The Lottery Office faces threat from US gaming crackdown
The Lottery Office, which offers Australians a chance to win millions of dollars in foreign prize draws, could be under threat from a regulatory crackdown on gaming in the US.
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The Lottery Office, which offers Australians the chance to win millions of dollars in foreign prize draws, could be under threat from a regulatory crackdown on gaming in the US.
New restrictions in some US states on lottery courier services – which has already resulted in an $83m prize being withheld – could pose risks to its business model and other companies offering similar services. A lottery courier service acts as a third-party vendor and purchases a lottery ticket on a customer’s behalf.
The Northern Territory-based Lottery Office (TLO) allows Australians to indirectly play overseas lotteries, currently offering eight games across various US and European jurisdictions.
Whenever a customer purchases a ticket to a draw, TLO will purchase a matching entry in the equivalent overseas draw. Should an entrant be eligible for an overseas prize, TLO will then pay an equivalent amount of the net winnings after taxes.
Privately owned The Lottery Office, which has offices in the Gold Coast and Darwin, has ridden a wave of success on this business model, taking out sponsorship deals with CommBank and Allianz stadiums as well as sporting clubs, including the AFL’s Gold Coast Suns and NRL’s Titans, to promote its brand. The company was founded by low-profile Gold Coast businessman David Railton Kennedy in 2003.
But industry insiders say its operations in the long term may be under threat amid a crackdown in some US states on tickets sold by lottery couriers.
In one case, a woman in Texas who won $US83.5m in a lottery risks losing her prize because she purchased her ticket through an online app run by Jackpocket, the nation’s largest lottery courier. Florida also is cracking down on similar services, recently shutting down The Lotter, an online courier service, in that state.
TLO declined to comment and it is understood the company does not believe it will be caught up in any crackdown as it is not a lottery courier.
Any move to crimp TLO’s business model would be good news for Australia’s major onshore operator, The Lottery Corporation.
Evans and Partners gaming analyst Sam Bradshaw estimates that TLO represents anywhere from 2.2 per cent to 4.4 per cent of Australian digital lottery sales, or 1-2 per cent of total Australian lotteries sales from any platform.
Mr Bradshaw in a report last year said that, as of 2024, TLO had purchased its matched tickets for the US Powerball & US Mega Millions out of Oregon.
Mr Bradshaw said given that lottery tickets could not be purchased online in Oregon, TLO bought the tickets via a registered retailer, a restaurant named The Pit Stop Sports Bar & Grill in the town of Beaverton.
“As the business operates more traditionally as a sports bar rather than a high-volume lottery ticket seller, we believe that the vast majority if not 100 per cent of the tickets sold at this sports bar relate to purchases by TLO,” Mr Bradshaw said in the report.
In an updated report written earlier this year, Mr Bradshaw said TLO appeared to have abandoned its deal with the Pit Stop, instead shifting to a nearby outlet in the city.
Although TLO takes no commission on winnings, it charges a significant premium for its services, relative to the cost of purchasing a ticket locally. This is typically about 55-65 per cent subject to exchange rates. TLO’s website states the mark-up covers the cost of the matching overseas lottery ticket, GST, a charity amount and administration costs.
The US crackdown on lottery couriers comes as TLO also faces closer regulatory scrutiny at home. The federal government has announced a review into foreign matched lotteries and online keno, including whether harm reduction policy options, including credit and digital payment bans, or other restrictions should be applied to these types of online lottery products.
The Lottery Corporation spokesman said it welcomed the review, adding: “Our lotteries have been a part of Australian life for more than 140 years.
“It’s very much in the public interest for the industry to remain sustainable and highly regulated, especially as official lotteries provide substantial revenues to state and territory governments, support thousands of small businesses and are loved by millions of Australians.”
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