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Online lottery: A jackpot for all

For Suraj Verma, January 27, was like any other day. He bought himself a lottery ticket on his way to the office. The very next day, this 36...

March 23, 2003

For Suraj Verma, January 27, was like any other day. He bought himself a lottery ticket on his way to the office. The very next day, this 36-year-old medical representative from Elder Pharma discovered he had hit the Jackpot — he was now one crore rupees richer! ‘‘I went straight home to tell my wife and the rest of my family,’’ says Suraj who now plans to start his own medical business.

Suraj is part of a small but growing breed who try their luck at that commonly-used short-cut to riches — a lottery. But Suraj didn’t have to go to a street corner to buy a paper lottery from some shady dealer, instead he went to a computer terminal near his office and bought himself an online ticket. And he found out he had won through national television.

Using the latest technology, lottery has now reinvented itself online. The market, which started with just one player a year back, now has many corporates vying for space. Its new USP is the fact that it bets on transparency. We explored the online lottery scene.

In the beginning

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It all began with Playwin. Part of the Essel Group—promoted by Zee Network, Essel Propack and EsselWorld—Playwin announced its first online lottery game, Sikkim Super Lotto, on March 5 last year.

The idea was simple, just walk into any Playwin outlet, where lottery terminals rub shoulders with your daily grocery, pick up a playslip and strike your lucky six numbers. Hand the playslip to the shopkeeper, pay the money and collect the ticket.

When the retailer puts the playslip through the terminal, it instantly sends the selected numbers via satellite to the main server. This server locks the numbers before the ticket is printed and keeps the data till the results are declared.

What started with one has now expanded to include more and more players.

The Essar Group, Videocon, Ispat Group and the Modi Group are some who have shown interest. After all, the market is estimated to be Rs 50,000 crore big and everyone wants his share.

There are a total of 13 lottery playing states in the country, but a lottery operator needs to get licenses in just one or two states to play in several.

For example, Playwin has license for three states, Maharashtra, Sikkim and Karnataka, but its games can be played in other lottery-playing states too. However, the company shares its revenues only with the states that it has licenses in.

Similarly, the Essar Group-promoted CAIRS’s Fortune Lottery Game, has a license for Nagaland only where it is played as the Nagaland State lottery. ‘‘We will be launching the first phase in the states of Kerala, West Bengal and Karnataka with 1,500 plus terminals, and the remaining states by the June of this year,’’ says Vikash Saraf, CEO of Essar Teleholdings Ltd. Essar has some 20 terminals installed in Nagaland but there are no winners so far. The group is expected to invest upto Rs 300 crore by the end of this year to take its total number of terminals to 10,000.

The company, however, refuses to divulge it’s game formats, but claims that their games will be superior to the ones available in the market. The Rs 3,500 crore consumer durable group, Videocon is another player exploring the lottery business seriously. ‘‘We already have the existing infrastructure like a countrywide dealers network. We will rope them into the business by giving them a computer terminal and a modem,’’ says Videocon chairman Venugopal Dhoot.

In the first phase Videocon is planning to invest about Rs 10 crore which will go up later as the company rolls out the product in the entire country. The group’s brand name is VOne.

The lottery business, says Dhoot, was conceived a long time ago and with Playwin’s success they have also decided to join the bandwagon. ‘‘This is an upcoming business if I do not enter this business then someone else will,’’ Dhoot says. The lottery business will also increase footfalls into Videocon showrooms which will give it an advantage to sell other products too, he adds. ‘‘The problem with a paper lottery is the total lack of transparency, so during the last few years the government has got totally disenchanted with this format. The online lottery seemed a better option. Some states are also looking at the online lottery market as an alternate revenue stream for themselves,’’ says Saraf of Essar.

Money for the State

And why not? While the state would get just 1 per cent of the total revenue from sales of paper lottery, in the case of an online lottery it can get upto 20 per cent. For example, Playwin had promised Sikkim a total of Rs 35 crore from the total sales in the first year, but because of the popularity of the game, the state eventually has Rs 66 crore in its kitty.

Similarly, Karnataka was promised Rs 100 crore in the first year, that is, between August 2002 to 2003 crore, but it has already made Rs 49.85 crore (till mid-March 2003) from Playwin.

All companies are targeting the same players. ‘‘Our target customer is someone from the lower- and middle-class segment,’’ says an official from Playwin. Started with Rs 350 crore and some 600 terminals, Playwin expects to invest over Rs 100 crore, mostly in marketing activities. The company is also bidding for Haryana.

“Eventually the online lottery will displace the old paper lottery. But at the moment the penetration of online lottery is very low and it will take some three to four years to realise the full potential of online lottery,’’ says Saraf. Some, like Suraj Verma, would disagree.

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