Zeal prepares for Germany repositioning with online lottery brokerage acquisition

Zeal has acquired German online lottery brokerage firm Lotto24, and will switch its business model in the country to become a lottery broker rather than a lottery betting operator.

As a broker, Zeal will sell tickets from local state lotteries, rather than offering bets on the outcome of the draws.

Zeal said the move would “de-risk its business model,” as the legal case against lottery betting operators in Germany continues to grow.

It will maintain its normal business model in all other markets.

The deal will create a group with more than five million worldwide customers and combined billings of €500m, but will cost Zeal around €107m annually, as it stops offering its betting products.

The firm said it would make up the shortfall in time through the “accelerated growth of the combined group.”

“The enlarged group will be in a unique position to accelerate online brokerage growth in the German lottery market,” Zeal added.

The deal will also deliver annual synergies of €57m through online platform efficiencies and reductions in operating costs.

Zeal also plans to relocate its operations to the country “in time”.

The operator has already initiated discussions with the German gambling regulator on future licensing arrangements for the group.

A statement released by Zeal said the transaction would strengthen the German lottery market and expand returns to federal states and their lottery beneficiaries.

Lotto24 is listed on the Frankfurt Stock Exchange and recorded revenues of €25.2m in 2017.

Zeal CEO, Dr Helmut Becker, said: “This transaction is good for shareholders, good for customers, and good for the German federal states and their lottery beneficiaries.

“We have held initial, constructive conversations with Lotto24 and look forward to further engaging with the management to achieve a successful combination of the businesses,” Becker added.