Forget inflation and rate rises: people still buying lottery tickets as The Lottery Corporation hits profit record
The Lottery Corporation’s first profit announcement as a stand alone company was a successful one, which its chief executive says demonstrates its resilience.
Interest rates are rising and inflation is biting amid concerns about consumer spending levels, but almost half of the population is still buying lottery tickets.
The continued habit of trying to hit the jackpot led to The Lottery Corporation posting a record result for the 2022 fiscal year, with comparable revenue rising 9.4 per cent to $3.5bn and comparable EBITDA (earnings before interest, tax, depreciation and amortisation) up 11.9 per cent at $694m.
Chief executive Sue van der Merwe said the result showed the company, which runs lotteries such as Powerball and Oz Lotto and sold more than 660 million lottery entries for the year, was able to survive and even thrive during tougher economic times.
“Our business model really is built on this very large portion of the population, about 46 per cent, participating in our products and spending a relatively small amount when they play. And so what we’ve seen historically, and continue to see, is that real resilience during … different economic cycles,” Ms van der Merwe told The Australian.
The average lottery ticket buyer pays about $11 per transaction, which Ms van der Merwe said stood the company in good stead.
“It’s about a value proposition, isn’t it? People outlaying a relatively low amount for the opportunity to win a big amount, to win a dream. And that’s the way our products are positioned, and that’s what appeals to people,” she said.
“The Lottery Corporation has infrastructure-like and defensive asset qualities, low capital intensity, strong cash flows, significant and diverse retail distribution and upside potential from digital growth.”
That growth from selling lottery tickets online via digital channels drove further profit margin improvement, with the digital share of overall sales rising to 37.7 per cent, compared to 32.8 per cent a year ago.
EBITDA for the lottery side of the group rose 14.9 per cent to $600m, while the Keno business was hit by Covid-related closures during the financial year that meant its EBITDA dropped 4.1 per cent to $94m.
Ms van der Merwe also signalled that The Lottery Corporation would contemplate future bids for overseas lotteries, though any such move would have to be “on the right terms” and for an appropriate length of time.
The record result was the first for The Lottery Corporation as a standalone entity, having been spun out of wagering business Tabcorp earlier this year.
Given The Lottery Corporation only began trading on the ASX in May, it will not pay a dividend for the 2022 financial year. Tabcorp will pay its shareholders a fully franked final dividend of 6.5c a share on September 23.
The Lottery Corporation shares closed down 7c at $4.37.
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