After starting out in Guatemala, lottery operator Grupo Tenlot is targeting expansion throughout Latin America. Gaming Intelligence caught up with Grupo Tenlot CEO Yossi Abadi to discuss the company’s plans and why social development is central to its future.
How did Grupo Tenlot begin, and why the focus on the lottery sector?
Our group, led by Jacob Engel, has its foundations in the mining, petroleum, construction and infrastructure sectors, with concessions in more than 25 countries and investments in more than 20 technology companies worldwide via our investment fund.
We have entered the lottery sector as we see a genuine opportunity to develop a project with both scale and a positive social impact. Our financial strength as a group, our willingness to invest and our ability to develop a market positions us well to become a major player in lottery.
Why lottery over the online casino industry?
We haven’t chosen one over the other. We believe in the future of online casino, which is clearly growing quickly and will generate global revenues of $55bn in 2019. However, we believe that any online project will have a greater chance of success when supported by an extensive network of retail stores, especially in countries where a large percentage of the population does not have a bank account or credit cards. This is when a point of sale network becomes critical.
Do you use third-party technology providers, or have you developed your own platform?
We use a range of the best third-party suppliers in the industry for our technology stack. We decided on this approach because as an operations group, we want to focus on our development within markets. This is what we do best.
We want to emphasise the human touch and the social relationships of our brand. Our big advantage is scale and our ability to invest heavily in marketing. We establish strategic alliances across the worlds of sport, music and television. We even host ‘lottery comedies’ in theatres. We try to become a part of the national conversation.
What are the longer-term plans for the company?
Our goal is to expand in both Latin America and Africa by expanding our investment and entering new markets. Our group’s founder has experience of having listed eight companies on stock markets around the world, including in New York, London and Tel Aviv. From day one, we are running TENLOT as though it was a public company, as the plan is to list in Sweden by the end of 2020.
Where did you begin your Latin American operations?
Our base of operations in Latin America is Guatemala, and to date we have invested more than $16m in the country. We are proud of what we have achieved so far. We have already managed to reach more than 5,000 points of sale in a very short time. We have built relationships with the main supermarkets and are in pharmacies, gas stations, neighbourhood stores and across hundreds of street vendors. We have a structure in place, built upon an advanced tech platform, that puts us in a very strong position.
What is your approach to marketing in Guatemala?
Our first product launch was a scratch card called “A Thing of Luck”, which is a simple scratch and win. With more than 100 employees in Guatemala, TENLOT is investing heavily in marketing the product. We are sponsoring two of the country’s biggest football teams and have a segment during the most watched television programme in Guatemala. We also support a comedy play about the lottery. We are across multiple channels including radio, newspapers and social. The investment is several million dollars.
How will you adapt your offering to different markets?
Governments generally cannot compete with the private sector when it comes to advertising budgets for lottery. We are offering to the fill the gap and partner with governments. It is a “win-win-win” arrangement that benefits the state, players and us. We are able to assume the necessary investment, installing and operating an advanced lottery platform as well as marketing and distribution channels. We are talking about millions of dollars of investment.
You mentioned the company’s social vision. What has been the focus here?
Sadly, many have lost the social focus a lottery should have. Lottery should be a platform for social development and a share of sales must help those most in need. Our platform is designed to help offer a strong lottery product that can support these causes.
Which markets are on your radar?
In Latin America, we are expanding into Mexico and two other central American countries. We are also active in Africa, where we have a large operations team. On top of this, we are in the process of agreeing a strategic partnership in Asia. We believe in entering developing markets with high growth potential.
How do you see the lottery market evolving in Latin America?
In 2017, lottery sales among WLA member countries totalled almost $300bn. But remarkably Latin America and Africa – two continents that represent a quarter of the world’s population – accounted for just 2.7 per cent of these sales. This indicates the scale of the challenge but also the opportunity. We are focused on growing these markets.
How can you contend with illegal lottery operations in the region?
We need to fight illegal operations intelligently. I am convinced customers prefer legitimate options where they know they will not be cheated and they are helping others by playing. But for this we must build trust, demonstrate responsibility, work transparently, invest in the region and offer attractive products.