Online lottery betting operator Lottoland appears to be making major moves to bolster its Australian market presence.
On Thursday, the Australian Financial Review’s Street Talk column reported that a mystery buyer had purchased 2.25m shares in lottery re-seller Jumbo Interactive after the market closed on Wednesday. The shares, which represent 5.1% of Jumbo’s issued equity, changed hands at a 28% premium to their current stock price.
Under Australian Stock Exchange rules, the size of the purchase requires the buyer to be identified via a substantial shareholder notice, so all will be known within a few days. But the AFR claimed that Lottoland was the purchaser, fulfilling the company’s long-held ambitions of acquiring a piece (and possibly much more) of Jumbo’s action.
Jumbo operates the OzLotteries website under license from Tatts Group, Australia’s dominant lottery operator. Jumbo used to run a German lottery business but shut the loss-making operation down last November based on its view that the market conditions didn’t favor the reselling model. (This view isn’t shared by Lottoland, which recently declared its intentions to launch a German-facing site.)
Lottoland made a major splash in Australia via its January 2016 launch and its disruptive business model hasn’t made it many friends among local lottery stakeholders. Earlier this month, Aussie newsagentsurged the federal government to mimic South Australia’s decision to prohibit Lottoland from horning in on state lottery operators’ turf.
Undeterred, Lottoland is rumored to be close to signing a naming rights deal with the prestigious Melbourne Cup race. According to the Herald Sun, the Victorian Racing Club (VRC) reportedly pitched Lottoland on a five-year deal to take over naming rights from Emirates, whose deal expires this year.
Here’s where it gets complicated. The VRC has a long-term wagering partnership with Tabcorp’s TAB betting brand, and sharing the stage with Lottoland likely won’t sit well with Tabcorp, which is currently pursuing a merger with Tatts.
Some analysts have expressed unease at the timing of Lottoland’s (alleged) Jumbo purchase. Jumbo’s Tatts licenses in South Australia and the Northern Territory expire in September, while the Victorian and New South Wales’ licenses have already expired and can be permanently cancelled so long as Tatts provides 30-days’ notice. Speculation is that Tatts could retaliate by taking its online lottery business in-house, leaving Jumbo a lot less jumbo.