Digital lotteries are taking over the world of traditional lotteries. Before convincing all lotteries to go digital, this paper seeks to explain why going digital is a logical choice, along with a brief history and forecast of the digital lottery world.

1. A White Paper By LocusPlay
29 December 2015
Digital lotteries are taking over the world of traditional lotteries. Before convincing all lot-
teries to go digital, this paper seeks to explain why going digital is a logical choice, along with
a brief history and forecast of the digital lottery world.
There are several main points of this paper: going
digital in the long run decreases costs and increases
security, technology has many advantages over
manual operations, and finally, the world market is
inevitably turning digital (with emphasis on Asian,
Latin American and African markets). Let’s look at
why and how this is happening.
Fixed Cost vs. Variable Cost
The nature of technological advancements is such
that many companies find it more cost effective to
go digital. Going digital typically allow for less
expensive software updates and easy reinstallation
as opposed to sometimes costly replacement and
fixing of infrastructure.
All tools and infrastructure used in manual opera-
tions, whether they are lottery ticket dispensing
machines, handwritten tickets and miscellaneous
smaller items such as ink, paper and other devices
vanish almost entirely. Digital platforms are also
more easily connected through a secure central sys-
tem. Electronically stored information has the
added benefit of being easily backed-up and
sortable versus manual operations which may be
harder to lose (except in the case of natural disaster
or intentional destroying) but otherwise more
painstaking to hold on to and store.
Going digital is also more space effective, as a
server can easily store many terabytes of data while
paper records can rapidly accumulate and consume
storage space. Thus the costs of going digital usual-
ly are one-time, averaging out in the long run to be
much less than manual operations and in-
frastructure that may require installation and repair,
along with higher potential for rapid depreciation.
Going digital typically mitigates most of these
costs, though not entirely (as technology also
evolves much quicker while at the same time being
easier to update).
Going Paperless
In a report by Cisco, going paperless was listed as
large expense businesses can “easily cut”1. In tra-
ditionally paper-based businesses such as lotteries,
going digital can save businesses a huge sum of
money, with figures differing based on size and
scope the business. Lotteries that are completely
manual for example, will save money on paper,
printing supplies, ink, and logistics while incurring
the additional cost of installing digital software.
Though receipts will still be printed, the costs
should drop as going digital tends to standardise
efficiently. The cost of software of all kinds has
been dropping for years and as technology be-
comes increasingly advanced it will only drop fur-
ther.
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Future of Digital Gaming
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Another important and less quantifiable benefit of
going digital is increased record-keeping and secu-
rity. Digital systems have a capacity to store and
index information; in terms of lotteries, not only
will records be safe but also easier to organise and
manage. Thus the increased safety and lowered
costs (especially over the long run, as software in-
stallation occurs once where paper is a constant
cost) contribute to a push for digitalisation.
Digital operations will also allow multiple points of
entry for consumers – that is, because of the less
limiting nature of mobile and online platforms,
more consumers will be able to play lottery games.
Even handheld, mobile point-of-sale devices are
different from traditional practices, where receipts
and tickets are handwritten and often illegible or
hard to keep track of. The digitisation of applica-
tions thus allows for an expansion of a consumer
base through easy channels; instead of customers
having to form lines to play lotteries and purchase
tickets, they can simply play from the comfort of
their own home, while only requiring a mobile de-
vice. In some cases, such as with USSD betting
systems, an internet connection is not even neces-
sary.
Digital Trends in Asian and Latin
American Markets, focus on Car-
ibbean
Apart from the general listed benefits of going digi-
tal, many markets have caught on or are ahead of
the curve. The micro-scale benefits of going digital
will contribute the world macroeconomic view of
going digital, as seen in global market trends.
Phone usage specifically has increased from 7% of
all gamers downloading mobile games to 18%
from 2008 till 2011 (Parks Associates). The upward
trend in online and mobile gaming continues in
various regions including EMEA (Europe, Middle
East and Asia), Asia Pacific, with smaller players in
Latin America, Canada, and finally the United
States with about half of the world market (as of
2010). According to Pricewaterhouse Cooper, in
2015 this will change to the Asia Pacific region
driving growth and capturing 43.4% of the world
market, up from 29.2% in 2010, while taking away
several percentage points of the global market
share from the United States and less so from
EMEA.
The Asia Pacific region’s growth in gambling mar-
kets will create a need to pivot geographically to
Asia and cater to that market specifically. Potential
in this market includes China and South Korea,
which are the largest markets for gambling in the
region and are both also closed to online gaming.
The potential for deregulation of these markets will
greatly increase the Asia Pacific region’s market
share, as legal lotteries (manual only) are found in
most Chinese cities and Hong Kong, although ac-
cording to a whitepaper by KPMG, casino gaming
is both extremely popular and exclusive to Macau
2. Japan prohibits most forms of gambling with the
exception of horse racing and lotteries. Despite the
heavy regulation of gaming faced by these markets,
Asia Pacific (and India) markets are still expected
to become the world’s largest player by 2015.
Deregulation will only increase this potential. As
transportation infrastructure such as trains im-
proves so as to better connect regions of Asia
where gambling is prohibited to regions where it is
legal (such as China and Hong Kong to Macau),
expect these numbers to only increase. Pricewater-
house Cooper projects that the online market will
be “steadily eroded” from 2010-2015 due to clearly
rising demand. The main concern of most govern-
ment regulation is the rise of monopolies; once this
fear is mitigated with legislation markets should
become more accessible. Projected numbers by
PwC say that gambling will grow at 9.2%, from
$117.6B to $182.8B in 2015.
Projection of digital lottery world
based on large markets
Smaller countries with projected growth include
New Zealand, Malaysia and Vietnam in the Asia
Pacific region (Pricewaterhouse Cooper), though
primarily for casino-based gambling. However,
casino-based gambling can easily be seen as a
gateway to online and digital gaming, as the tech-
nology has already reached these markets.

3. The trend can clearly be seen in markets such as
the UK where a sharp increase in all bets placed
over the past few years were online. As Asia Pacif-
ic markets deregulate and expand the gaming in-
dustries, look to see countries with functional gov-
ernance and a steady population of gamers already
in place turn to digital gaming. Another promising
trend is the “harmless” nature of lotteries – while
games such as poker and sports betting may be
deregulated after the other gaming markets due to
their negative public perceptions, the playing of
lotteries is typically much more widely accepted.
Markets such as Japan which otherwise prohibit
gaming allow lotteries, and it is only a matter of
time before they go digital. Markets such as the
Caribbean or South America in particular which
rely heavily on tourism, will also see an increase in
online gaming as both local users gain access to
better mobile devices and tourists will be attracted
to the regions due to their gaming opportunities.
Thus it will be in both the region’s best interests to
increase online gaming opportunities.
Conclusion
Clearly the world is leaning towards a digitalized
future. As barriers such as heavy regulation fall and
markets open up, expect to see online lotteries in
abundance. Regions of interest include the Asia
Pacific and Latin America, which even without
deregulation of online gambling markets are ex-
pected to grow considerably in the future. In order
to unlock the potential of a lottery business, man-
agers must look for ways to tap into emerging mar-
kets; it appears that the way to do this would be
through now converting to a digital platform in or-
der to minimize costs and keeping an eye on mar-
kets of interest.
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1. http://www.cisco.com/web/solutions/smb/
need_to/the_path_to_paperless.html
2. http://www.kpmg.com/EU/en/Documents/On-
line-Gaming.pdf
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