Lotterywest counters online threats

State government gaming agency Lotterywest has beaten its revenue budget and grabbed its biggest share of spending per capita for three years, but it continues to watch the threat of online gambling and other web-based gaming products from outside Western Australia.

Detailed numbers released in the Lotterywest annual report tabled in state parliament show that it had lottery sales of $889.5 million for the year ending June 30, up from $826.3 million in the previous corresponding period.

Sales per adult in WA for the period were $424.88, slightly better than its most recent peak performance in 2012-13, and well above budget due to lower than expected population.

It is clear from the annual report that Lotterywest is concerned about online sports betting and alternative lottery products such as Gibraltar-based and Darwin-registered Lottoland, which allows consumers to bet on lotto results around the world.

Lotterywest is making efforts to remind consumers that their gambling habits offer more than a prize payoff, with about $280 million paid to beneficiaries including community organisations, local governments and arts groups.

The response to these challenges has been multi-pronged.

It launched its first new game for two decades and has revamped the look and machinery of its retail offering. In addition, it has a business development program for retailers such as newsagents, but is also aiming to increase the number of outlets – a strategy that is not always welcomed by existing suppliers.

Lotterywest is also countering online interstate threats by investing in its own products via new website and mobile apps. That these moves will be viewed as a threat by retailers highlights the fine balance Lotterywest must maintain as it deals with strategic challenges.

Its online sales generated $61.8 million, which represents 7 per cent of total revenue, a jump of almost 40 per cent in the past year.

Retail commissions rose to almost $68 million from $64.3 million the previous year without any marked expansion of the store network, which stands at 529; of these, 500 are full-service outlets.

The big public winners, of course, remain the recipients of grants around the state.

Business News’ analysis reveals 27 recipients of $1 million or more from 963 grants worth a total of $118.9 million paid to community organisations; this is outside the $162.6 million in statutory grants to be distributed by the departments or ministers overseeing health, sport and the arts.

The biggest of these direct grants is $7.6 million to the Perth International Arts Festival, part of almost $10.9 million paid to University of WA projects.

Following that in order of scale, but excluding local governments and indigenous corporations, are: ScreenWest ($7.6 million); St Vincent de Paul Society WA ($6.5 million); the Royal Flying Doctor Service ($3.9 million); Independent Living Centre WA ($3.3 million); Anglicare WA ($2.2 million); Relationships Australia ($1.9 million); Identitywa ($1.8 million); St Basils Aged Care Services WA ($1.5 million); Cancer Council WA ($1.5 million); Friends of Kings Park ($1.4 million); Hope Community Services ($1.2 million); Intework ($1.2 million); Returned and Services League WA ($1.2 million); and True North Church ($1 million).

Lotterywest CEO Paul Andrew said the organisation was girding itself for a challenge from online gambling and betting players but to date the impact had not been noticeable on the bottom line.

Mr Andrew said the revenue improvement in the past year had been in part due to luck – the previous year had been hit by an unexpectedly big run of jackpots.

Nevertheless, the business had to prepare for the future, including the fact that younger people preferred to both communicate and consume games online.

The growth in online sales, he said, was expected to continue, especially over the next two years or so.

“We would be looking to double that 7 per cent to get it around 15 per cent,” Mr Andrew said.

“That is where we need to be.”

Mr Andrew acknowledged that another bulwark for Lotterywest was in the expansion of its physical presence via traditional outlets.

He said that Lotterywest had identified about 30 places where it planned to expand in the new future, with research indicating a further 50 on the horizon.

While that might seem significant to existing retailers, he said there had been little change in Lotterywest outlets during the past decade.

“During that time of significant growth in our population in net effect we have had just over one new retailer per year,” Mr Andrew said.

At the same time, Lotterywest was looking to defend its territory against for profit rivals that gave little or nothing back to the state.

“That is the niche for us,” Mr Andrew said.

“We need to appeal to our customers to buy our authentic product.

“Our structure is unique to WA, the proceeds from playing in WA stay in WA.”