I participated in Betting on Football (BOF) event in London earlier this week. I was there as an expert in two different panel discussions. The first one was about Sports Betting market stagnation and the other one was about lotteries role in Sports Betting business. I also chaired the European Lotteries Sports Betting working group meeting before that BOF event. So I have got lots of stimulation from Sports Betting business lately and I try to think about what that information might mean for lotteries.
The first question is what companies are lotteries? I’m not trying to write any official definition because I’m not able to do it anymore. Lottery used to be a company which offered Lotto games normally based on monopoly situation. The most of lotteries are used to have also some other games too. Nowadays it is more common that lotteries still have monopoly in Lotto games are but not so often in other gambling areas anymore. Some former lotteries have wide product portfolios and they are offering all kind of games. For example, my company Veikkaus has all possible gambling products like lottery, Sports Betting, Horse Betting, bingo, casino games, slot machines etc… Is Veikkaus lottery anymore? As in our panel discussion in London also here in this blog I mean by lotteries still the companies which are offering monopoly-based Lotto games and it doesn’t matter if they are offering other games either in monopoly or in license markets.
One of the questions in BOF panel was could lotteries offer Sports Betting? It was strange question to me because we have had sports games since 1940’s and introduced fixed odds Sports Betting already 25 years ago. I see sports games as natural part of our product portfolio. There are more than 70 lotteries as members in European Lottery Association and about 2/3 of them have sports games in their product portfolio. So, lottery could and should operate in Sports Betting business, but can they do that in same way than Sports Betting companies like William Hill, Ladbrokes, Unibet & co are doing? They should do that but in some cases legislation would set restrictions. If lottery has monopoly also in Sports Betting it can’t use exactly the same tools than “normal business companies”. The reason why states have gambling monopolies is to restrict and control that business. Normal it means limitation to the business which in open market cases don’t exist.
The French gambling business consultant Christian Kalb has made survey among European lotteries to analyze how those companies are offering their Sports Betting products. He found out that there seem to be three or actually four different kind of strategies in that area. There is small group of lotteries who have positioned themselves to real competition in that area and are running Sports Betting like business as usual. The second group is offering quite many sports games but with a little bit worse rules (payout etc.) than private companies. Surprisingly big third group has Sports Betting or Football Pools but are offering it mainly like lottery games. Fourth group is that 1/3 of companies who haven’t been willing or allowed to have Sports Betting at all. Companies from those different groups are totally different ones from customer point of view and I try to analyze the first and second group to find out the question what kind of possibilities lotteries might have in Sports Betting.
Some lotteries are among the biggest Sports Betting companies in the world. Someone might be surprised that Hong Kong Jockey Club is the member of World Lottery Association and it could be called as a lottery? There are two real big European lotteries in Sports Betting business too. Those companies are OPAP from Greece and FDJ from France. FDJ is operating in heavy competition in French digital market and manages very well. The other kind of example of competitive lottery in Sports Betting is from Denmark where the state changed the legal system from the beginning of 2012. Lottery Danske Spil was split to two separate companies Danske Lotteri Spil and Danske License Spil where both are still part of Danske Spil company. Danske License Spil is in heavy competition and have exact the same tools and rules than other Sports Betting companies have. The lottery monopoly Svenska Spel from Sweden has now faced the same kind of change than Danske Spil had 7 years earlier. I’m keen on seeing the first results from there and analyzing them after few weeks. I was surprised that Christian Kalb put also Veikkaus to that first group. I agree that we are trying to operate Sports Betting as business as usual but have many limitations compared to those private companies. Anyhow for those business-oriented lotteries Sports Betting is normal business and natural part of everything else and they seem to manage very well also in competition if they would have possibility and will to have same condition than the other ones.
Example of companies from the second group are German lotteries. They have had fixed odds Sports Betting already many years, but they don’t have competitive rules there at all. They had monopoly in Sports Betting in principle but in practice they have faced competition from the beginning. Those German lotteries have had right to cooperate with each other and they have managed to utilize their huge lottery customer potential a little bit also in Sports Betting, but they have lost the competition quite badly anyhow. Now there is new legal environment in Germany, but lotteries haven’t changed their Sports Betting offering. I’m now sure if the reason has been legal restriction or is the decision made by lotteries themselves? I think that lotteries should either offer real product or stay away that business totally. I understand some limitations like lower risk limits and a little bit lower payout percent but those shouldn’t be too far away from the market level. If lotteries are not willing to compete in fixed odds Sports Betting they could offer more “lottery style” sports games like Football Pools and pool-based sports betting products – for example Moniveto (correct scores in 3-4 football matches) here in Finland. It’s always better from customer point of view to get all products from one shop and that’s why all lotteries should have sports games in their portfolio.