Big news in this press release from ALNA today:
Australia, 27 March 2018: The lotto and keno betting industry will cease to exist under a new proposed amendment to the Interactive Gambling Bill, meaning the closure of dangerous sites like Lottoland and Planet Lottery – a move welcomed by the Australian Lottery and Newsagents Association.
The news comes as a relief to the Australian Lottery and Newsagents Association (ALNA), which has long held serious concerns about the ethical conduct, high consumer risks, damage to Australian businesses, and dodgy structures of these schemes.
Adam Joy, CEO of the Australian Lottery and Newsagents Association said, “We are pleased to see this loophole being addressed on a national level. The best kind of consumer protection from synthetic lotteries is to not allow it in our country. The model encourages problem gambling, promotes high risk spending, and is misleading regarding the winnings available. And it also comes at a significant cost to state taxes, and to local family-run small businesses – that employ locally, pay Australian taxes and support the local community.”
Betting on the outcome of lotteries is already not an approved betting contingency in South Australia, so lotto betting schemes cannot accept bets there. The UK government has recently moved to close further loopholes in their Gambling Act, to ensure betting on lottery outcomes is prohibited. And now this proposed amendment will see decisive national action to prohibit these types of businesses in Australia.
Joy added, “We are talking about websites, like Lottoland, that send bets overseas and have a history of being misleading, preferring token gestures over responsible behaviour, of targeting Australian businesses, of illegally misusing trademarks of other businesses and facing legal action. They operate on the methodology that it is easier to beg for forgiveness than to do the right thing from the start.
“And they do all this while operating outside of the much tighter regulations, consumer protections, and higher taxes that official regulated lotteries adhere to. This is why amending the Interactive Gambling Act is the only sensible way forward.
“This will be welcomed news for the consumers who have been misled by these online schemes, the community that have been concerned about the impact on state tax revenues, and the more than 4,000 small businesses and their 15,000+ employees that are regulated lottery retailers.”
One of the most concerning aspects of the synthetic lottery model is its introduction of instant and repetitive behaviours that have been proven to be high risk for addiction and encouraging of irresponsible gambling behaviours: “The same features of pokies that make it high risk and dangerous, are being applied to online betting. All the while, using the low harm product of lotteries as the bait to then switch Australian consumers over to high harm gambling.
“The Federal Interactive Gambling Act already makes it illegal to sell a scratchy online and play a poker machine online, and the federal government moved last year to further strengthen the act with an amendment to ban online in-play betting on sports and banning credit betting, as well as making it illegal for unlicensed operators to offer online poker. We are pleased that they are now closing a further loophole in the Act by banning online betting on all lottery and keno outcomes,” explained Joy.
The ALNA has objected to the financial implications of these online betting sites, like Lottoland and Planet Lottery. Based offshore and licensed in the Northern Territory as sports bookmakers, the schemes avoid paying any gambling tax and have no obligation to support the consumers they may hurt with their encouragement of high harm behaviour. And in the case of Lottoland, a Point of Consumption Tax for all synthetic lottery sales would be contributing less than 1% compared to official lotteries.
The ALNA questions if the current licence for these sites can manage the risks that come with the type of complex layered financial hedging that they operate on.
The other concerning financial implication of lotto betting has been that consumers can walk away with significantly less than what was initially promoted or than they had understandably expected if they won.
Joy added, “State Governments have been voicing concerns that lotto and keno betting sites are hurting state tax revenue collections that impact community services that pay for schools, hospitals, roads and other important infrastructure.
“These schemes are also hurting newsagents and other lottery retailers across Australia who are mostly mum and dad operators and have their houses on the line as collateral for their businesses. And because they are bound by tight regulations that provide consumer protections, they are open to having their customers hijacked.”
On behalf Australia’s lottery and news agents, the ALNA greatly appreciates the Coalition Government’s strong support and decisive action on this issue, and would also like to recognise the important role of Senator Pauline Hanson and the One Nation Party in leading this initiative with the government.
– ENDS –
What is the difference between lotto betting and official regulated lotteries:
Lotto betting sites are wagering websites that sends bets overseas, with customers betting on the outcome of lotteries. More colloquially known as lotto bets (synthetic/fake lotteries), these online-only bookmakers are different to official regulated lottery draws.
They do not offer tickets in a draw, rather they draw from regulated lottery businesses and offer bets on lottery outcomes, relying on complex insurance linked securities to pay any winners (there has only been one million-dollar prize recipient, compared to official lottery’s 253 millionaires in 2016).
Real lotteries generate billions in state lottery taxes to pay for schools, hospitals, roads and other important infrastructure.
About the Australian Lottery and Newsagents’ Association (ALNA)
The Australian Lottery and Newsagents’ Association (ALNA) is the only national and non-profit, industry body specifically for Australian newsagents and lottery agents. Representing a significant part of the Australian economy, ALNA works tirelessly to better its members businesses, and to ensure a secure future for newsagents and lottery agents.
About Adam Joy, Chief Executive Officer, ALNA
Adam Joy is the Chief Executive Officer of the Australian Lottery and Newsagents’ Association (ALNA). He has held senior roles at ALNA for almost a decade.
Adam is an experienced senior executive and board director in commercial, advocacy and non-profit organisations. Previously, he worked in business process outsourcing, petrol and convenience, FMCG, QSR and marketing organisations.
Adam holds a Masters in Leadership and is a member of the Australian Institute of Company Directors.
Hi Mark,
This is fantastic news! I saw a question on reddit about this that I thought was a good question though. So Lottoland are not allowed to take bets on domestic lotteries and soon they won’t be allowed to take bets on international lotteries. Is there anything stopping them from making their own lotteries?
