Lottoland is on the march in Australia, with a new advertising blitz that’s clearly aimed at us punters.

The ads have been popping up regularly between overs on cricket coverage, talking about how you can “bet on lottery results” worldwide.  So how does it work?

Everybody knows how lotteries work: players buy a ticket with their combination/s of numbers.  If some or all of their numbers come out in the draw, they win.  If a number of people have the right combination, they share the prize.  If nobody does, it usually jackpots to the next draw.

The body running the lottery – usually the government, or a company licensed by the government – gets their cut of revenue, with the rest going into the dividend pool.  Fairly simple model.

A fairly simple model which is being shaken right up by Lottoland.

At a glance, Lottoland may appear to be simply selling lottery tickets.  In fact, they’re not.  A ticket purchased from Lottoland doesn’t enter you into the lottery itself: they themselves aren’t connected to the draw or the body running it.

They’re simply taking bets on the outcome of the lottery, just like any bookmaker takes bets on the outcome of a race or game.

The cost of the ticket is your stake; in return, Lottoland pay you out at a dividend if you win.  The dividend is equal to the lottery jackpot, so from a simple profit / loss perspective, it’s much the same as entering the lottery.

So why use Lottoland?

Simple: the range of bets available.

Being something of a government institution, lotteries are generally only open to residents of a certain country or state.  In Australia we have our own, such as the long-running Saturday Lotto, Powerball or Keno.

Given Lottoland isn’t actually entering the lottery, rather taking bets on which balls that are drawn, it’s not subject to the draw’s own rules.  Bets are open to all: people from all around the wold can bet on our lotteries with Lottoland.  And in turn, we  can bet on their’s.

So rather than the standard few official lotteries in Australia each week, you can have a crack at any number of draws around the world.  Lottoland’s website list dozens of them.

And given relative populations, some of these behemoths can dwarf what we’re used to.

US Powerball can feature jackpots worth over USD$1 billion.  The popular EuroMillions jackpots often run into the hundreds of millions.

So in effect, you can play a lot more lotteries, with a lot higher prizes.

In terms of security of your bet, there’s nothing at this stage to suggest Lottoland isn’t legitimate.  They’ve been operating in the UK for some time.  All bets are actually forwarded to a parent company called EU Lotto, who are based in the European tax haven of Gibraltar and act as the bookmaker in the transaction.

Their position and liabilities (your potential winnings) are managed by a “complex series of hedges and insurance polices”.  There’s not much information available beyond that, but since kicking off overseas, Lottoland has indeed paid out winners in line with their offer.

So in a gambling sense… is it worth it?

In a word?  No.

Like a traditional lottery ticket, you’re still relying on your exact combination of numbers to come up in order to grab the top prize.  Spend any time researching the profitability of that – it’s been written about to death – and you’ll see the odds of actually winning are appalling: often more than 100,000,000/1 on the bigger draws worldwide.

One thing that makes lottery odds even worse is the take-out: the amount of the pool that the controlling body “skims” as their own revenue (otherwise, why would they run it?).  That’s “the tax on the poor” that the lottery is often referred to as!

With Lottoland, they’ll also take their own cut, which is built into the price of the bet versus the price of a regular ticket in the lottery.  This further reduces your mathematical equation.

So whilst certainly an interesting concept, personally I think i’ll stick to the horses or the footy.

2 COMMENTS

  1. Good story about lottoland. I remember a few years ago a company started on the ASX, and they were about Lotto and Lotteries, bought shares in it about 0.45 and sold when they got to $1.40, my son got interested in it too, did the same and was excited when they rose, when he sold them, I said wait till they drop and buy them again, but of course he didn’t listen and bought again at the high price, they are still about $1.60. Your right though, you buy Lotto and you never think of who’s behind it, just hope your numbers come out, and the horses are always a good bet. It has been said, ‘a good investor never buys lotteries as the return is too low’ Regards Mike

  2. The other problem purchasing Lottoland tickets is that credit cards are charged as ‘cash withdrawals’ and incur immediate interest charges from the cards issuing bank, and as they are sold offshore, they incur ‘foreign currency’ conversion charges !