Thursday 22 February 2018

Lottoland looks to capture a new generation of punters seeking a jackpot win

The Irish boss of lottery website Lottoland is targeting young smartphone users in a bid to grab market share

Graham Ross, Lottoland’s Irish boss, is targeting the National Lottery’s online business by appealing to smartphone consumers under the age of 40
Graham Ross, Lottoland’s Irish boss, is targeting the National Lottery’s online business by appealing to smartphone consumers under the age of 40

Fearghal O'Connor

"Grab my balls," says Lottoland's Irish head Graham Ross, his voice rising with obvious relish as we sit drinking coffee in a busy Dublin coffee shop. Ross laughs at the catchline of a provocative Lottoland advertisement that ran online just before Enda Kenny's St Patrick's Day visit to the Oval Office.

It was part of a Donald Trump-themed campaign starring comedian Oliver Callan that was designed to announce the Gibraltar-based online lottery company's arrival in Ireland.

Lottoland is a self-styled disruptor, and its here with one thing in mind: to grab a big chunk of the state-owned National Lottery's business.

"We had a lot of fun with that ad and got a lot of traction," says Ross (40), who for nine years was Irish country manager for Betfair.

The company is investing €1.5m this year to attract "young, savvy, smartphone users in the 18-40-year-old category", says Ross.

"They've changed everything - the way they pay utilities, order food, shop. So there is no reason why they won't change the way they play the lottery," he proselytises.

This year, Ross expects "strong five-figure sign-ups" to Lottoland.

"Some consumers are a little bit institutionalised by the experience of buying it over the counter for years, but the National Lottery's online business is not as strong - and that is the market share we are going after."

Lottoland launched in 2013 in Gibraltar and was immediately profitable, he says. It has over six million customers and is active in 12 markets on four continents, offering lotteries based on the numbers and jackpots of 30 lotteries worldwide, including the Irish Lotto and EuroMillions.

"Gibraltar has become a sort of Silicon Valley for the gambling industry," says Ross. After two decades of massive change across the gambling industry - to which he often had a front-row seat - lotteries were the last area of the sector to experience significant disruption, he says.

"No one sets up to be the next Uber or the next Airbnb. It is a little bit cliched. It is about being a good company, with a good offering and going into a space that is crying out for evolution.

"It has been dominated for a long time by state-owned lottery monopolies.

"There has been some evolution of the offering but it has been a slow move to online and mobile.

"It's not very innovative and Lottoland is heading up a new wave of companies that are hoping to innovate and disrupt the sector."

In Ireland, the National Lottery - now operated by Canadian company Premier Lotteries under a 20-year license from the State - has dominated the sector with a turnover over €600m. This year, Lottoland aims to take "a high five figure" number of players from the state lottery, for starters.

"They've got a good business but Irish people are open to new products," said Ross. "We feel that with the investment in the product and in marketing that we are in a good position to grab some market share off the lottery."

Ross himself comes across as an unlikely disruptor of the gambling industry. Smart, quietly spoken, more bookish than bookie, he is nevertheless steeped in horseracing.

He grew up in the small west Wicklow village of Grangecon and recounts proudly the area's racing heritage of Derby and Gold Cup winners.

"From childhood, I had a passion for racing. When other kids were reading the Beano, I was reading Pacemaker.

"The story goes that my dad broke his leg when I was two and I ended up watching racing for a winter with him every Saturday. So it's probably his fault that I'm a little bit obsessed."

At Betfair, he would bet on the exchange "to be tuned in to how the markets were going on a day-to-day basis". He bets for fun these days on sporting events, such as Cheltenham.

Indeed, Ross, an enthusiastic amateur jockey, recently fulfilled a lifetime ambition by riding in a charity race at Cheltenham. "The buzz of riding in front of 40,000 people at a venue I had been going to since I was 12 was amazing. But I didn't follow my trainer's instructions and so completely botched my chance of getting placed. It was a learning curve."

After first working for the Irish Horseracing Authority, Ross cut his teeth in the gambling business at Dermot Desmond's Betdaq. After two years there, he moved to its rival Betfair, becoming its Irish country head. Betfair's unique gambling exchange allowed punters bet against outcomes, turning the serious gambling sector on its head.

