Requirements for starting a Lottery Business

While there are multiple fronts on which a new online lottery business needs to be ready on, the following elements could play a crucial role in a successful launch or otherwise of what is usually a high-potential business in most Countries/States. This article only touches upon some broad based points and is not meant to be an in-depth analysis or business plan for a new entrant to this exciting and challenging business.

Hiring a Gaming Consultant:

Once the initial seed has been sown in terms of wanting to evaluate entry into an online gaming/lottery business in one’s chosen territory, the best thing a newcomer to the Gaming Industry or for that matter even someone with prior experience should be doing, is to scout for a good and effective consultant from the Gaming domain. This consultant should ideally be one who has worked that specific market in some capacity that demanded decision making, either as an employee/owner of such a lottery business or carries previous successful consultancy experience that can be vouched for. A good consultant will play a very crucial role in gathering inputs about, analysing and deciding on most if not all of the points, covered below.

Market Potential:

A wide and deep study of the market that is being evaluated is called for, in terms of number of existing players, potential new entrants, current market penetration and volume of sales being achieved. Identifying popular games that are currently being offered and scope for acceptance of new games needs to be studied. This may call for some structured and paid market research activities to be carried out. If niche segments of the market can be identified, either in terms of player groups, geographic boundaries or other parameters, it would be make for good business sense and opens opportunities for starting off something unique and creating ripples in the market. Industry data in terms of declared turnover, tax paid to authorities, number of employees and/or retailers/agents hired will help build a complete picture of what the market currently looks like and who one is pitted against. A thorough market analysis can throw up interesting findings, possibly even leading to shelving the idea of launching an online lottery business!

Competitive Analysis:

A thorough study of all the competitors to the new business, their spread and reach, popularity, issues being faced, etc is also a critical part of this evaluation to set up or launch a new online lottery business. Games being offered, incentive/commission plans for existing Distributors/Retailers, entry barriers of any kind – either natural, regulatory or artificial have to be studied.

Regulatory and Licensing Needs:

This is a very critical aspect that needs to be studied. It may even precede some of the other steps defined above! Availability of required license/s to set up and register an online lottery operation, scope of the license, tenure, games that can be offered, limitations to territory coverage, etc have to be analysed. There could be multiple options available for a new business, including procuring of a distribution license to an existing player (this could involve lower license fee and possibly lower scope for operations) or acquiring a full fledged license, again either at a State or Federal level. The owner/investors of the new lottery business need to take into consideration all such aspects and how it fits into their scheme of things, especially their growth plans for the business. Other statutory licenses and permits to start a business, employ people, acquire Office space, etc have to be understood as well. Cost of license fee and other cost elements needs to be factored in.

Technology evaluation:

In the case of online lottery, technology plays a stellar role and the success of the business can be defined by how good, robust and scalable a technology has been adopted. The kind of lottery software used to design and develop the online lottery’s central setup as well as client side software to be used with different POS system and Terminal options from across OEMs, can decide whether one has a winner on hand or something that will soon develop into an outdated, confusing and incompatible setup over a few years. Technology evaluation has to ask for a structured and detailed proposal including certifications, referrals of existing users, a demonstration of all features and capabilities, a pilot run to study all options and ease of using the system, display of load bearing capabilities and any other steps essential to finalising a technology and vendor thereof.

Direct and Indirect Sales Channels:

These options are to be evaluated and could include Retail distributors, agents, mobile app based and/or website based, SMS/USSD playing options. The Consultant can play an important role here in identifying and roping in new distributors and even helping in incentivising existing channel partners of other lottery players to jump onto this new bandwagon! This could make the difference between having just a docile and hardly noticeable launch or having a grand and hard-hitting launch whose impact is felt by competition as well as the playing public.

Marketing Campaign:

With the consultant’s help, a clear marketing message conveying the game offerings and prize monies to be won, intent of the business to stay and pay the winnings on a timely manner and conveying of credibility of the new license holder has to be planned for. A sustained marketing campaign, both pre and post-launch to help ramp up the volumes is quite essential for business and to even rope in new channel partners and needs to be budgeted for.

Business Plan and Sales/Cash flow forecasting:

Based on the above elements, a detailed Business plan, coupled with sales projections and cash flow for the new business has to be worked upon. This has to take into consideration that typically an online lottery license is issued for 12 Years or more and the projections have to be long term as well. A well researched and detailed business plan is also crucial to establishing credibility of the new business owners and could help in bringing in much needed investments for acquisition of License, buying technology and hardware, putting together initial operational costs, etc.

The pointers shared above will stand in good stead to illustrate most elements to be taken into consideration by a new business wanting to venture into launch of an online lottery operation. These can be the initial steps to take more serious and concerted efforts in validating viability and launching a successful online lottery operation.