DIGITALIZATION OF LOTTERY BUSINESS

Lottery business has been based on monopoly all over the world as long as I could remember. Lottery games have been run by national lotteries mainly. Those companies have been owned by states, but that’s not the case anymore. There are already many countries where lottery games are operated by private companies which are trying to make as good business as possible. That has changed the lottery world a lot and has caused big differences between different lotteries. Lottery companies used be like state offices in old days and they still are in some countries. At the same time there are modern business companies running those games too. It would be interesting to see what will happen in lottery business if for example Virgin Group will win the UK lottery license…

Because the ownership and business strategies of lotteries are so different, it’s natural that the state of digitalization of those companies varies a lot. We have lottery companies where the share of digital business is something like 50 % of total business and companies which haven’t even started the digitalization of their business. Someone could guess that state-owned companies are in the latter group and private companies are in the first group, but that’s not the case. For example, my former company Veikkaus is 100 % owned by the Finnish State and almost 50 % of lottery business is coming from digital channels. Another similar example is Norsk Tipping.

I have said many times before that gambling, or lottery, business is not specific and separate business area. Our consumers are used to use digital channels to get other services and products. People are using internet and their mobile phones almost for everything and it’s strange if they can’t get their lottery products from there too. Actually, lottery products are more suitable for digital channels than many other products, because there is no need for distribution. Lotteries should be part of normal life and be available in digital channels if customers would like to get them there.

Veikkaus introduced lottery games in internet already in 1996/1997 as the first lottery in the world – sorry my Icelandic friends! I was in charge of that digital business first years and due to that I was visiting many lotteries and events and told about our solutions and experiences. Those days the most of lotteries were afraid of reactions from retail network and weren’t ready to introduce digital solutions. It took surprisingly many years until lottery companies outside the Nordic countries started digitalization of their business. Veikkaus and other Nordic lotteries (Danske Spil, Norsk Tipping and Svenska Spel) have further developed their digital businesses. Someone might say that we are using digital tools even too much and trying to sell more than enough. Digitalization and utilization of customer data enable us to make more effective marketing and product development and that will improve the business results. Lotteries should find out the balance of business and responsible gaming together with regulator, but that is partly another story.

I believe that digitalization will give lottery companies and regulators more tools for responsible gaming too. We get lots of data from digital channels and that make it possible to analyze customer behavior more than it’s possible in retail channels where gambling has been anonymous. Digitalization makes it possible to give better service for customers. We could also offer more entertaining games and services. Of course, it’s important that lotteries understand how far they could go and control their actions. Otherwise there is a risk that gambling problems would increase.

The market situation has also changed. There are nowadays companies like Lottoland operating in lottery sector and traditional lotteries should compete against those modern companies. It’s impossible “fight” if we are not using the similar tools. I think that it’s better way to compete by developing our own business than try to beat those newcomers in courtrooms. I would almost like to thank Lottoland about “wake up-call” for lotteries…

It’s important to understand that digitalization of lottery business doesn’t mean just new digital channels internet and mobile. There are also lots of new opportunities for traditional retail channel. It’s possible and necessary to utilize new technology in retail business too. We have already lots of example of multi-channel products. We have brought digital services to retail network and that has utilized both sales channels. FDJ in France and Danske Spil in Denmark have managed to get excellent business results when they have launched new digital services for their retail network. I have admitted that I believe in omni-channel solutions. I’m sure that lotteries will introduce games where customer could play same game in retail network and continue that game in digital channel or vice versa. I’m also sure that customers will use their mobile phones for gambling when they are physically in retail shops – we have already seen some small examples of that. It might be impossible to say in the future which part of lottery business is digital and which retail business and it doesn’t matter at all. Lotteries should understand that retail business is the asset which the most of other gambling operators don’t have and that’s why it’s important part of the business to further develop!

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