Online gambling reform: State lotteries must catch up if they are to survive
Gambling has been a popular pastime worldwide for centuries. The dream of fast money with little effort has always fascinated millions of people and provides the basis for an industry worth billions. In Germany, state providers have been monitoring players and gaming operations for many decades - each federal state has its own state lottery company, which manages the offering and ensures that it can be played responsibly, quasi as a monopolist. This also ensures high tax revenues and subsidies for the federal budget.
The Internet has fundamentally changed the industry. The offerings of the state providers, which are mostly focused on offline distribution, have been joined by online gaming brokers and foreign market participants. All of a sudden, the state monopoly position was no longer sufficient for success - customers were enthusiastic about the user-friendliness of the online platforms, about ever new game offerings and colourful advertising campaigns. The quick reaction of the politicians: ban on online gaming, back to the intact old world without the Internet. Under the pretext of ensuring responsible gaming, the successful online platforms were forced out of the German market and now had to prove themselves on the international stage.
New developments for 2021
All this is now in the past. The state lotteries are using the phase of the ban to also retrofit online. Since 2012, Internet gaming has been permitted again under strict conditions and even market participants banned abroad are gradually returning to Germany. A new State Treaty on Lotteries is now to ensure a balance of control and supply from 2021.
However, the state is once again underestimating the speed of development of the Internet and the ability of entrepreneurially managed gaming providers who have adapted perfectly to the needs of their customers. Forced internationalisation has made many of the non-state market players even more successful. Thanks to success on the international stage, their pockets are full to bursting - but even more importantly: the experience gained there and the high level of investment in technology enable constant further development of the offerings parallel to the high willingness of the Internet and the clientele cavorting there to change.
Merging of online and offline
Anyone who wants to be successful today must understand technology not as a means to an end, but as a raison d'être. Unconditional customer focus is the only way to success. It has long since ceased to be about the task of translating offline offers for the Internet. The question of the state providers must be: "How would Amazon actually offer gambling on the Internet? Companies like Amazon even dream of the incomparable offline sales network that state lottery companies have at their disposal. The merging of online and offline must therefore be driven forward technologically and culturally in parallel.
Only a few state market participants have so far prepared themselves sufficiently for the current challenges and the future. Most of them use standard solutions to run their business or are tinkering with smaller solutions that will not be able to withstand the force of the competition. Some companies lack urgently needed e-commerce competence and the long-established service providers are too expensive or do not have modern solutions on offer.
However, there are also rays of hope. For example Toto-Lotto Niedersachsen has been developing online business for many years together with sum.cumo as a partner and is investing in sustainable changes in the internal service readiness and the offer for customers in Niedersachsen. Rapidly increasing online sales figures and a constantly modernised technological basis put the company on a secure footing for the future.
Germany therefore continues to afford the regional operation of the lottery business. The future will show whether the regional companies will be able to compete with international players and whether they will be able to meet the expectations of customers. Thanks to their regional sales network, the starting position is actually ideal - if only there were not the Internet…
For years we have been supporting companies in the lottery industry in digitizing their offerings through disruptive innovations and customer-centric solutions based on the latest technologies. Accompanied by our specialists in consulting, user experience, front- and backend development and marketing, successful projects are created from the idea to the implementation.
This article has also been published as guest article by UNITEDNETWORKER