Are the politicians directly responsible for Lottoland (1) being licensed to operate in Australia corrupt or just ignorant and stupid? At the very least they did not practice any great ‘due diligence’ (i.e. really checked this out first) as increasingly normal practice for many Australian politicians (2). And with the massive amounts of money at stake there is also a suspicion (i.e. a bad smell) there could have been some backdoor deals behind this here as well as in other countries such as the UK (3).
Lottoland has been operating locally for a good year or so now with television promotions convincing many people to spend money on the possibility of winning massive international Lotto prizes through the use of digital or online means – convincing them that they are paying for real ‘lottos’ when they are not (as we discuss below). Lottoland was licensed to operate in Australia via the Northern Territory which has long had a loose licencing regime for gambling companies and bookmakers (especially those operating online or digitally) as well as cut-price tax rates (4). This has invited a great backlash in recent weeks from both a group of 3000 newsagents around Australia crying foul (5) also joined by cross-bench senators like Pauline Hanson (6) sparking a backlash against yet another destructive case of corporate raiders from overseas (Lottoland is based in Gibraltor).
So is Lottoland some kind of a scam, and if so how? And aren’t ‘lotto’ tickets usually sold in newsagents just another form of gambling? And hasn’t Australia started to lead the world in opening up to allow all forms of gambling to prey on and often devastate some of the most vulnerable people in our society – including the ‘pokies’ or ‘slots-machines’ in pubs and clubs around Australia, and the bookmaker apps of companies such as William Hill and Crownbet (both now apparently trying to copy Lottoland) with smartphone apps which encourage endless betting on weekly sports results, and so on (7) . It is estimated that , $11.6 billion is spent on poker machines in Australia annually with the country having ‘the worst “pokies” problem in the world – causing great dependency by many in turn leading many to suffer financial devestation, family breakdowns and even suicide (8). Indeed Australia apparently has the highest rate of gambling in the world more generally – with ‘over 80% of Australian adults [engaging] in gambling of some kind. This is the cultural backdrop of how smartphone gambling apps – ranging from ‘mobile casinos’ (e.g. roulette and blackjack as well a) through to the ‘gambling-like’ Facebook apps such as Slotomania and Zynga Poker, and on to the online bookmaker apps such as Sportsbet – have now increasingly hooked in a younger more diverse demographic apparently ready to bet on anything (even the current sex marriage political survey)(9) . So why wouldn’t a corporate raider good at fooling people that digital apps is a legitimate way to ‘disrupt’ an industry not want to make Australia a prime target?
In Australia gambling by ‘punters’ is not taxed directly. This is only partly because most people lose most of the time or mostly overall. Its also because gambling operators pay tax which in relation to the Australian social contract means that the social or indirect costs of gambling (reputed to cost around $5 billion a year). The Australian fascination with diverse and extensive forms of gambling from ‘two-up’ to betting on any sporting or life event seem to continue the endemic ‘get rich quick’ hope and expectation that seems to have been part of the culture since colonial times (i.e. when many people to this country in the often vain hoping of finding gold in the next creek, valley or ‘around the corner’).
Like Uber after having been ‘banned’ in London last year, Lottoland is already realising that it will have to start paying tax in Australia if it does not want to be shot down (i.e. s gambling taxes are key source of revenue for debt-strapped Australian governments – which is one main reason why encourage people to gamble in this country). After a recent report that ‘more than $90 million has been wiped off the Victorian Government’s budgeted gambling revenue forecasts for the next three years, the federal government is putting a lot of pressure on the Northern Territory government to pull Lottoland in to line(10). So the fact that it tries to avoid paying any tax at all in Australia which defeats the purposes of legalised gambling in this country, is just part of Lottoland’s rort. The newsagent group taking on Lottoland rightly claim that it is destroying small businesses in this country as well as the 20,000 staff employed by news and lottery agents, and it is also not contributing to funding key community facilities and services as it does not pay taxes like other gambling and bookmaker companies (11). As they further outline “Consumers need to know the difference between buying official pool-based lottery tickets, and using a wagering website that sends bets overseas.”
The main reason why Lottoland can be called a rort or scam of sorts is that it purports to sell Lotto tickets as an altnernative to the Lottos sold in newsagents. However, it really sells gambling about Lottos not direct entry to overseas Lotto jackpots per se – that is, it allows people to rather bet on the outcomes of international lotteries with the promise of matching their prizes. From our own inquiry, a further related con about this is that whilst Lottos are regulated to the point of safeguarding those that buy tickets, there are indeed a lack of such safeguards with Lottoland-type gambling on Lotto results – also resulting in substantial discrepancies between promised prizes (and chances of winning these) and the reality. Indeed, one report projected that Lottoland was ‘slugging’ an average 35% reduction from any winners of bets on advertised massive US and European lotteries (12).
So Lottoland may not be a full-on scam (i.e. a complete rip-off) since people can win. But it clearly involves willfully deceptive advertising or misrepresentation which does not even have the redeeming tax and community benefits to offset the destructive social consequences of how gambling is a basic form of addiction also causing financial devastation. Unlike many similar corporate rorts exploiting the current political fascination with market ‘digital disruption’ (such as Uber) the tax shortfall is the cynical reason why you will see governments now act to either get a piece of that pie or they will indeed shut Lottoland down very soon. Maybe if people are going to gamble they should just make sure they keep this a simple and inexpensive hobby only (i.e. the way my grandmother used to get the occasional ‘real’ lotto ticket) !!! – CKR 29/9/2017
See our earlier report on Uber to compare with the Lottoland strategy