It’s no secret that Australians love a punt. But if players want the option of winning a prize from an overseas lottery, such as a top prize EuroMillions jackpot, things get a lot more complicated. The lottery industry tolerates monopolistic behaviour and consumers are worse off for it. Lottery is the nation’s favourite game of chance, with over 7.5 million people playing in the 12 months prior to June 2018. But that leads us to the following question…
Where’s The Competition?
Nobody can reasonably argue that competition is a bad thing. In a healthy, competitive market, there are a number of winners. Competition brings lower prices, greater choice and ensures that companies can’t afford to take customers for granted. It drives innovation, higher quality and improved service. So why is it that when it comes to Lottery, competition is somehow non-existent?
It’s doubtful that customers are happy with this. They remain unheard, drowned out by the hysteria from vested interests who seem to think lottery competition would bring about the end of the world. Until recently, all lotteries in Australia have been traditionally administered by 2 entities. In Western Australia, the government owns and runs the lotteries. For the rest of Australia, they are privately owned and administered. These entities, along with local retailers of incumbent Australian lotteries, have been resistant to potential new players in the lottery space. This has even spread to other industries, with all being very vocal in their lobbying for the banning of lottery betting.
Sure enough, lottery betting was banned in June 2018. Of the law change, a prominent Western Australian parliamentarian said, ‘It gives the Wagering Commission in the future the power to act in the event of some other unforeseen disruptive betting process coming onto the market, they can just outlaw it immediately’.
Some may say this was a draconian attempt to stifle competition. However, it was to no avail. Rather than leaving the gambling industry altogether, the main lottery betting protagonist simply adapted their business model to skirt the new legislation. They continue to thrive in Australia. Despite lottery betting falling under the umbrella of ‘sports betting’, and not lottery, the perceived harm to traditional lotteries and their sales outlets was used to justify the law change. Oddly, worrying concerns about whether or not a huge winner could actually be paid didn’t seem to affect the conversation. This raises questions about whether or not the interests of customers and their rights to be paid winnings were even considered.
Refreshingly, a lone licensed lottery operator entered in the market recently, offering at least some resistance to the lottery monopoly.
The Lottery Office’s Business Model Enables Them To Sell Tickets In Their Own Australian Lotteries
They differ to the incumbent Australian lotteries, which customers are familiar with. Also, they aren’t foreign ticket resellers. Their point of difference is that they purchase a ticket in a matched lottery draw overseas for every ticket they issue in their own lotteries. They then collect any winnings from the overseas lottery and pay the customer the same amount. This appears to be the only way in Australia to legally access overseas lottery jackpots. This gives customers an alternative to the traditional Australian lotteries they’re so used to seeing, bringing some much-needed competition to the industry. They even donate a percentage of ticket costs to Australian charities.
Despite this, and despite being licensed and audited by the Northern Territory government, The Lottery Office has not escaped unscathed. The Australian reports it has been forced to justify its legality, after being probed by the Western Australian government. This has failed to provide any evidence of wrongdoing.
Stifling Competition With Questionable Claims
It could be argued that the powers mentioned above seem to have developed paranoia over emerging lottery competition. What’s driving this resolve that seems determined to crush any emerging competition in the millionaire maker market?
On the banning of lottery betting, an aggressive campaign was rolled out to try and get the public onside. In this it was claimed that lottery betting companies paid no state or territory taxes, aren’t regulated like ‘real’ lotteries and could destroy 4,000 newsagencies and small businesses. Sports betting companies asked for support on legislation changes to address these perceived concerns and level the playing field. They also offered to work with local retail businesses to involve them in a commission system. Despite these peace offerings, significant resources were aligned to aggressively push for the ban. Even the ‘tax us, don’t ban us’ catch-cry coming from the pro-lottery betting camp did nothing to sway the argument in their favour.
Nowadays, lottery betting has been outlawed, only to be replaced by a different betting business model that a recent court case failed to stop. State and territory taxes are still not collected from these companies. This is exactly the scenario lobby groups were claiming they were preventing by advocating the ban. Could it have been a better option to tax lottery betting companies appropriately and work with them on solutions to any other concerns? If this had been done, new lottery betting taxes could have been rolled out, agents could have earned commissions and healthy competition may have resulted. Everyone’s best interests could have been served.
Despite the continued success of betting companies with their new ‘jackpot’ betting model and Australian lottery companies like The Lottery Office, we have yet to see the decimation of newsagencies, or a collapse of the long-established Australian lotteries. These were points that were often used to justify resistance to competition. Do lottery retailer businesses have a long-term future in Australia? In any case their survival shouldn’t be artificially built on a foundation of eliminating opposition lottery competition. They may need to evolve to survive, as many other industries have had to do.
Surely Australia’s major Australian national lottery operator doesn’t appear too concerned about any reduction in sales from their retail sales outlets. Their own business model enables them to sell lotteries online and they have done so for a number of years. They also have longstanding ticket reseller agreements with a number of other online lottery ticket retailers. All of this excludes newsagents from receiving any revenue for tickets sold online, but conveniently, this hasn’t been mentioned. It must also be assumed that as more people become internet savvy, they will move their lottery buying habits online, further isolating local retailers from lottery revenue streams.
Finally, Where Do We Draw the Line?
Most people will remember the disturbance to the taxi industry when ride sharing was introduced. Taxi lobby groups campaigned hard for it to be banned, unsuccessfully. Ride sharing has since flourished, with several platforms now available to choose from. Some drivers even drive taxis and moonlight as ride sharers.
So, where’s the downside? Taxi companies have been forced to lift their game and come into the 21st century. Ride sharing offers cabbies an additional source of income. Customers have cleaner cars, access to more competitive pricing and a great choice of providers. Everybody wins. How will new lottery operators in the market fare against entrenched protectionist attitudes? Time will tell. If we’re going to resist competition against incumbent Australian lotteries, we must be willing to accept that it could set a precedent that may spread to other industries. And that is something that isn’t good for anyone.
