Nigel Birrell: batting away the brickbats
Lottoland’s CEO talks about coming under attack from monopoly lottery operators and how he thinks the company is getting a raw deal from regulators and authorities. By Joanne Christie
Before Nigel Birrell moved into the industry in 2005 when he joined Party Gaming, he had worked in the legal and banking professions and, one would assume, been exposed to some of the most cut-throat behaviour the business world has to offer.
But the Lottoland CEO says that he’s never seen anything quite as ruthless as the attack Australian monopoly lottery operator Tatts waged against it earlier this year with the “Lottoland’s Gotta Go!” campaign that ran in newsagents nationwide.
“I’ve been in business nigh on 30 years and I’ve never seen in any industry a company put A$10m (£5.7m) into targeting one other company and getting rid of them.
“It wasn’t even about getting rid of the sector, it was about getting rid of Lottoland — ‘Lottoland’s Gotta Go!’ — so that was to my mind an abuse of their monopoly, using that money to go after one particular company.”
Unfortunately for Lottoland, the campaign worked and in mid November the Northern Territory government, which licenses Lottoland in Australia, bowed to political pressure and banned the company from selling bets on Australian lotteries, wiping out about 25-30% of its business Down Under.
“Tatts positioned us as a Gibraltar-based company siphoning off money from the wonderful Australian people, which was totally untrue, but it is hard to dispel that and if you’re a politician and you’ve got a constituent body of newsagents who are pretty fed up as well, there’s nothing in it for you to support the innovation and entrepreneurship of a company like ourselves.”
EuroMillions ban to make life difficult
There was more bad news later in the month, when the UK’s Department for Digital, Culture, Media and Sport (DCMS) announced that secondary lottery operators would no longer be able to sell bets on EuroMillions draws in the UK following a consultation that had begun in March.
This is a much bigger blow than the Australian decision, says Birrell, because Lottoland’s UK business is heavily EuroMillions focused. “It’s a big component of our UK business — in the UK we are not allowed to offer National Lottery products and probably the best-known one outside that is EuroMillions.
“So it will take a longer period of education and advertising to introduce UK consumers to the other products we have — we offer 25 in the UK. It is not catastrophic but it is going to make life a bit more difficult.”
But he admits to not being overly surprised. “When the review came out in March I think the tone of it led one to believe the decision may have already been made.
“I don’t feel perhaps we got a fair crack of the whip in the procedure. We never even met the minister and we know Camelot has. I think it has been driven by the monopoly, which wants to stamp out the competition.
“We’ve proven to them that there is no impact on good causes and in fact we are actually additive to the market.”
On this last point, Birrell may well have a point. The Gambling Commission’s annual report on gambling participation in 2016 breaks down the age-related gambling participation figures into the number of people gambling overall, and the number of people gambling excluding National Lottery.
By taking the overall data and subtracting those excluding National Lottery, we can deduce the number playing only National Lottery. The numbers make for some depressing reading when it comes to the much-coveted Millennials. In the 16-24 and 25-34 categories, just 3.3% and 9.8% had played National Lottery over the past four weeks.
This compares with 21.4% for those aged 45-54. The online figures are even worse, with 1.0% and 4.4% for 16-24 and 25-34, respectively. Even among those aged 45-54 it was only 6.3%.
In contrast, Lottoland is raking in the Millennials, with 55% of its UK players under 34, 50% of its German players and 52% of its Australian players.
“I think that is where our strength is and I think that is why we would argue to the likes of DCMS that we were additive to what Camelot does.
“With respect to what Camelot does, I don’t think any self-respecting Millennial wants to walk into a newsagent and buy a lottery ticket, because they don’t buy their newspaper there. All they’d probably buy there is beer and fags if they ran out.
“They read their newspaper online and book holidays online so the next step is to buy their lottery tickets online, but not just to have the bog-standard six out of 49 draw once a week — they want to have jackpots and prizes every day and be able to get on to the lottery all over the world.”
Although monopoly lottery operators the world over continue to insist that Lottoland is stealing their business and dismiss the argument that it is appealing to a different demographic, the more entrepreneurial are taking note of the company’s success and following suit.
Birrell says that, for his part, he welcomes more competition in the sector. “What the emergence of some other companies does is validate the sector we are in. But if a cowboy company came out which was offering bets on lottery without the proper insurance coverage that would do us no good whatsoever.”
Earlier this year, Lottoland boosted its insurance-linked securities coverage both to allow it to cover bigger wins and also to improve its appeal as a B2B partner – it has now signed deals with Kindred, William Hill Australia and Gaming Innovation Group — and Birrell says its coverage is “second to none”.
Even so, he says: “We would all be tarnished by a failure if somebody didn’t pay out on a ticket so we very much work with regulators — we are regulated in five or six territories now — and encourage regulators to check very hard and deeply when any company comes up that they have that proper coverage.
“I understand that certain jurisdictions have turned down many young companies because they didn’t have that.”
Birrell says that new competitors could also take some of the heat off Lottoland: “I’m delighted we’ve got some other competition emerging, so maybe it is not Lottoland that’s going to get all the brickbats we’ve been getting.”
GC fine “pretty unfair”
One of the “brickbats” Birrell took particular issue with was the voluntary settlement the company made with the Gambling Commission (GC) earlier this year.
It came as a result of a radio advertisement in late 2016 that the Advertising Standards Authority ruled had misled customers by not making clear it was offering a bet on lottery, rather than the opportunity to play the lottery.
“The fine I feel was pretty unfair to be honest with you. Look at the number of companies that have had adverse ASA rulings and then nothing’s happened.
“That was our first ever — and still only adverse — ASA ruling yet the GC decided to clamp down on us so we made a voluntary settlement of $150,000 but it does seem to me a little bit unfair that other companies weren’t asked to do that.
“That was our first transgression with the ASA and we didn’t even do anything wrong.”
“The advert had gone through our own team, external lawyers and the central radio authority and everyone thought it was absolutely fine.”
Birrell concedes, however, that at times the company’s marketing may have gone a bit too far, particularly in Australia.
“What I would concede is that perhaps we were a bit aggressive when we first came into the market. Maybe with some adverts which were depicting newsagents as primitive — basically if you go and buy a ticket at the newsagent you are behind the times.
“I think actually riling up one constituent body, in this case the newsagents, probably wasn’t the best course of action in hindsight. Perhaps we were a bit sort of insensitive with some of our advertising when we first went in.
“But the problem is as a young company you’ve got to try and make a splash.”
There’s no denying Lottoland has made a splash. Since launching in 2013, it has grown quickly into a company with more than 350 employees and 7 million registered users across 12 markets.
It’s taken a few knocks along the way from traditional lotteries, which often have the ear of government by virtue of their links to either tax or good causes, but Birrell says simply: “We roll with it, we move on.”
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