Don’t shoot the messenger

While lottery betting may have been banned in Australia this year, messenger services backed by the purchase of the matching ticket abroad are still active and entirely legal, according to experts. Joanne Christie considers if we can expect to see more players enter the market.

When the Australian lottery betting ban came into place at the start of this year, it was game over in what had been a lucrative market for Lottoland and others Down Under.

Most operators active in the market withdrew in advance of the ban coming into effect, while Lottoland switched tack to a financial markets-based betting product and continues to operate in the country.

It was a huge blow to the industry as the opportunity to bet on big overseas draws had been very popular with Australian punters – so much so that a number of companies were quite far advanced in plans to launch in the country when the ban was passed in June last year.

But the recent publicity drive by a new player in the market suggests there may be a way to keep selling to these customers – at least for now.

In late March Australian news outlets ran several reports on The Lottery Office, a company offering Australians the opportunity to take part in one of the billion dollar jackpots common in the US via what looks to be a lottery messenger service.

It operates out of the Northern Territory and according to Licensing NT, it holds various licences, including a mail order lottery licence that means it “is permitted to conduct mail order lotteries including selling foreign lotteries outside of the Territory”.

Its website says it purchases physical tickets in overseas lotteries to match any ticket it sells via its website. The company is a subsidiary of Global Players Network, which has been operational since 2003 but was previously focused on offering overseas players the chance to buy tickets in Australian lottery draws.

The company declined to speak with iGaming Business, but its general manager, Jaclyn Mundey, was quoted in an article on news.com.au saying the company had spent many years developing its model and had all the “necessary legal approvals”.

“We are licensed to operate our own lotteries just like Tatts are, and we’re required to buy the matching ticket, that’s what our licence says.”

According to Mundey, “we’re definitely not in a grey area”.

Interestingly, Jamie Nettleton, a partner specialising in gaming law at Sydney law firm Addisons, is of the same view.

“From a legal perspective there are two relevant types of licence: the licence which Lottoland had and still has and is still conducting business under, is a sports bookmaker licence; and there’s a completely different type of licence which essentially permits the provision of an online lottery service, including a messenger lottery service, and that is the form of licence that this company appears to have been granted by the Northern Territory Government.
 
“From my perspective this type of activity is not caught by the IGA [Internet Gambling Act].​ What is actually prohibited is lottery betting.

“Certainly they have been promoting their business and I haven’t seen any litigation involving them.”

It’s certainly true the IGA amendment last year focused on lottery betting. But given the rationale – whether accurate or not – was that people were spending on bets on overseas lotteries instead of official domestic lottery tickets, and that this in turn took money from newsagents, state coffers and good causes, it’s hard to see how this wouldn’t also be true if they were using a service that physically purchased a ticket.

It’s telling that none of the big players simply switched tack from betting into messenger services, particularly given they all have the ability to so. Indeed, it’s common practice among lottery betting firms to physically purchase tickets when draws reach a certain level because even the best insurance-backed model can’t cover a $1 billion payout.

And the existing big messenger players haven’t piled in either. A spokesperson for theLotter, for example, says it is still looking into the legal framework in Australia before making a decision.

The Lottery Office seems keen to distance itself from Lottoland and in fact its branding is very much focused on the differences between the two companies – its home page displays the question, “What’s the difference between The Lottery Office and Lottoland?”

It also recently came out in support of an investigation into Lottoland’s financial markets betting offering.

However, jumping on the anti-Lottoland bandwagon is unlikely to make the company immune from the same type of criticism its predecessor faced.

This is particular true when Mundey told Australia’s Daily Mail it had been inundated with new punters for a big US Powerball draw in March.

Indeed, already Western Australia has taken steps to stop the company operating in the state by claiming it is breaking a law that bans advertising foreign lotteries.

In addition, the Australian Lottery and Newsagents Association (ALNA), one of the bodies most outspoken against Lottoland in the past, has raised questions about the company.

“Our members have raised concerns with us about The Lottery Office, and we do have initial concerns that the model could raise questions under some state and federal acts that in some cases exclude certain lotteries like foreign lotteries from being sold,” says ANLA CEO Ben Kearney.

“We will continue to investigate our members’ concerns with regulators to discuss if this model is able to legally operate in all the states it is operating in, and if it complies with federal laws – all of which are designed to product consumers and regulate the industry in Australia.”

Asked if there was a chance this company could find itself banned in the same way as Lottoland, Nettleton says: “Each time there has been an issue that has emerged relating to a form of online gambling advertising that is perceived to be problematic, it has been addressed by changes to legislation – obviously that is what happened in respect of lottery betting.” 

While it may well be the case that The Lottery Office isn’t doing anything illegal for now, nor was Lottoland when it set up shop Down Under. Its previous activities only became illegal when those who saw it as competition convinced politicians it should be banned.

Given the clout of Tatts and newsagent bodies in Australia, there’s at least a fair chance messenger services could suffer the same fate. But if they don’t, The Lottery Office could well soon find itself with a number of new competitors.