The European lottery industry seems to understand that things must change if it is to safeguard its long-term future. It just can’t quite decide who is to blame for its predicament, or what changes are needed.

Figures from the World Lottery Association revealed a 0.9 per cent decline in European sales for the first quarter of 2017. At a time when the re-regulation of markets across the continent has led to increased competition, the industry is thinking long and hard about how it responds.

And although many state lotteries have been quick to identify private (or publicly-owned) gaming operators as a threat to their model, competition is more widespread. In 2015, European Lotteries members are estimated to have generated total sales of €86.4bn, and gross gaming revenue of €38.8bn. Online GGR for European Lotteries members was €2.5bn.

They see billions of Euros in revenue generated online that didn’t come from lotteries, and believe that they could have had a share of this if not for private competition. Svenska Spel chief executive Lenart Käll points out that unlicensed operators have built up a 25 per cent share of Sweden’s gambling market since entering the country in around 2005.

“Given the lack of controls introduced by the Swedish authorities, coupled with the strict regulations governing Svenska Spel or AB Travoch Galopp, the evidence is clear: they have taken market share from us,” he says. “Our market share has fallen from 55 per cent in 2007 to around 40 per cent today.”

Michael Heinrich, co-CEO of Lotto Hamburg and Germany’s powerful state lottery association the Deutsche Lotto und Totoblock (DLTB), claims that unlicensed companies offering lottery products in the country turn over “around €500m per year”. These figures are the DLTB’s own, based on members’ revenue.

“Many of these private companies operate from the gambling tax havens, Malta and Gibraltar, where they pay almost no taxes,” he says. “The activities of these ‘black’ lotteries are not a competition issue,” Heinrich continues. “They are a public order issue, as they are illegal and undermine our lottery system, which is oriented towards the common good.”

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