Strength in numbers: can collective action prevent more lotto betting bans?

After legal blows in the UK and Australia, secondary lottery operators are hoping they can successfully head off another ban, this time in Ireland, by working together. Joanne Christie reports

This year hasn’t been a great one for secondary lottery companies, with opportunities in two of their most promising markets curtailed as the ban on EuroMillions betting in the UK came into force in April and the Australian government passed a law banning all betting on lotteries in June.

News of the latter, which comes into effect in January next year, came just as a number of European companies were setting up shop Down Under after seeing how successful — albeit controversial — Lottoland had been in the country.

Now operators in the sector face a clampdown in Ireland, where some politicians have latched onto the Australian ban to suggest similar action should be taken there. In September a bill to ban lottery betting was introduced into the lower house of Ireland’s parliament, the Dáil.

But while the situation has a sense of déjà vu about it — monopoly provider argues ‘parasitical’ secondary lotteries are diverting money from good causes and convinces politicians of the same — the difference this time around is that the operators are fighting back collectively via newly formed industry body the European Lottery Betting Association (ELBA).

Formally launched in July, the idea of an association was first mooted shortly after ICE earlier this year, says Paul Telford, director and general counsel at Annexio, which operates LottoGo. 

“At the time it felt that we were being besieged on all sides because it wasn’t just the UK, it was also Australia with the flak that Lottoland was getting,” he says. “And one Irish minister had picked up on what was going on in Australia and was making noises about how maybe the Irish should follow the Australian lead and clamp this business down so it made sense to get together as a body and try and speak with one voice.”

The five founding members of ELBA — MyLotto24, Multilotto, Legacy8, Lottoland and LottoGo — are hopeful that they can avoid a ban in Ireland.

Putting ELBA to the test
“Ireland is one of the first jurisdictions showing some negativity and to which we are challenging as an association,” says Lena Patel, head of corporate affairs at MyLotto24 and spokesperson for ELBA. “There is no evidence that lottery betting has any impact on the state lottery and we hope our activity and lack of evidence that we pose a threat to PLI [Premier Lotteries Ireland, the incumbent monopoly operator] will ensure any such action is curtailed.”

Lottoland CEO Nigel Birrell similarly hopes an evidence-based approach will win out. “Following the recent Presidential Election and the Halloween recess in the Dáil, we are planning a further round of engagement that will address the key point around the funding of good causes and the fact that lotto betting represents a negligible risk to this important area, particularly when set against the more substantive factors over many years predating the launch of ELBA members in the market, that have seen the good causes funding drop from €268m in 2008 to €225m in 2018 despite comparable levels of sales by the National Lottery.”

Unfortunately, however, these sorts of reasoned arguments have fallen on deaf ears in the past. For example, despite research provided by Lottoland that showed its product had no statistical impact on EuroMillions sales and despite concluding there was no data that showed otherwise, in a consultation response last year, the UK Department for Digital, Culture, Media & Sport concluded that a ban on EuroMillions betting was “justifiable on both a principled and precautionary basis”.

And in Australia, monopoly provider Tatts managed to convince both newsagents and politicians to support its ‘Lottoland’s Gotta Go’ campaign despite its financial reports showing it was in fact Tatts’ own digital arm rather than Lottoland that was taking market share from local newsagents, with its half year report for the period ending December 2017 revealing an almost 30% rise in digital sales.

But there are signs that this time around the message that secondary lotteries aren’t to blame for falling monopoly sales is getting through, says Telford. “In the Irish Times there was a story run by the Irish national lottery full of inaccuracies and they allowed ELBA to respond and ran that story so it seems to be having the desired effect in terms of reacting to negative publicity.”

Patel adds: “ELBA and its members frequently secure coverage in the national media and engage with Teachta Dálas on a consistent basis. Economist Jim Power recently completed a piece of independent research into the economic impact of lottery betting in Ireland and we will be commenting on that.”

One other thing that should stand in the lottery providers’ favour is the fact that in Ireland land-based businesses have long offered bets on lotteries, including the official Irish lottery, where bookies offer players cheaper options than those on offer from PLI.

“It is important to remember that there is a long established tradition of lottery betting via the retail bookmakers in Ireland, with no evidence of any objection from or negative impact on the National Lottery licence holder, and as such this is an important point of precedent that policy formers are acknowledging during our engagement,” says Birrell.

The lack of accuracy in the explanatory memorandum to the National Lottery (Protection Of Central Fund) Bill — the Fianna Fáil politician who introduced the bill, Jim O’Callaghan, incorrectly stated that there were 15 betting on lottery operators in Ireland when in fact there are only six — may also stand the association in good stead.

No going back
But while ELBA members are cautiously optimistic they can dispel the inaccuracies and avoid being shut out of Ireland, Telford says it’s clear there’s no going back in markets that have already closed. “The ship has passed in Australia, that door has been shut.”

Asked if he thinks having a body such as ELBA in place prior to the Australian issue would have made a difference, he says, “yes, but it was too late”.

“I think Lottoland was far too slow to react in Australia. The writing was on the wall quite early on and I think too much ground was gained by Tatts and too much leverage before they really got their act together and it felt like they were constantly on the back foot. I feel like we are involved at a much earlier stage in Ireland.”

While LottoGo hasn’t faced the same kind of criticism as Lottoland, Telford acknowledges its recent hiring of Keith Lemon as the face of its advertising campaign is likely to increase its visibility and therefore mean it also ends up in the firing line.

Similarly, Melanie Hart, head of communications and PR at Multilotto, says because the company has previously focused on the Nordic regions, it has also thus far largely avoided negative attention. “In the Nordics there hasn’t been any movement to ban lottery betting and since we’re focused on those regions we haven’t really come under the same pressure Lottoland has and maybe Mylotto24.”

But now that Multilotto has obtained licences and operates in the UK and Ireland, like Telford, she expects the company may face more scrutiny going forward.

On the one hand, it might seem counterproductive for these thus far publicly unscathed brands to align themselves with brands such as Lottoland, which in some respects has invited criticism with its aggressive tactics when entering new territories. But on the other hand, if Lottoland is shut out of a market, as happened in Australia, it’s closed to everyone else too.

“It felt to us that the time had come to really expand commentary and activity in this area beyond Lottoland and in some respects share the burden,” says Telford. “It is easy to vilify one organisation, it is not so easy to vilify an industry body, one that has been formed with core objectives and core values.”

Hart adds: “A lot of the criticism received is about the business model. If such criticism is levelled towards any other operator then the same criticism applies to us.”

And there are added reasons to be part of ELBA, she adds. “Being under an association gives our customers more peace of mind. I know that they are currently working on the ELBA website and we are going to outline the things that we stand for, like companies that are part of ELBA will always honour payouts and we will always make sure that we are regulated and licensed, so it gives also a little bit more trust in the brand.”

It’s too soon to tell if the collective approach will pay off in Ireland. But even if it does, given the resistance displayed by lottery incumbents to secondary lotteries in the markets targeted so far, ELBA probably still has plenty more battles ahead.