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A Review of Secondary Lotteries

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A Review of Secondary Lotteries A review of secondary lotteries Sally Gainsbury June 30, 2017 Report submitted to Gambling Research Exchange Ontario Please address correspondence to: Dr. Sally Gainsbury [email protected] Gainsbury – Secondary Lotteries Table of Contents Executive summary ............................................................................................................................... 4 Terms of reference ............................................................................................................................... 5 Context for secondary lotteries ............................................................................................................ 5 Lotteries ............................................................................................................................................ 5 Internet gambling ............................................................................................................................. 6 Online lotteries ................................................................................................................................. 7 What are secondary lotteries? .............................................................................................................. 8 Messenger model ............................................................................................................................. 9 Insurance model ............................................................................................................................... 9 Affiliate operators ............................................................................................................................. 9 Secondary lotteries available in Canada ............................................................................................. 10 Potential for harm............................................................................................................................... 11 Relationship between lottery and gambling problems ................................................................... 11 Income ............................................................................................................................................ 11 Youth .............................................................................................................................................. 12 Player understanding, rational thought, and motivation ................................................................ 12 Frequency ....................................................................................................................................... 13 Jackpots .......................................................................................................................................... 14 Gambling opportunities .................................................................................................................. 14 Electronic expenditure and accounts .............................................................................................. 15 Disreputable sites ........................................................................................................................... 15 Regulation ........................................................................................................................................... 15 Expressed concerns......................................................................................................................... 16 United Kingdom .......................................................................................................................... 16 Europe......................................................................................................................................... 18 Australia ...................................................................................................................................... 18 Considerations .................................................................................................................................... 19 Disruption ....................................................................................................................................... 19 Competition with existing operators .............................................................................................. 20 Consumer protection ...................................................................................................................... 21 Suggestions for research ................................................................................................................. 21 Conclusions ......................................................................................................................................... 21 References .......................................................................................................................................... 23 2 Gainsbury – Secondary Lotteries Appendix – Examples of secondary lottery operators ........................................................................ 26 Lottoland......................................................................................................................................... 26 WinTrillions ..................................................................................................................................... 29 LottoDay ......................................................................................................................................... 31 TheLotter ........................................................................................................................................ 34 3 Gainsbury – Secondary Lotteries Executive summary • Most jurisdictions have a single provider of lotteries. Although many lotteries have online sites, apps, and potentially the ability to purchase tickets online, the lack of competition has resulted in low levels of innovation and sophistication in consumer offerings. • Secondary lotteries allow consumers to participate in a lottery through a third-party provider, including lotteries from jurisdictions they would not typically be eligible to win. • Messenger lotteries purchase tickets in an existing lottery draw on behalf of customers and send scanned copies. Winnings are claimed by the operator on behalf of the customer, or the customer is flown to the relevant jurisdiction to claim their prize. • Insurance lotteries are betting/wagering rather than lottery activities. Customers bet on whether a set of specific numbers will be drawn in an existing lottery and operators pay out jackpots through an insurance scheme. Bets may be made on various outcomes of lottery draws, making a broad array of betting options available. • Fourteen of the top twenty most popular English-language online gambling sites accepting play from Canada offer secondary lotteries, including five offering the Canadian 649 Lottery. • There is little research on the impacts of secondary lotteries for consumers or existing lottery operators and few regulators have taken specific actions regarding these. • Secondary lotteries have features that pose the risk of harm for some consumers: o Secondary lottery sites may have poor consumer protection standards, including age-verification, and protection from scams and fraud. o Consumers may not understand the mechanics behind secondary lotteries, challenging the validity of informed choice. o Multiple lotteries and draws offered may increase gambling frequency. o Large jackpots may induce individuals experiencing financial difficulties, including gamblers experiencing problems, to participate in draws, exacerbating problems. o Customers may migrate to additional forms of gambling through sites that offer multiple draws and betting options. • Operators of messenger lotteries may not have a lottery license as these are resellers of tickets. Insurance model lotteries generally require a betting license. Many secondary lotteries operate in jurisdictions without appropriate licenses. • Several jurisdictions have taken actions against secondary lotteries, including the UK, which is holding an inquiry into these practices. Italy, Greece, Estonia, Bulgaria, Romania, and the Czech Republic have all taken action to block various secondary lottery sites. • Secondary lottery sites represent a disruption to the lottery industry and a new form of online gambling. • Secondary lotteries may compete with existing lottery providers, offering products that regulated lotteries are not able to provide and use branding of lottery operators without permission. The extent to which consumers understand these products, how outcomes are determined, and their links (or lack thereof) with existing operators is unknown. • Secondary lotteries may reduce revenues to governments and contributions to worthy causes related to lottery proceeds. • Levels of consumer protection offered by secondary lottery sites are not well established. • Further research is recommended to guide responses from regulators, including to protect consumers from harm. 4 Gainsbury – Secondary Lotteries Terms of reference The aim of this review is to examine the current state of the field with regards to secondary lotteries. This includes consideration of current sites, operators, and licensing jurisdictions, as well as international policies on these sites and apps. Specific consideration will also be focused on implications for consumer
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