Changing perceptions

Lottery revenues increased 9 percent year-on-year in South Korea in 2016 driven in part by changing player perceptions, but remain low when compared with other OECD countries, signaling room for further growth.

More than half of all South Koreans purchased at least one lottery ticket last year, driving a 9.3 percent increase in sales to KRW 3.9 trillion (US$3 billion). The rise came amidst an economic slump, which some believe is the main reason for the uptick in sales.

But while consumers undoubtedly turn to lotteries and games of chance in times of economic depression, the Korean Lottery Commission (KLC) believes more tangible factors are at play, including changing perceptions and the 543 new retailers that opened during the year. The introduction of online sales is also expected to be a gamechanger.

“Koreans now have a more positive attitude towards lotteries,” a spokesperson for the KLC said. “In a recent survey, we found that 71 percent of those asked had a positive attitude toward lottery draws, up from 68 percent in 2015.”

The KLC is looking to capitalize on this new-found positivity and increasing appetite for lottery products by opening another 670 outlets during the year, taking the total number in the country to more than 7,000.

Koreans are not short of lottery games to play either, with 12 different formats available including both draw and instant-win formats. These include: lottos, three types of printed lotteries (Spitto-2000, Spitto-1000, Spitto-500) the pension lottery, and seven types of electronic lottery (Mega Bingo, Speed Keno, Power Ball, Treasure Hunter, Triple Luck, Double Jack Midas and Catch Me).

The Lottos, purchased from land-based retailers, are the most popular and accounted for more than 90 percent of revenues in 2016, but electronic lotteries are on the rise and the government recently amended the law to allow Lotto tickets to be sold online.

“We have an online version of the pension lottery and seven other types of electronic lottery,” the KLC spokesperson said. “We have revised related laws to allow the sale of Lottos online, which we are now working to implement,” they added.

Part of the lottery’s increasing popularity is that around US$1.5bn of proceeds are poured into the Lottery Fund each year, which supports welfare and cultural projects such as the Ministry of Science, ICT and Future planning.

Another reason for the lottery’s success is that it is properly regulated and its chosen operators fully vetted.

The KLC is a government agency and is responsible for formulating and implementing lottery-related policies. It also has the exclusive authority to issue, sell and manage lottery products, with the day-to-day operation undertaken by the private companies it selects.

Nanum Lotto Co currently holds a five-year contract (due to expire in 2018) to run online lotteries (via secondary operators) and printed ticket sales, while the Korea Union Lottery Co also handles printed and internet lotteries.

The whole sector is overseen by the National Gambling Control Commission, which plays watchdog over each operator and the secondary partners they choose to work with, which is helping to build that all important player trust.

“Supporting good causes and community projects are a vital part of government lotteries, and help players put distance between taking part in a lottery draw and gambling,” says Nils G Thomsen, CEO of the Winners Group.

In countries such as South Korea, where gambling is discouraged, lotteries have huge potential to grow their player base and revenues as perceptions change for the better and greater access to lottery products is provided through online and mobile channels.

While ticket sales are on the up in South Korea, they remain low when compared to the other 34 members of the Organisation for Economic Co-operation and Development, which includes the UK, US, Australia and Japan.

The KLC isn’t concerned by this, however, and says it is because the government tries to discourage betting and that Koreans simply have a lower propensity to gamble than citizens of other OECD countries.

But the KLC’s decision to amend the law to allow Lotto tickets to be sold online may open the door to a whole new generation of Koreans playing lottery games for the first time via their computers and mobile/ tablet devices.

“Lotteries around the world are primed and ready to take their products online for the first time or in a more meaningful way, as is the case in South Korea,” says Thomsen.