Best Wishes,
Bradley
Yes Bradley , Current Legislation and you’re right it is good news.
Hi Graeme Day,
Thanks for the response. I ask because on Lottoland, they have two lotteries that they created: the “Friday Lotto” and the “WorldMillions.”
So I know that Lottoland are banned from taking bets on domestic lotteries, and they will soon be banned from taking bets on international lotteries, but will they be banned from taking bets on lotteries that they have created?
Best Wishes,
Bradley
In my view, this is a terrible precedent that sends a frightening message to any business that wants to set up in Australia. It’s an anti-competitive Government decision which makes a mockery of our free market system and people’s freedom of choice.
Tatts have been very quiet on the fact they are taking revenue away from us, not Lottoland. Their online lottery revenues were up 30% in the half year to end of December, 2017. We’re being hoodwinked into blaming Lottoland. We need to open our eyes to the facts.
Peter,
Whilst you’re certainly entitled to your view I disagree strongly. Aside from the gratuitous donations made by Lottoland to their carefully selected causes how much tax did they pay into our country? Do their tax contributions even come close to that paid by our Lottery Providers from which every state benefits financially? Have they been clear to their customers about the true odds their products really represent?
I find their comment about wanting to work with Newsagents particularly distasteful and insulting.
Online migration of Lotteries is going to happen whether we like it or not and it’s what they should be pursuing. Our mission should be to do our best to plan for it.
David, tax-wise, as far as i’m aware, Lottoland is currently the only company in the country asking to pay more tax. The legislation currently is not in place allowing them to do so. Obviously they wont compare to Tatts, because Tatts is enforced to pay a lotteries tax whereas Lottoland is a bookmaker. My preference would be to tax Lottoland to the hilt then see if they survive. Surely a better route? Just worried about the precedent it sets by the Government straight out banning them.
Do we ban Apple and Google from this country too on the same basis? Just my two cents for what it’s worth…
Point taken.
I’ve never been happy about the Google/Apple thing. Would Google and Apple not have come if there were going to be taxed the way we would prefer they would?
Hi Peter,
It’s only fair that free competition is allowed providing the playing field is level.
In this case Tatt’s have competed with all tenders to obtain the lease rights for 40 years of a Govt owned product called The Lott Newsagents have been granted a renewable 5 year leased franchise depending on behaviour and the terms of the franchise being met. Both entities pay State Govt and Federal Govt taxes on these profits. in the case of newsagents we are also competing with online selling by our franchisor.
This agreement does not permit us the priviledge of joining any other competitor if we choose to.
Do you really believe it fair competition to “raid” our paid for space, not pay tax and further do it knowing we cannot compete.
Fair go, business is tough enough as it is let alone
having to fight both the Boss and the competition.
Internet pirating is a whole new game that all Governments throughout the World are looking at and something I believe will be huge when we all realise how it affects us. Not much use having agreement Free Trade or otherwise if they can be willy nilly abused at whim.
I ask you, can newsagents start there own bookmaking internet betting?
peter I agree with your free market sentiments however this isn’t free market when our hands are tied by both our opposition and our franchisor.
Hi Graeme – appreciate your thoughts. The fact is that Lottoland doesn’t even offer the same product as Tatts now so isn’t the argument that they’re competing null and void? I’m sure Lottoland would be very happy to pay the amount of tax that Tatts pays in exchange for a monopoly…
Lottoland like all other bookmakers is licensed in the NT. I’m afraid I just don’t agree in one company being singled out when all along they have worked within the legal and regulatory framework put in front of them, yet are being penalised for doing so.
Change the framework. Don’t hinder economic prosperity. Allow the public of Australia to spend their hard-earned money where they see fit, not where the Government wants them to.
While I welcome the Lottoland decision, the reality is that the migration of over the counter lottery purchases to online through the tatts website and Tatts app is at a far more significant cost today and into the future than Lottoland.
Thanks Mark. Tatts have successfully achieved what they set out to do: spend $5m of shareholder money to silence a tiny competitor and maintain their grip over us.
What’s the long-term answer/solution?
Hi Peter in my opinion the best approach is to run a business without reliance on any agency line for survival.
There are some who say to me that this opinion disrespects newsagents and talks down Tatts. The thing is, the data speak volumes. The Tatts Annual report shows the results and the trajectory.
My advice is make your business more appealing in products you are not known for, products people will seek out. In one store it will be a certain range while in another it will be another range.
I know a newsagent who is on track to do $50,000 in handbags this year. At 55% GP the number becomes interesting. In one of my stores we will do $125K this year in sought after plush at 52% GP. That shopper buys other items 40% of the time, making them valuable.
We are in times where what was traditional for the shingle matter less.
Tatts have hoodwinked the governments and all Lottery agents.
they do not want an on line competitor because they continue to use the existing bricks and mortar outlets to sell their product, then swing the customer to on line,
net result Lottery agents lose because TATTS will not return any online sales to Agents.
ALNA has let us all down and one wonders why they jumped on board the TATTS wagon
John, your summary is spot on where Tatts are concerned. The secondary problem is that the synthetic lotteries/fake lotteries are also a large threat for they play in newsagency paid for space (as a franchsee) which is taking a monetary consideration away from us as well.
The Government is acting properly to fix this.
The Governement also need to look at the Franchise code where the Franchisor cannabilises the Franchsees authorised area for their own benefit with the eventual outcome of increasing the Franchisors business by demising thier own Franchisees by “eating” their profitability and market share without compensation.