The Lottery Sector and its Impact on the Gambling Field: Market Trends in 2022–2023

Many people say that they do not like to gamble but are still playing lottery games on a regular basis. Most market participants do not see the lottery industry as part of the casino market. However, this business is increasingly approaching the level of the online gambling field.

The Lottery Market in Numbers: an Overview of the Present-Day Situation

Lotteries are one of the most promising and profitable segments of the industry. Already in 2018, the volume of the global market reached 250 billion euros, and by the end of 2020, more than half of the revenues of the entire gambling business were accounted for by lottery operators.

Most of the profit came from Europe and Western European regions:

• 7.3 billion euros — the declared annual income of the German company, Deutsche Lotto- und Totoblock;
• 9 billion euros — the revenue of the UK national lottery;
• 13.7 billion euros — the annual profit of the French La Francaise des Jeux;
• 20 billion euros — the profit of the Italian lottery market.

According to the forecasts of the Technavio independent research agency, the volume of the global lottery market will continue to grow. Experts believe that an average annual rate will reach 10%.

It is worth noting that the COVID-19 pandemic does not have a significant impact on the market. Yes, land-based establishments were forced to temporarily stop working but operators quickly realised the advantages of online drawings and decided to switch to the digital environment.

Lottery ticket providers are not only moving their capacities to the online segment but are also following the most significant trends in the IT industry. For example, since 2019, one of the largest Chinese operators, 500.com Limited, has launched a large-scale redirecting program for sales markets and started bitcoin-mining.

Public Opinion: How Lotteries Differ from the Casino Business

The established opinion that a lottery ticket has nothing to do with slot games was formed mostly thanks to national operators controlled by state monopolies.

Most governments use the profit of the lottery business to spend more on sports, culture, and education. Accordingly, lotteries may come off as a form of charity in such regions as:

1. Europe. The European State Association of Lotteries has reported donations of 20 billion euros. This is 52% of the annual revenues of 72 operators, members of the Association.
2. Great Britain. The amount of deductions from the lottery business is established in the country at the legislative level. Market participants send 40% of the annual revenue to the Department of Digital Technologies, Media, Culture, and Sports.
3. The United States. Local monopolies bring to the public treasury from 28% to 40% of the annual revenues. The income of members of the US lottery organisation splurges on financing the education system and programs that are aimed at combating gambling addiction.

Compared to national lottery monopolies, the gambling business is considered a relatively young niche that simply did not have time to gain a positive reputation.

At the same time, the casino market is also actively involved in charity work. But this information is not advertised as widely as in the lottery industry.

Examples of large-scale charity:

• The American business baron, the owner of the most popular land-based establishments in Las Vegas, donated 50 million dollars to the New York State Health Fund.
• The Slots City gambling brand created a special charity fund and took part in the International Environmental Campaign “Tree Planting by One Million People Per Day”.
• Employees of the US operators annually spend more than 422 thousand hours on voluntary work (open data from the report of the American Gambling Association).
• Russian bookmakers regularly invest in the development of youth sports and culture.

According to independent international analysts, public opinion regarding lotteries will not change in the next couple of years.

Gambling operators cannot yet compete in terms of information of the public since they have several limitations because of the ban on advertising their projects. They just have to adhere to the chosen tactics and show customers maximum exposure and security.

Will State Monopolies Give Way to Private Business?

Europe is considered the most interesting market in terms of legal regulation and state monopolies.

Following the precedent of 2011 when a Maltese provider joined issues with the French government on the right to offer bets on horse racing on the country's domestic market, the European Court of Justice declared the state lottery monopolies a legal exclusion from the free gambling industry.

According to the judicial instance, such a decision will allow national providers to control the niche more effectively and fight against such social problems as tax evasion and money laundering.

Over the years, this way of thinking has become even more common. National governments are not ready to stop controlling domestic lottery markets, although private and offshore projects are still trying to change the situation.

