Lottoland CEO on disrupting the status quo

The modern world is full of disruptors – innovative and entrepreneurial companies that have succeeded in dragging cherished, if outdated, industries kicking and screaming into the 21st century.

Through the adoption of new ideas and technologies, we have recently witnessed the likes of Uber take on taxis, Airbnb compete with hotels and Netflix revolutionise home entertainment. This disruption has oſten, and quite understandably, resulted in resistance from industry incumbents looking to keep a tight hold of their previously uncontested market share.

And over the past few years we’ve seen a similar shaking-up of the $300bn lottery sector through the emergence of Lottoland. Faced with highly regulated and monopolistic restrictions, Lottoland has built a business offering bets on lottery draws, rather than traditional ticket purchases.

The model enables players to bet on lotteries taking place outside of their own country, which often means players can win bigger jackpots than are offered within their own borders. The opportunity to play the US Powerball or secure the large El Gordo pay out in Spain, for instance, has proven hard to resist for many, with Lottoland recently exceeding the five million customer mark.

And with innovation in mind, Lottoland also offers players the chance to enhance their winnings, with opportunities to double the jackpot or claim the entire top prize, even if there is more than one jackpot winner. But akin to London’s black taxis fighting against the rise of Uber, Lottoland has come under attack from the likes of German state lotteries and UK National Lottery supplier Camelot.

Respectful of local lotteries, regulations oſten mean Lottoland is unable to offer bets on lotteries where players are based. For instance, Lottoland does not and cannot offer UK players bets on the National Lottery. However, speaking to EGR Intel, Lottoland chief executive Nigel Birrell says lottery monopolies have had it too good for too long and believes competition is needed if customers are to receive the best product and customer experience. The former bwin.party man also reveals how Lottoland plans to build on a successful 2016 and the firm’s ultimate goal of launching its very own lottery product.

EGR Intel: Lottoland has experienced substantial growth of late, recently passing €300m in annual revenues. Has this changed the shape and footprint of the company?
Nigel Birrell (NB): We are still primarily based in Gibraltar, which currently houses about 200 staffers – so while we are no Ladbrokes Coral, it’s still a sizable operation. Then we have a few offices in some of our core markets, so an office in Sydney – Australia is now our second biggest market – then a small base in Kuala Lumpur where we are looking at possible expansion into Asia. After that we have some technology and development offices that we use in Hamburg, Bratislava, Malaga and also Porto, while we may open an outpost in London. So all in all we are approaching the 300 staff mark now.

EGR Intel: And in terms of customer numbers and markets?
NB: We actually passed a major milestone this month – we now have in excess of five million customers, which is a great achievement and one which we celebrated. Right now we operate in about a dozen markets with Australia and the UK being our fastest growing markets. El Gordo [the special Christmas lottery in Spain] was great for us and played a role in December being our best month to date, acquiring over a third of a million new customers and generating over €30m in revenue – even better than last January when we launched in Australia at the time of the £1.3bn US Powerball rollover.

Lottoland CEO, Nigel Birrell

EGR Intel: Are you planning on bringing Lottoland to more markets?
NB: Well, there are a number of other countries we are looking at. Both Eastern and Northern Europe have lots of potential. Latin America is also very interesting. But the idea for now is to focus on a select few countries and do those well – that’s the plan for growth.

EGR Intel: You recently added scratchcards and other gaming products to your portfolio, as well as gaining a lottery messenger licence. Are you now more than just a bet-on-lotteries operator?
NB: We are an online lottery company, not a lotto betting company. We serve a mass market where three out of four adults are our target group. This is very different to casino or sports betting.

We believe lotto does not necessarily mean a rather boring draw of balls out of a drum. In essence, it enables people to dream and to win big sums of money. The demand for lotto products is unbelievable. There are many innovations to be made and nothing much has been done for centuries. Expect the industry to change and Lottoland to come up with many new products. Lottery betting was just the start. Our aim is to become the world’s leading online lottery operator which offfers the full range of products.

EGR Intel: Will you be using the messenger licence for your Lottohelden messenger brand in Germany?
NB: The licence will be used more for countries where regulations don’t allow for betting but where we feel we can use our lottery experience to remain in the market. We bought Lottohelden about 15 months ago but we’ve since moved those players from a messenger service to betting on lotteries directly through us, as the latter is the superior model. So the messenger licence just adds to our product set rather than being our focus.

EGR Intel: It’s fair to say you aren’t popular with the lottery monopolies – do you get frustrated having to defend Lottoland’s business model to them and others?
NB: I think companies such as Camelot do a great job but why shouldn’t others do that and also give to good causes? Why should the state lottery in Germany, for instance, be allowed to handle that state on their own? The whole ethos of the European community is to have competition across markets. People have vested interests and they want to protect them, I understand that. Taxi companies versus Uber, or hotels against Airbnb, for instance. I think the world is moving toward consumer choice and with the internet people can buy the product they want, so it will happen.

So I do get frustrated and a bit bored with it, particularly when we get guys who have worked for state lotteries for 30 years, expect a job for life, automatically have a profitable business as there are no competition concerns and no need to improve efficiency, sit back and lecture us about being a competitor who has come in and annoyed them. I’m glad we’ve annoyed them as it means they’ll have to up their game. I know Camelot is very good but some others rest on their laurels.

EGR Intel: One of the criticisms of Lottoland is that, unlike state-run lotteries, you don’t contribute to charity. Is this correct?
NB: No. Charity work is becoming more and more a priority for the Lottoland Group. On certain products Lottoland donates 25% of the revenues to charity. Lottoland is one of the main financial supporters of the Lottoland Stiftung (Lottoland Foundation) in Germany.

The Lottoland Stiftung is an independent non-profit organisation which is supporting charity projects in the two main areas: sports and help for disabled people. Recent projects are in the area of inclusive sports (where disabled and non-disabled people do sports together) and the provision of regular sports activities for children coming out of difficult social circumstances.

The Lottoland Stiftung is also a partner of Hamburg’s football Bundesliga club HSV. This cooperation allows awareness to be generated for the Lottoland Stiftung – for both people who want to participate in the work of the Stiftung and people who need the support of the Stiftung.

EGR Intel: Your chief strategy officer Elicia Bravo recently said Lottoland is aiming to become an online lottery operator – what did she mean by this?
NB: What we’d like to do is, rather than being a secondary lottery, or what we call a synthetic lottery offering bets on lottery, is create our very own lotteries. Right now we mirror EuroMillions, US Powerball, etc. but there’s an opportunity to build our own products, run our own draw and offer big, eye-catching jackpots. But that’s very much in the future – blue sky thinking. The lottery customer is rather conservative – so it will be many small, but hopefully quick, steps.

EGR Intel: You moved into B2B with Lottoland Solutions back in 2015 but, as yet, we’ve not seen any customer signups. Do you still see a future for this part of the business?
NB: It’s fair to say B2B has been a slow burn, but that is the nature of B2B. We’ve had a couple of false starts, trying to get the product offer right, but now we are really confident about its future and we have a really good pipeline with some big names to be announced shortly. I think these things take a long time as not only have you the contract to sign but there’s then all the work to get the integration done, which can take some time with large organisations. If a new product comes along that they feel they need then that comes first so you are never the top of the list when it comes to technical priorities.

EGR Intel: So it sounds like you have a few spinning plates – what’s your priority for the year?
NB: We’ve had serious growth over the last couple of years and are confident we can keep that path. We will focus on our core markets, add new markets and come up with our own products, which we believe to be much more innovative than what is already out there. January has started brilliantly so we are confident we can achieve our goals.