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Ireland’s charities and good causes losing out on as much as €43 million a year due to National Lottery’s license terms and operator’s commercial practices
- National Lottery operator to benefit from as much as €306 million in unclaimed prizes over the 20-year term licence;
- Unclaimed prizes, limited online performance, and increasing prize ratios are all key contributory factors in reduced Good Causes Funding;
- Long-term sustainability and growth of Good Causes Funding are negatively affected by the current commercial strategy of Premier Lotteries Ireland (PLI);
- Continuing lack of evidence that online lottery betting is significantly impacting the sales performance of the National Lottery and Good Causes Funding;
- DCU economist Tony Foley: “Today’s research highlights that there are several key issues that present a risk to the long-term sustainability of this vital funding…”
A new research report by DCU economist Tony Foley on the sustainability of Good Causes Funding associated with the National Lottery, published earlier today Monday 11 November, has found that aspects of the current commercial strategy of the license holder are undermining the Fund’s long-term future and its contribution to voluntary and community organisations across Ireland.
The research, commissioned by the European Lotto Betting Association (eLBA), found that currently up to €43 million in Good Causes Funding is being lost every year because of the business approach being pursued by the licence holder, Premier Lotteries Ireland (PLI), who paid €405 million when awarded the contract in 2014 to operate the National Lottery for a 20 year term until 2034.
The report, “An Analysis of Good Causes Funding Associated with the National Lottery and Factors Impacting its Long-Term Sustainability”, identified the key factors, that are impacting Good Causes Funding currently and into the future, as being;
- The unprecedented level of unclaimed prizes returned to the operator
In 2018 alone, the unclaimed prizes total returned to PLI was €19 million. Under the terms of the National Lottery in the UK, for example, that same amount would have been ringfenced for contribution to the Good Causes Fund.
The report highlights that a continuation of the current strategic approach of the National Lottery, in prioritising the performance of the retail channel over urgent investment and action to address the underperforming digital channel, could see up to €14.74 million per annum or a total of €305.8 million in unclaimed prizes returned to PLI by 2034;
- A fall in Good Causes Funding contribution relative to National Lottery sales
In 2009, Good Causes Funding as a percentage of National Lottery sales stood at 32.3%. In 2013, prior to the awarding of the new National Lottery licence to PLI, it was 30%; while by the end of 2018, it had fallen to 28.4%. A restoration to even the 2013 share of 30% would result in an extra €12.9 million contribution per annum to Good Causes Funding;
- Increasing National Lottery prizes as a share of sales
PLI’s licence requires that prizes as a share of sales must be a minimum of 50%. However, in 2018, it stood at 56.3%. This strategy, led by the operator, means that total gross gaming revenue, a key determinant in Good Causes Funding, is being undermined. Even a modest 2% reduction in prizes as a share of sales, back to 54%, would yield up to an additional €13 million annually for Good Causes Funding;
- Ongoing underperformance of the National Lottery digitally
The digital share of total National Lottery sales remains low, materially risking the long-term sustainability of Good Causes Funding. In 2018, online sales were only 7.7% of total sales, compared to a previously stated target at the start of the license of 15%. This also significantly under indexes the National Lottery in the UK, where online sales now stand at 25%, and the Paddy Power business, where 50% of global revenues are generated by its digital channels.
With the ongoing shift in consumer purchasing to digital platforms, the relatively poor performance of the National Lottery in this space is a clear and significant concern for its future and, consequently, Good Causes Funding.
The report also found that there is no evidence that a ban on lottery-type betting, such as that offered by retail bookmakers or dedicated online lottery betting providers like Lottoland, would significantly “boost the performance of the Good Causes Funding” or would result in these consumers switching their spending to National Lottery products. In fact, the findings show that between 2014 and 2018, the period when Lottoland and other licensed online lottery betting operators entered the market, overall National Lottery sales increased by €117.3m or 17.1%, with Good Causes Funding increasing by €34m or 17.5%. Also, National Lottery sales as a % of overall bookmaker’s turnover in the Irish market increased from 24.2% in 2015 to 27.9% in 2018.
Comment by DCU economist Tony Foley:
“Over the last thirty years, the National Lottery and its contribution to Good Causes Funding has been an important source of financial support to community and voluntary organisations in every parish, constituency and county in Ireland. Today’s research highlights that there are several key issues that present a risk to the long-term sustainability of this vital funding.
“The perceived threat of online lottery betting to Good Causes Funding is in fact minimal in today’s terms, as indicated by the market share held by the licensed operators like Lottoland, especially in light of the robust sales performance of the National Lottery.
“The reality is that issues such as the reduction in Good Causes Funding as a percentage of National Lottery sales in recent years, the ongoing limited digital performance of the National Lottery, reduced player participation and the extent of the unclaimed prizes expected to be returned to the operator over the 20 year license, are far more significant threats to the future of the Good Causes Funding.
“There is also inadequate transparency around aspects of the current financial performance and regulation of the National Lottery, which is making it difficult for policymakers to assess the extent of the problem and to take appropriate steps to address these issues. The National Lottery Regulator can support policymakers by ensuring that they have access to more detailed information than currently appears to be the case. Better availability of information would contribute to ensuring that the right decisions are made to address the most significant risks to the long-term sustainability of Good Causes Funding”.
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The pros and cons of proprietary platforms
Dee Maher, Chief Executive Officer at La Royale Gaming Investments, says in-house tech development is not for the faint-hearted but is ultimately a must for operators wanting to compete with the power players
When launching an online sportsbook, one of the biggest decisions an operator faces is whether to power their brand using a third-party platform or a proprietary platform developed in-house from the ground up.
