The Red Cross Internet lottery sounds like a good idea in theory. From the comfort of your home or office, you pick your numbers and wait for up to a SFr1.25 million (#590,000) jackpot to arrive in the post. In practise, there are problems, as InterLotto, the company which runs the lottery, has found out the hard way.
The biggest obstacle is the bad name that gaming has on the Internet. Everyone, it seems, has heard of cowboy outfits running out of tax-free havens and taking off with punters' hard-earned cash. Hence, the public's reluctance to place credit card transactions over the Net and InterLotto's search for a partner to lend credibility to its Internet lottery.
Enter the Red Cross, looking for new ways to fund its humanitarian efforts. Having been approached by InterLotto, a deal was struck and InterLotto became PLUS Lotto. The Red Cross negotiated 25 per cent of gross proceeds from the lottery and InterLotto got a brand name the public could feel comfortable with.
The logic behind the move appears impeccable - the Red Cross lottery is a better brand name than InterLotto. But whether it'll work for a long-odds game remains to be seen. Some experts don't think it would work even if it were called the Papal Lotto. The simple reason, they say, is that the numbers don't add up yet for a standalone Internet-only, long-odds lottery. All long-odds games are mass market games, and you need a big market to generate the volume of play needed to make combination games work and to generate the big prizes needed to promote play.
HOW IT WORKS
PLUS Lotto is a six from 40 competition. Players choose six numbers from one to 40 and enter their choices online, using their normal Internet browser. Entries cost SFr1 each, with a minimum of one entry per player. There's a weekly maximum of SFr500 per credit card that can be deposited into a player's account. In each draw, six numbers are selected at random and any player who matches four, five or six of the numbers drawn wins a prize.
PLUS Lotto works in much the same way as the UK National Lottery. Lotto pools are rolled over from week to week when there are no winners. If more than one person wins the jackpot, the prize is shared equally between those that have matched all six winning numbers. Fifty per cent of the total take is divided by the winner(s).The draw takes place every Friday at 18.00 hours GMT in a public place in Lichtenstein, under the scrutiny of auditing firm Coopers & Lybrand.
The problem is, the Internet isn't yet a mass consumer market; it's a specialised niche market. So Internet consumers aren't a reflection of the mass market; they're a computer literate elite who fall into socio-economic groups which aren't typically heavy lottery players.
James Tucker, Marketing Manager at PLUS Lotto, says that to turn the situation around, 10 per cent of every SFr1 (45p) will go into a targeted marketing effort on the Net, which includes bulk emails, televised draws on satellite, giveaways and free plays.
"InterLotto hasn't been as successful as we had hoped, but we feel the Red Cross association will be an incentive." Tucker also expects Microsoft's moves to integrate its Internet browser into its operating system will make Net use widespread.
InterLotto was established by software company Walton Consulting in 1995. After it had developed its London Mall Web site, it set up a lottery for the Mall to get customers coming back. It then took the idea a step further and established it as a separate company.
According to Tucker, Walton shopped around for a legal government license to operate a lottery and came across Lichtenstein, which had an unused charter to run a lottery. Since the country's population of 35,000 wasn't big enough to run a lottery, it shared its lottery with Switzerland. As a result, the International Lottery in Lichtenstein Foundation (InterLotto) was formed as a not-for-profit organisation under agreement with the Lichtenstein government. InterLotto was formed to operate a lottery on the Net that would not compete with Swiss on-the-ground lotteries and which would profit Lichtenstein charities. That, says Tucker, was the birth of InterLotto - the first government authorised lottery on the Net and still the only one with an Internet charter.
If it can get enough publicity this time round, it might make a difference. No doubt we'll find out soon enough if this is the winning formula for an Internet-only, long-odds lottery.
Launch: 18 April 1997
Design: Walton Consulting
Target Audience: Internet users
Competitors: The Internet Lottery
Setup: Hosted by Switch in Lichtenstein on a 2Mb leased line
Development Cost: #2 million
Hits Per Day: Unknown
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