Record-breaking prize money won by a lucky Lottoland punter will come from the coffers of the betting company’s insurer.
Lottoland industry concerns
Gibraltar-based betting site Lottoland allows its customers to bet on the outcomes of a wide variety of lotteries across the world. These include offerings such as the Powerball and Mega Millions from the United States as well as many of the big European draws.
The company also offers customers a wide range of scratch card products. Lottoland punters do not bet on the lotteries per se; instead, the company allows them to place bets on the results of these draws, offering prizes identical to those in the lotteries themselves.
It is effectively a one-stop shop for lotto players, and the company has been growing steadily since it launched back in 2013.
Companies like Lottoland are the target of critics who claim that they divert money from the pockets of charities and other good causes. Unlike Lottoland, many national lotteries give a significant portion of their ticket sales to good causes.
Speaking to The Irish Times, a Lottoland spokesman rebutted this, saying: “By far the biggest threat to good causes’ funding from lottery-related sources is the treatment of unclaimed prizes, which are no longer ring-fenced for good causes.” He went on to talk about the company’s commitment to social responsibility and discussed a number of initiatives that are in the works, including a “partnership with a major charity”.
The Australian government has made moves to ban these types of third-party national lottery game betting platforms. The National Lottery authority in Ireland went so far as calling these types of betting firms “parasites”.
According to estimates, these betting companies are now taking up as much as 20% of the market, with no obligation on gamblers to buy actual tickets for the draws anymore. Very often these bets can be placed at a reduced price to what the actual lottery tickets would cost, despite being for the same draw with the same prizes.
These companies were never allowed to gain any traction in the United Kingdom, as they were never allowed to cater for bets on the UK national lottery. They are also banned from accepting bets within the UK for Euro Millions draws. An alliance of these companies, including Lottoland, is in the process of seeking a judicial review on the Euro Millions decision in the UK.
Details of the win
On June 1, a Berlin-based Lottoland user called Christina managed to win a significant jackpot of £79m ($105m) as a result of correctly matching her ticket numbers with the five numbers pulled out in the lottery draw for Euro Jackpot.
This is by far the largest prize a Lottoland user has ever won. In comparison, the previous record was a meager £12.3m ($16.5m), won in 2016 by another German user.
Lottoland believes this is the largest payout that an online lottery or gambling site has ever made. There is no doubt that the company will be using this jackpot win as a core part of its future marketing efforts to try and attract more customers who will be enticed by the chance of achieving a similar victory.
This hit to the company’s finance is not as bad as it may appear on the surface. Lottoland is covered for a significant portion of this jackpot by its insurance plan.
In 2015, Lottoland entered into an insurance policy to protect itself against a jackpot of this magnitude. It did so as part of an insurance-linked securities scheme (ILS) and was also able to utilize this policy back in 2016 for its previous large payout.
The company increased its level of coverage as part of this ILS in August 2017, bringing the size of the insurance plan to £106m ($142m). In hindsight, the move was very well timed. As a result of this scheme, Lottoland’s ILS insurance provider will have to pay out nearly half of the entire jackpot, with most of the rest of it being covered by the traditional insurance markets Lottoland is part of.
It appears that Lottoland is the sole company of its kind to take out this form of ILS insurance, and it may lead to insurance providers contemplating their ILS offering in the future.