Published: September 3, 2023

Australia's The Lottery Corporation accuses operators of bypassing state laws and to offer "synthetic-style" lottery products

SYDNEY, NSWz, Australia (August 24, 2023) — According to local media reports a conflict between ASX-listed The Lottery Corporation and smaller Northern Territory-registered rivals in the Australian lottery industry is gaining momentum.

On Saturday ‘The Daily Telegraph‘ reported the chief executive of The Lottery Corporation, Sue van der Merwe, has criticized these smaller competitors for offering Australians the opportunity to participate in overseas lotteries and for their aggressive marketing campaigns. The Lottery Office, one of the key competitors, was established in 2018 and is licensed by the NT government to operate lottery services.

The main points of contention seem to revolve around:

  1. Compliance with Laws: The chief executive of The Lottery Corporation, Sue van der Merwe, accuses the NT-registered operators of bypassing state laws and potentially offering banned synthetic-style lottery products. In response, the CEO of The Lottery Office, Jaclyn Wood, defends their compliance with all relevant state and federal laws and rules for lotteries.
  2. Revenue and Impact: Van der Merwe highlights that state governments rely on lotteries duties for a significant portion of their annual revenue (around 2% of annual revenues in various states). The concern is that the rise of offshore lottery ticket sellers might impact the revenue collected from lottery duties. Equity Research analyst at Barrenjoey Matt Ryan points out the potential risk to government taxes if offshore lottery products gain traction.
  3. Business Models and Offerings: The Lottery Office’s business model involves selling tickets for their NT-licensed lottery and then matching those tickets with tickets purchased in international lotteries, which generally have larger jackpots than Australian lotteries. The CEO of The Lottery Office denies the accusations of aggressive marketing and claims that their advertising efforts are in line with any growing business.
  4. Industry Impact: The impact of these smaller competitors on established players like The Lottery Corporation and Jumbo Interactive is still being assessed. The concern is whether these offshore lottery ticket sellers will cannibalize the revenue of established companies and potentially impact the taxes paid to governments.
  5. Responses of Competitors: Jumbo Interactive’s CEO, Mike Veverka, states that the impact on his business has been negligible, with some effect on marketing costs. Jumbo Interactive intends to stand by The Lottery Corporation and offer support, including aiding in newsagent lobbying efforts.

In essence, the conflict revolves around regulatory compliance, potential revenue impact, and the competitive dynamics in the Australian lottery industry due to the rise of offshore lottery ticket sellers. Both The Lottery Corporation and The Lottery Office are presenting their respective viewpoints, while analysts and industry players are closely observing how this situation might evolve.

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