While many EU States are in the process of re-regulating and/or deregulating their respective markets, accordingly Lotteries are also preparing for the changing Gaming landscape with developments to their technology platforms, distribution channels and games portfolios.
In the Gaming & Lotteries industry at large, Sports Betting has been identified as one of the gaming categories that have been consistently gaining popularity since it appeals to demographic profiles of the customer base that are not regularly attracted to the traditional lottery games (Draw & Instants). Yet this popularity is only marginally experienced by lottery operations and while some are able to respond to market demand and offer a competitive product, most are either underperforming or not providing such a service for their jurisdiction’s players.
In many jurisdictions this segment is being facilitated by commercial operators who have consolidated their position predominantly in the interactive space and consequently, lotteries are facing substantial dilemmas as to which development strategy to follow. In jurisdictions where the segment is not offered, some lotteries are considering embarking into the involving process of developing a Sports Betting department while others, are investigating operational partnerships or are seeking to outsource this service.
In recent times, a number of lotteries have moved away from the traditional model of a single supplier for their lottery infrastructure and have implemented a shared services model using multiple vendors within a jurisdiction or even across multiple Lottery operations.
Indicative of the Lotteries’ predisposition to participate in shared infrastructures is also the emergence of multi-jurisdictional gaming products. The direct benefits of which apart from the obvious operational and costs efficiencies, is the capacity to generate substantially greater liquidity.
Shared gaming liquidity naturally favours games that rely on greater participation numbers and prize pools in order to be viable (ex. Bingo, Poker). However we have seen that increased prize pay-outs from multi-jurisdictional draw games (ex. Euromillions, EuroJackpot) also generate greater interest by younger demographic profiles that are predominantly predisposed to gaming products that incorporate levels of perceived skill.
With developments in the Lotteries’ interactive space, the emergence of shared technological infrastructures and the emergence of multi-jurisdictional games; – Is it time right for the introduction of a multi-jurisdictional Sports Betting offering?
Multi-jurisdictional Sports Betting is not a new concept. Such infrastructures have already been established in States that incorporate multiple lottery operations and furthermore, it should be acknowledged that officially or unofficially, traditional lines of information exchange already exist amongst various groups of Lottery Odds Compilers and Traders.
Operationally, Sports Betting is a complex gaming category to manage since amongst other: 1/ it requires dedicated operating platforms and teams of specialized personnel; 2/ it incorporates a substantial degree of risky, due to the fact that Liability incurred is not predetermined and its management relies on individuals making critical decisions under pressure; 3/ compared to other lottery gaming products its GGR is quite low (EU average about 20%); 4/ in non-Regulated markets, Commercial Sports Betting operators have been able to leverage the fact that Gaming and Company Taxes are not enforceable by the State and consequently are able to provide a more competitive offering (a substantially greater range of marks & markets at higher odds); 5/ operators face an increasing number of educated players ready to capitalize on any given opportunity.
Considering the segment’s low GGR, the most critical component of Sports Betting offering is the issue of Risk & Liability management though it has been observed, that the greater the liquidity the more manageable the Risk becomes and by default the Liability can be minimized.
Meaningful Sports betting liquidity assures to an extent that operators are able to consolidate their margins and offer better odds and wagers flexibility.
Furthermore, the potential development of a substantially larger Sports Book supported with regional expertise, will contribute to the development of a lower Risk market competitive Game proposition that ultimately can reclaim segments of the Lottery’s traditional customer base that have been attracted by commercial operators.
There are many notable attributes in favour of the development of a multi-jurisdictional Sports Betting platform and admittedly, many hurdles to be overcome in order for such a concept to be materialized.
As witnessed in other multi-jurisdictional games; diverse Regulatory restrictions, Gaming Taxes and existing supplier agreements will impede initial participation of some lottery operations. However as markets are re-regulating in accordance to EU gaming guidelines and/or participate in more shared technological and gaming infrastructures, the more feasible such an exercise becomes.