White labels provide a fast route to market and are inherently less risky, but for me, a proprietary platform is the best long-term solution.
This is because ownership and control of technology is the only way to provide a personalised, localised and bespoke experience to players while also ensuring compliance with regulations across global markets.
This is much more challenging when using a white label platform as the core product and experience offered to players is the same or very similar across all brands using the platform, and this makes differentiation beyond branding and bonusing incredibly difficult.
Operators are also limited to the markets they can enter based on the jurisdictions in which the white label provider holds licences.
In such a competitive market, sportsbook brands must deliver more value to their customers than ever before, and this means being able to bring new features, tools and experiences to the book.
With a white label, this is almost impossible to achieve beyond what the tech provider has in its product roadmap. Take payments, for example. Sportsbooks must localise their cashiers and, where possible, offer instant deposits and withdrawals.
This often means integrating new and innovative payment providers into the cashier. If you own your platform, you can quickly onboard these providers, but if running on a white label, you can do little more than request the method be added as soon as possible.
The same applies to rolling out new betting products and experiences. You can request the white label provider to develop them on your behalf – often at a cost or under the premise it’s made available to all operators using the platform – but with the request logged in a queue.
This prevents the operator from being able to pivot and meet changing player preferences or bring something truly unique to the market without having to share it with their competitors.
These are simply not issues with a proprietary platform and that is why it’s the best way forward for sportsbooks. However, developing a technology stack from scratch is not without its challenges. Let’s consider some of the most significant…
The cost of development is high
Developing a cutting-edge platform that is flexible and robust, that combines state-of-the-art technologies while being able to meet regulatory requirements, that can handle increasing demand while being able to effortlessly scale is no mean feat.
It requires a skilled, talented, experienced and ambitious team of designers, developers, engineers, specialists and managers, working collaboratively towards a shared end goal.
Make no mistake about it, this is an expensive undertaking not only in the human resources required to oversee and deliver the platform but also the investment in the infrastructure and technologies needed to build, power, host and protect the technology.
Throw in trademarks, IP rights, licensing and certification, and the real cost can quickly go way beyond that initially estimated.
It comes with high levels of risk
The cost of developing a proprietary platform aligns with the inherent risk this approach takes.
This is an unproven technology stack that is as complex as it is comprehensive. Things can and do go wrong but if these challenges can’t be overcome quickly and efficiently, the project can grind to a halt – in this game, if you rest, you rust.
In-house platform development is pioneering in its very nature, and when you push boundaries and try new things there is always a risk it won’t work out.
This is why so many operators turn to trusted, proven third-party solutions – for them, the trade-offs mentioned above outweigh the risk of building from scratch. But for me, it’s the other way around – the risks of not developing your platform are higher than taking the “safe” option of a white label.
Compliance can be a headache
Perhaps the biggest challenge with developing your own technology is ensuring that it has the flexibility to meet regulations and requirements in multiple regulated markets.
Given the cost of development, operators will want to run multiple brands in as many jurisdictions as possible to offset the initial investment and ongoing development and maintenance costs.
But you need to be able to ensure you can tweak the technology so that it meets the standards being set in each market. This flexibility needs to be ongoing, too, given how often regulations change and evolve.
Missed opportunities
There is an argument that the time it takes to develop a proprietary platform creates a missed opportunity for the sportsbook brand. If the operator opted for a white label instead, they could be live in a matter of months.
But good things come to those who wait and again, the upsides to owning your technology mean that any lost ground can be quickly recovered with the sportsbook powered by proprietary tech having no limitations when it comes to player experience, new market expansion and overall growth.
Building a platform in-house is not for everyone but for those who invest and take the risk, the rewards are far greater than those available by white labelling a solution. Just look at the titans of the industry – they all own their tech.
eSports
T1 claims victory at Red Bull Home Ground 2024
After a thrilling Grand Final, T1 claimed the 2024 off-season champions title at this year’s Red Bull Home Ground. Emerging victorious with a 3-1 victory over Cloud9, they take home the much-coveted trophy for Korea.
In front of more than 2000 fans experiencing the excitement first-hand in Berlin, Germany and the thousands more watching at home, the professional VALORANT Invitational tournament saw a closely fought finale play out on the Arena Berlin stage.
As the event kicked off on Thursday 21 November, the Group Stages saw both T1 and Cloud9 put in dominant performances as they each went 2-0. While Team Heretics started in a strong position with a win over FOKUS, they fell to Cloud9 and, due to medical issues, were unable to continue, sending FUT Esports straight to the Semis. Vying for their own spot in the semi finals, last year’s champions Fnatic were unable to replicate their 2023 success as G2 headed into the lead with a 2-0 victory.
The Playoffs saw Cloud9 continue their dominant streak as their Semifinals match against G2 Esports went 2-0 with strong performances on both Sunset and Pearl. FUT Esports faced off against T1 in a hotly competitive game, with T1 taking the first map and FUT Esports the second. After a neck and neck showdown, T1 finally took Ascent as FUT bowed out the tournament and T1 advanced to the grand final.
The final stage of the competition saw Cloud9, who came in second place at last year’s tournament, go head to head against T1 in a thrilling matchup. Continuing to step it up in the grand final, T1 were off to a strong start as they took Abyss in a closely fought first match. Although Cloud9 soon equalled the score as they took the second map, it was T1 that eventually emerged victorious, winning the next two closely contested games to claim the trophy and Red Bull Home Ground 2024 champion title.
Following an excellent performance throughout the tournament, Red Bull Home Ground champion BuZz of T1 said: “Winning this tournament means a lot for us. Against international teams we show we’re strong, so that’s why I’m happy we win this tournament and maybe we can keep this momentum until the end of 2025!”
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