One Tuesday around this time last year, businessman Luke Brill was riding the bus on his way to work with his earphones in, half-listening to Triple J, when he heard something that made him pay attention.
The station’s breakfast presenters were talking about the upcoming US Powerball jackpot — a multi-billion dollar lottery draw that was set to break records and become the biggest cash giveaway of all time.
What they didn’t mention, and what no one knew at the time, was that the draw would also lead to the launch of a massive business which in 12 months’ time would be on the way to revolutionising the gambling industry in Australia while raking in more than a million dollars a week.
That business is Lottoland, and Mr Brill is its managing director.
You’ve probably heard of the online lottery betting company by now — its branding is everywhere. The Gibraltar-owned business’s Australian arm has taken out advertising space across television networks in prime-time periods and secured significant sponsorship deals with major sporting events.
But a year ago, no one had heard of its gambling model, and for good reason — it didn’t exist.
Lottoland had been operating in Europe and the UK for three years but the timing of its launch in Australia was a bit of an accident.
“We got the licence to operate on Christmas Eve the year before and had planned on launching around February, but when I heard that this was going to be the largest jackpot in history, we spent the day rushing through things to get ready to launch, rushed out a press release and it just caught fire,” Mr Brill told news.com.au.
“We had no clients to begin with on the Tuesday. Zero. The Powerball draw was on the Thursday and by then we had 250,000 [clients]. It was the best possible start but it took us all by surprise and we weren’t really ready. We spent the rest of January playing catch-up and working out what our strategy was. It would usually happen the other way around.”
The brand didn’t invest in advertising at the time and it didn’t need to. More than a dozen TV and radio spots were devoted to explaining what Lottoland was all about — and there was a lot of explaining to do.
The business was unusual in the gaming and gambling industry operating in Australia at the time, and it still is. It involves betting on lottery outcomes rather than entering the lottery itself.
Players bet on the results of the biggest lotteries around the world, and now local draws too, and using an insurance-based model Lottoland is able to match the prize money offered in those jackpots.
So taking the US Powerball example, Australians weren’t able to buy a ticket for the $2.3 billion jackpot, but through Lottoland they could pay $10.50 to bet that the numbers they would have selected, had they been able to enter, would be picked. Just like buying multiple tickets, players could enter as many times as they liked, and the prize on offer was the same as that of the actual Powerball draw.
The Powerball jackpot sold itself, but without resulting in any major wins for Aussie entrants, it wasn’t great for Lottoland’s customer retention.
“That first 250,000 were almost like Melbourne Cup punters — most of them you’ll never see again” Mr Brill said.
“The initial push for us was ‘play the Powerball’, but that was just one hit, there wasn’t a great understanding of what our product was other than a way to get in on that one jackpot, so after that our advertising and marketing was about trying to educate our customers.”
Lottoland’s entry wasn’t welcomed by competitors who took legal action ahead of its launch which was settled out of court.
Gambling experts have also criticised it saying making lotteries more frequent increases users’ chances of developing a gambling problem.
Senator Nick Xenophon was among its most vocal critics. The anti-gambling politician blamed laws in the Northern Territory, where the company is registered, for allowing it to operate for profit unlike most other lotteries which are run by governments to pay for public services.
“Lottoland has turned into a legal no man’s land and we need to close the loophole,” he told news.com.au at the time of its launch.
“It’s also causing a haemorrhaging of local territories including state-owned ones. We will miss out on money for hospitals and schools because it will bleed government revenue.”
Lottoland says it’s trying to appease some of those critics by “looking for a charity to support”, but the main focus is building its customer-base.
Lottoland is now trying to get across the message that it’s not just US Powerball. It offers betting on other major international jackpots, and regular, local lottery draws as well.
But the main point of difference with existing lottery providers in Australia, as well as its offering of bigger prizes — “why play for a million dollars when you could play for a billion?” — is the online element.
“You can play on your mobile, there’s no real reason to go down to the newsagent. We know a lot of people don’t want to do that. Particularly young people — they don’t do that,” Mr Brill explained.
“People used to go to the bookies, to the TAB to have a bet, now they play on their Sportsbet or Ladbrokes app. The message we’re getting out is why are people going to the newsagent to buy their lottery ticket every week when they can play with us.”
Mr Brill says Lottoland is offering innovation in an area that has been stagnant.
“We are grabbing that younger audience,” Mr Brill said. He added that its customer bases skews towards women.
The company has signed up around 400,000 Australian users and by Mr Brill’s estimate has taken about one per cent share of Australia’s $2 billion lotteries market.
Though the company wouldn’t release its overall revenue for the year, Mr Brill said it was making “in excess of a million a week”.
Lottoland has paid out about $6 million in prizemoney to Australians since its launch, but is yet to declare a major win for one of its players and prove that it has the capacity to play it out.
“That would be the real prize for us,” Mr Brill said.
“We’re hoping for a big winner. Once we’ve paid out, say, $100 million, all those questions about is it legit, are people going to get paid out, they’re all answered.”