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Lotto NZ Move Towards Online Gambling

New Zealand’s national lottery, also known as Lotto NZ, has recently begun a significant upgrade of its mobile app and MyLotto website, designed to better the performance of its digital products as customers begin to migrate online.

Lotto NZ Move Towards Online Gambling

The upgrade project, which is speculated to reach completion by the early part of 2021, started off in 2019 and involved an investment in technology of a total of NZ$25m (£12.5m/€13.8m/US$16.3m). This move may lead to the appearance of the new online casinos at the NZ market in the closest future. The chief executive of Lotto NZ, Chris Lyman, explained that the need for the overhaul to be carried out was to ensure top quality of service for the lottery’s online customer base, with its present, “ageing” website needing improvement in order to meet higher demand.

Since the country and other parts of the world first went into lockdown in early March 2020, which saw the country’s lottery’s retail outlets closed for business, the number of online players has increased by 33%.

Layman had said that the company has significantly more individuals buying tickets online at this point than ever before. Approximately 200,000 people have been recorded to register to play games online since 25 March. To better put this figure into perspective, this number represents only new online players that have registered after NZ Lotto shops opening; the lottery would expect this number only over two years, and not four months. Layman also said that in this week alone, the lottery had recorded the registration of 32,000 to play online, with about half of those newly registered persons from the Auckland region.

Before the lockdown in March, 25% of sales by Lotto NZ were online, compared to the remaining 75% in-store, however for the draw on 16 August, 40% of tickets sold were purchased online.

The lottery company sold about 2.5m tickets for the last draw, and more than a million of those sales were online. That accounts for the most tickets Lotto NZ has ever sold online, according to Lyman.  He added that these high sales online slowed down Lotto NZ’s processing significantly and also led to delays, unfortunately.

Lyman went on to admit that interim improvements that have been made so far had also caused some issues on the Lotto NZ site, such as poor customer service and slow processing speeds, for which Lyman “sincerely apologized.”

The project scheduled to reach completion in 2021 is expected to ensure the back-end processes become more robust and that the lotto NZ site can handle higher traffic. This will then be followed by a complete replacement of the NZ lottery’s gaming system in 2024.

Lyman mentioned that the timing and costs are currently being worked through. However, the current work will cover a holistic replacement of the back-end gaming system supporting MyLotto, and also includes the lottery’s terminals in retail stores.

In July, the NZ lottery published its forecasts for the year to 30 June 2021. The company expects sales for the period to drop 8.4%, though for its online contribution to increase to NZD$418.3m.

Sales are also expected to drop from 2019-20’s reduced forecast of about NZ$1.34bn (£682.2m/€754.5m/$889.4m) to about NZ$1.23bn in 2021.

The amount that is set to be paid to the Lottery Grants Board, which makes use of lottery revenue to support charitable causes, is an expected experience of a  6.7% decline, from $300m to $280m. Meanwhile, operating expenses are expected to go up from 5.3% of entire sales in FY19/20 to around 6.6% for FY20/21.

The lottery explained that at this point, it is too early to have an accurate prediction of the impact of Covid-19) on New Zealand and also on Lotto NZ’s performance.

However, considering the unprecedented nature of the crisis the world is currently witnessing, the lottery is currently adopting a conservative approach to setting its targets for the 2020/21 year. It has now set its sales and profits targets a bit lower than the modelled long-run median.

Lotto, Strike, and Powerball games are currently expected to make up a total of $1.025bn of next year’s sales,  which is 83.4% of the entire forecast. ‘Instant Kiwi,’ and other lottery games such as Bullseye, Keno, and Play3, are forecasted to make up the rest of sales revenue.

Retail presently accounts for the bulk of sales made. However, there have been downgrades of forecasts for 2019-20 from their initial targets. At the start of the financial year, the retail sales targets amounted to $984.4m; however, the current forecast for the channel is to generate $935.2m, down by 5%.

Retail forecasts for the FY20-/21  are relatively low still at $810.4m, a further decline of 13.3% from the predicted figure for FY19/20.

The Lotto NZ expects to increase its revenues from digital sales in FY20-21, up 2.8% from a predicted $406.8m in 2019/20 to $418.3m.

This new development comes after the unavoidable closure of NZ Lotto retail locations saw many players move online, resulting in the predicted digital revenue FY19-20 rising over 50% from the initial target of $270.2m.

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