’ through laws and regulations. This kind of thinking is still prevalent in many countries, but luckily, lotteries have also been able to change.
“Keeping up with developments requires a critical review of your own operations and the ability to make the necessary changes. Many times an attack is the best defence. So could lotteries take over from other markets?”
Already, there have been instances of states pushing back against the idea of international expansion. In March 2021, Idaho announced that its state lottery would no longer participate in the Powerball draw as a result of the decision by the MultiState Lottery Association (MUSL) to expand the game to Australia and the United Kingdom. One reason for taking such an approach appears to lie in cross-border relations, and the potential damage of being associated with one another.
“My concern is the delegation of authority, and essentially turning over our sovereignty to this Multi-State Lottery Association,” Democratic Representative Chris Mathias said, according to the New York Times. “I think we should be concerned that they could be persuaded, they could
be lobbied heavily by countries that we are not particularly friendly with.”
Other states have even rallied against operators taking their games online. In February 2022, Indiana lawmakers added provisions to a bill that would require the Legislature’s approval before the Hoosier Lottery could sell tickets online.
One of the significant concerns centres around the damaging impact online games could have on convenience stores and other retailers. Clearly, even the notion of opening up the possibility of online offers has struck fear into some, with the danger of it leading into a full-scale expansion and shift away from physical stores.
Vähänen concluded: “It is already clear that a company operating a lottery in a country on a monopoly basis may also operate internationally. That, of course, requires a group
structure in which international operations are handled through another company.
“Therefore, expansion of the business is possible, but it involves, for example, significant competition law challenges, at least as long as the lottery operates under a monopoly. It is interesting to note that the most active expanders have been the forerunner and most advanced lotteries. Does this mean that others will follow them in this area as well?” •
