For decades, the global lottery industry worked with thousands of traditional retailers to sell tickets and scratch off games.  Outlets such as groceries, convenience stores, and gas stations  benefitted from selling lotteries and scratch offs because, as studies show, most people who buy tickets also purchase consumer products (such as milk, snacks, and alcohol) when they visit a store.

Thus, the distribution arrangement increases sales for both parties.

Evolution of Lotto Sales

Internet-based sales is transforming a centuries-old industry: by changing the distribution model (most lotteries have no control over messenger companies that sell online), and by removing geographic barriers that previously gave these state-sanctioned organizations a local monopoly.

The history of lottery goes back to ancient China, around 200 BC.  Some historians believe some of the gambling proceeds helped to fund the Great Wall of China.  Today, governments and local states use lotteries to collect revenue.  In the United States, most of the money helped to fund state education programs.

Credit: Commons/Flickr

Credit: Commons/Flickr

The Internet is making a localized game into an increasingly global one.  In the U.S., sales are typically restricted to within state boundaries.  A non-resident or tourist can play so long as they purchase tickets within the state.

“The Web is proliferating with online retailers,” according to a spokesperson for Lottosend.com, an online messenger company.  “It’s creating an international market for players in a once-restrictive environment.”

Global Game

A Canadian player, through his Web browser, can simply play U.S.-based, or European games, or many other lottery draws outside of North America.  A local player can bypass geographical restrictions by using a messenger service, which acts an agent who makes purchases on the player’s behalf.

There’s another different between traditional and online retailers.  Brick-and-mortar stores have to abide by certain rules, such as pricing, brand displays, and promotions.

Online retailers can be more creative, by offering new games (such as combining jackpots of one or more lotteries in a single game, changing the odds and payout), alternative pricing, and unique promotions, such as volume discounts.

“So far, there hasn’t been too much resistance from lotteries against online sellers,” says the spokesperson for Lottosend.  “Perhaps that’s because the Internet is creating new sales channels and revenue streams for their organizations.”

Lottery Marketplace

As barriers are removed, a kind of lottery marketplace — where consumers have more options — is taking place.  With Web-based purchases, people can shop for the highest payouts, or the greatest odds of winning.

Not all games are created equal — or played equally.

When certain lotteries are scandalized through corruption or cheating (such as some located in the Caribbean, Africa, or Asia), players can simply bypass local games in favor of foreign draws.  (As quasi-state organizations, prize pools can be hijacked by unscrupulous politicians or administrators.)

Additionally, paper-based tickets are becoming digitized, potentially reducing instances of fraud, theft, lost tickets, and cases where unaware winners don’t claim their prize.

It appears that the global lottery industry may become more competitive.  In the future, localized lotteries could compete with foreign games because of the Internet.