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Interactive LOTTERY


When is a lottery not a lottery? When it only has two legs…


ZEAL Investment’s James Oakes describes a lottery market that’s ripe for a shake-up


Tat the lottery industry is sorely lacking innovation is hardly news. For example, when was the last time that you wrote a cheque? If banking has made the transition to becoming entirely digital, why is it that in 2017 95 per cent of the $300bn lottery industry still involves having to buy a paper ticket?


James Oakes, Director, ZEAL Investments


James is an experienced entrepreneur, executive, economist, and is fascinated by all things lottery. He is the co-founder of Geonomics, a location-based lottery start-up that raised over £20m in funding and was sold to ZEAL Network in 2016. Prior to that James developed a statistical arbitrage trading system for equity derivatives and worked as an economist for a boutique London consultancy that was acquired by Experian.


Te answer lies in understanding just how fragmented the global lottery market is. Every single country that allows lottery has its own unique set of regulations, and typically a single monopoly provider. Tis explains why lottery has resisted the revolution that technology has wrought on almost every other industry over the last 20 years. Even industries such as taxis and hotels, themselves no strangers to highly fragmented byzantine regulations, have succumbed to the relentless march of progress.


So long as this fragmentation exists there can be no UBER or AirBnB of lottery because it is impossible to piece together a patchwork of different, protected territories into a business with real scale and reach. At least that has been the conventional thinking that has led to entrepreneurs avoiding the space, and to the incumbents becoming increasingly entrenched.


THE THREE LEGS OF GAMBLING Gambling is typically defined by a framework


with the existence of three elements, or “legs”: l


Payment – players must pay to participate P122 NEWSWIRE / INTERACTIVE / 247.COM l l


Chance – the result must be largely determined by chance


Prizes – players must be able to win a prize of value


Whenever a product has all three legs then it is typically defined as gambling, and regulated as such. Tis is important as gambling needs to be regulated; to protect children and to protect people that are susceptible to addiction.


TWO-LEGGED FRIENDS Something very interesting happens when you


remove one of the legs. Not only does the resultant product become less risky it is also unlikely to be classified as gambling. If a product is low-risk and not classified as gambling, then regulators stop caring about it and it can transcend the fragmented landscape.


It also means that start-up companies can move faster, and introduce genuine innovation. We have already seen this play out in sister industries to lottery.


Social casino companies like Playtika have


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