From BizCommunity. Story by Sumita Saha.

 In Europe, everyone from small startups to the big players in the online gaming industry are vying to get a piece of the lotto pie as European Union legislation has called into question the legality of this longtime national monopoly.

And that pie is potentially huge since the lottery industry is by far the most lucrative industry in gambling and one of the most profitable markets in the world, making more money than cinema, video games, professional sport and yes, even porn.

How are they doing it? There are a few different business models being implemented. Some are ticket resellers – they buy up official tickets and resell them online at a premium price, particularly to those wishing to buy tickets last minute or play from overseas. Others focus on promoting lottery syndicates – offering entry into multiple online group lottery tickets. It essentially works the same as if you were in a lottery syndicate with your colleagues from work – everyone pools their tickets improving your chances of winning, but equally dividing the prize between everyone when you win. Many players prefer to improve their chances of winning in this manner so those websites offering syndicate play fill this demand.

The most profitable model is offering bets on lottery results. Often skating close to the line of legality, this devilishly simple business strategy lets the lotteries incur all of the logistical costs of running a lotto. The company then simply offers bets on the results to consumers at the same price as an official lottery ticket without any costly expenditures of running a lotto. Of course it’s not quite as simple as it seems since someone needs to foot the bill when that big multi-million jackpot is won, which generally means finding reliable insurance companies to underwrite the costs.

There usually seems to be one company which gets off to a healthy lead while the others get bogged down trying to get off the ground and for online lottery the winner at the moment seems to be Lottoland, a Gibraltar-based startup with a U.K. license and former U.K. gameshow host, Chris Tarrant, as their celebrity sponsor. Lottoland is perhaps the most successful adopter of the “betting model” providing players from an expanding number of countries with the chance to wager on lottery results. Although online gambling is not yet legal in South Africa, Lottoland is poised to garner a large market share should the legislation change.

Because of South African laws there are currently very few online providers of online lottery tickets. There are some resellers who are buying South African lottery tickets but they are mainly focused on selling them to South Africans living overseas (the reseller model does not give much competitive advantage selling domestically). There are also some companies running online lottery syndicates although again, these tend to focus on European and American lotteries.

With the amount of money to be made from online lottery however it seems inevitable that Intralot is going to face a wave of new competition in the near future. The rest of Africa is almost untouched and opportunities abound for enterprising businesspeople to profit from being the first to bring online lotto to the rest of the continent. Like Blockbuster, Tsogo and RiSA, the South African lottery is going to have to adapt quickly to startup companies using the power of the internet to provide a better product in a more efficient manner to Africans.

Read more at BizCommunity.