Those who want private entrepreneurs to enter the market believe that the need for monopolies is exaggerated.

If customers can get a wider range of services at affordable prices, the market will only benefit from healthy competition. And taxes paid to the public treasury can also be spent on social needs. In this case, there will be no need for the compulsory nature of charity.

How Lotteries Compete with Other Types of Gambling

After the lottery business was transferred into the digital format, it has received more new opportunities for the attraction and retention of the audience than in the land-based segment.

If earlier users had to wait for the weekly drawing, now, they can buy a ticket at any time. Moreover, customers are offered:

• variable betting systems;
• flexible limits;
• different rules of participation;
• new types of tickets and game mechanics;
• progressive jackpots;
• dynamic round-the-clock drawings;
• drawings with gamification elements, and much more.

In the online format, users can get new experiences, good prizes, round-the-clock access to entertainment, and a wide variety of products.

The lottery is quickly transforming into the format of a casino game. The most popular thematic solutions are:

Mega Ball by Evolution

The release of 2020 transformed the standard bingo drawing into a fun, dynamic TV show. Broadcasts are available at any time of the day and please users with their visual appeal.

The developer also offers several bonuses that are typical for slot machines. For example, multipliers and free moves (customers are provided with the ability to cross out a few extra balls or buy a new ticket).

Lucky Series from BetGames.TV

This is a unique solution in the live format. The provider's project combines live broadcasts of the drawings, traditional lottery rules, and sports betting.

Gamblers are offered a series of bets on the outcome of the drawing in real-time. Moreover, there are several coefficients, tables of probabilities, and even templates for the most effective gaming strategies.

Casino operators and bookmakers have 2 options:

• competition with the lottery market and the implementation of new developments that can attract the attention of customers;
• integration of lottery products into already existing gambling platforms.

Trends and Prospects of the Lottery Market

According to the forecasts of Global Industry Analysts Inc., the average annual growth of the market will reach 8.7% by 2026. Growth rates in some regions may differ but such differences will be really small.

The expected growth rates for the lottery markets in 2021–2026:

• 10.1% for the Pacific region;
• 8.2% for Europe;
• 7.2% in Canada;
• 8.5% for Latin American markets.

In addition to the global growth in the volume of the lottery industry, there are some more trends:

1. Market digitalisation. The private industry and lottery monopolies are actively moving to the digital sector. The transformation of the market causes changes in the regulation of the industry and provides other participants with an opportunity to enter the market.
2. Focus on the mobile audience. The mobilisation trend has affected all gambling niches, including lotteries. The modern casino software is developed using HTML5 technology and allows entrepreneurs to work with any type of traffic.
3. Promotion in social networks. Lottery operators are taking all possible steps to expand and “rejuvenate” their audience. Today, on the global market, there is a trend of the distribution of gambling products via Google stores, App Store, as well as social and streaming platforms.
4. Integration with casino content. One of the most successful ways to compete with monopolies is to put lotteries and video slots or sports betting together. This approach helps operators to attract a wider audience and constantly expand the range of services by using different products.

The Main Things about the Lottery Market in 2022–2023

About half of the income of the entire gambling industry is accounted for by the lottery business. This is one of the most promising investment areas in recent years.

• Most modern markets are represented by national monopolies. This approach is used in the United States, Canada, and more than 20 European countries. Businessmen make attempts to change the situation but so far, the most successful option is the provision of lottery products within online casinos.
• Regular lottery participants do not think that drawings are games of chance. A positive opinion about lotteries is formed mostly thanks to large-scale charitable programs. Owners of gambling projects have not yet managed to gain such a reputation, although they regularly fund social programs, culture, and sports.
• One of the main trends in the coming years is the full-scale digitalisation of the industry. Lottery operators are switching to the online segment and are working on the gamification of the gameplay. The latest releases are a unique hybrid of casino games, TV shows, and sports betting.

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