Lottery looks very simple when you play and pick your numbers, but it is a complex organization internally. Unfortunately, most of the investors take a plunge into this business with a different perception and are usually sold with an unrealistic business plan with RoI (Return on Investment) in less than 6 months. It is a good “fairytale business model” which rarely exists in reality. Over the past year I have met quite a few such investors in the emerging countries, as usual my favorite regions - Africa, Latin America and South-East Asia. I discovered many interesting facts during my lengthy discussions with them. It gave me an opportunity to understand the process through which the lotteries struggle and run like loss making machines. I have tried my best to summarize them here.

1. From CEO’s desk - LocusPlay
Why do lotteries run into losses?
16 May 2016
I wrote about reasons for lottery failures in one of my previous articles. I am glad it was well received
and we had a record number of readers. Since then, I have been thinking of writing my findings on
struggling or loss making lotteries. However, my hectic travel schedule and buzzing business pushed
this article a bit out of schedule. But here I am, writing this piece straight from an airport lounge at
Bangkok airport while in transit and waiting for the next flight.
Lottery looks very simple when you play and pick your numbers, but it is a complex organization in-
ternally. Unfortunately, most of the investors take a plunge into this business with a different percep-
tion and are usually sold with an unrealistic business plan with RoI (Return on Investment) in less than
6 months. It is a good “fairytale business model” which rarely exists in reality.
Over the past year I have met quite a few such investors in the emerging countries, as usual my fa-
vorite regions - Africa, Latin America and South-East Asia. I discovered many interesting facts during
my lengthy discussions with them. It gave me an opportunity to understand the process through which
the lotteries struggle and run like loss making machines. I have tried my best to summarize them here.
1. Gloomy picture – The investors are usually sold with an idea that the lottery market is worth a few
hundred million to a couple of billion dollars. Even if we acquire 5% of the market share in the begin-
ning it will return the investment in 4-6 months. After almost a decade in this industry, I have still not
found a single lottery that fits into this business model, may be I have a weak eyesight.
2. Culture misfit – Lottery is a high-risk and high-return business. So, investors usually have a big
appetite for risk taking. International investors investing into a lottery in an unknown territory is not
uncommon and there have been success stories. But at the same time it is imperative that you do not
take a plunge with a team that has never understood the culture of country/territory thoroughly. The
common trend I have observed is that investors bring their own team and hire local people who have to
blindly follow the instructions given by the management. The opportunists see this as a low-hanging
fruit to make one’s personal fortunes, which puts organization goals on the back seat. Lottery is highly
cultural and this factor has been grossly missed out. If you cannot blend your strategy and game design
with the local culture and rely blindly on a foreign team of so-called “experts” then
Congratulations!!! You have started digging the first hole.
From CEO’s desk
www.LocusPlay.com

2. From CEO’s desk - LocusPlay
It is evident that the lottery has failed to understand what customers want and instead delivers a
product they either do not understand or is beyond their intellectual level.
3. Pursuing a non-solvable problem – Eventually the lottery is launched with the help of so-called
“experts” who have never operated a lottery before. First month’s sale is flat and you see people on
the ground gradually loosing motivation. Again the board-level strategies are worked upon while
ignoring the ground-level facts. More money is pumped-in, the pressure is transferred to the next
level and the same corporate theory is making rounds. A few more months and the situation is even
worse, lottery looses half of the sales staff, blame-game has just started, small stakeholders have al-
ready started branching out… More money is pumped in, more “experts” are called for… digging
the hole deeper.
4. Art of making it more complex – When it is not going our way, usually we try many out-of-the-
box solutions rather than attacking the actual problem. Lotteries do the same by adding more
games, more channel partners, hire unnecessary people etc. This makes situation more chaotic and
in the end, result is the same and the sale is still flat. More money is pumped-in…
I wish money could solve all the problems.
5. A ray of hope may be too late – Eventually, the lottery discovers something that they have been
thriving for. Someone who shows them the mirror and walks them through each and every step that
went wrong. There is a hope for a turnaround, but it requires more money. Sometimes they are
available, sometimes they are not...
The investors invest without a realistic market study, solely focusing on the RoI in anticipation of an
unrealistic business model that churns money.
There are subtle ways to penetrate the market and systematically grow the investment. Success of a
lottery depends heavily on how well you have understood the local culture, demography, level of
education, source of income, etc. All these are factored into designing a game and creating a distrib-
ution network that blend well with the expectations of players. Majority of the time a successful lot-
tery model from the US, UK or Europe is replicated in the emerging markets and it fails
miserably. Each startup lottery requires proper planning and presentation of a realistic business
model. Professionals, who have spent sizeable amount of their career in this industry and with
emerging markets, are capable of deriving such business blueprints. I would recommend having
such professionals by your side to give your lottery venture a fair chance to succeed.

3. LocusPlay, Inc.
91 Clemence St.
Providence, RI 02903
USA
+1(401)400-1183
info@locusplay.com
www.LocusPlay.com
locus-
play
About LocusPlay
LocusPlay is a global lottery technology provider that has helped transform struggling lotteries in the
emerging markets. 50% of our customers are those who have switched from their existing technolo-
gy providers to LocusPlay. It is evident with the amount of trust these lotteries have put in us that
LocusPlay delivers a combination of right technology and perfect execution.
LocusPlay deals with all aspects of lottery technology like business plan, game design, marketing
etc. Please feel free to write us at LocusPlay.com. We are always eager to help you.
This content was accomplished by Rahuldev Rajguru (CEO, LocusPlay) in his personal capacity. The
opinions expressed in this article are the author's own and do not reflect the view of any specific organiza-
tion or institute.