During Ross's nine years at the company, Irish revenue went from €1m to nearly €14m.

"When Betfair launched, it was probably the biggest innovation around sports betting in a generation - in a couple of generations," he says.

But by the end of Ross's stint, Betfair had come to a strategic crossroads. When Breon Corcoran arrived from Paddy Power as chief executive, he pushed the company towards a more mass-market approach. For Ross, Corcoran's restructuring was bad news personally as it switched the regional model for a more product-focused one.

"It was an interesting time and obviously Breon has done an amazing job," he said. "Betfair taught me the importance of a clarity of strategy and keeping a clear focus on the opportunity and your unique selling points. Betfair had tried to do too much and lost its strategic vision.

"There are arguments for and against specialism but one way or another you need to be clear on what the customer problem is, how you can address it, how you can win and then follow through on that as quick as you can. That applies as much to Lottoland as it does to Betfair."

After leaving Betfair, Ross did some consultancy work, including a stint with British gambling giant Sky Bet, helping to set up its new Italian operation. But he is now back in Ireland with disruption on his mind and the National Lottery firmly in his sights.

Not everyone is happy to see him. In a recent Dail committee hearing, a representative of grocery store lobby group RGData raised concerns about private lottery companies, without referring directly to Lottoland.

She said: "They are a huge threat to the retail agents I represent, who are selling legitimate tickets that deliver funds to good causes."

Ross insists that his company too will donate to charity and support good causes and that a policy on this will be announced soon. "We are not necessarily going to look to replicate anyone else's approach on this. We will look to put money back in more innovative and targeted ways."

There are other concerns too. Problem gambling is a huge issue in Ireland.

Although lotteries are not generally the means by which hardcore gamblers spend their money, the ease of access to a whole host of new lotteries that Lottoland provides might not be welcomed by all, particularly given the glacial pace at which the Government has moved to put in place new legislation to govern the area.

"Online lottery betting is not the area of most concern in terms of problem gambling but everyone has got a responsibility to ensure they have the protocols in place," said Ross.

"Not having a formal regulatory structure is a negative. It means that Irish consumers are reliant on the processes in place through other jurisdictions and regulatory licensing regimes to ensure that they get a second hand socially responsible problem gambling approach from operators.

"I think all of the major operators are committed to ensuring that people who have a problem gambling are protected from themselves and have access to the treatment or advice they need."

For the average Lottoland player, though, the key question is likely to be "Who will pay up if I win?" That is central to the company's model because if you play the Irish lottery on Lottoland and your numbers come up, you have not actually won the Irish lottery. Instead, it is Lottoland that must cough up an equivalent-sized jackpot.

Under its tiered-risk management system, it meets any prize below €10m out of its own resources and above that it uses insurance to cover winnings. But for the really big jackpots, it operates a security-linked insurance model that is fully collateralised and backed by institutional investors. Ross insists no jackpot is so big that it would break the model and leave unhappy customers. "I'm sure a billion-dollar lottery win would make for extra work for our risk-management team but that happens very rarely."

The standard lotteries that Lottoland's Irish customers want to play are the EuroMillions and the Irish Lotto. A winning jackpot on either would not trouble the company's "business-as-usual risk-management approach", he says.

"We have had a €23m winner in Germany and in total we have paid out over €600m in winnings.

"But we are actively waiting for that first Irish jackpot winner."

When the company launched in Australia, it just happened to coincide with the biggest-ever lottery globally, a $1.6bn Powerball lottery rollover in the US.

"There's a huge lottery market down in Australia and Lottoland was the only place you could play this jackpot. They got 250,000 signs up in the space of a couple of days."

To date, there has been no Lottoland jackpot winner in Ireland. The publicity generated would transform the company's prospects here, says Ross.

"Look, if we do our job and grow our market share and our active player base, in due course we will get that Irish winner."

But with the chances of winning the Euromillions at one in 39 million, he may have to wait.

Sunday Indo Business

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