Jumbo Interactive terminates lottery reseller agreements in Mexico3rd April 2014 8:36 am GMT
Australian online lotteries operator Jumbo Interactive has served two notices of termination of agreements which relate to the resale of official Lotería Nacional and Pronósticos lottery games in Mexico.
The notices of termination affect the agreements signed by Jumbo in November 2012 which would have enabled the company to become an official internet and mobile reseller of products from Lotería Nacional and Pronósticos, the only two national lotteries in Mexico.
“Unfortunately it was necessary for Jumbo to exercise its rights to terminate the reseller agreements”, said Mike Veverka, CEO of Jumbo Interactive. “Jumbo Mexico has built a state-of-the-art lottery website in Mexico, but has still been unable to begin selling tickets according to the terms of the agreements due to local issues which are independent of Jumbo’s activities.”
As part of the initial agreement, Jumbo agreed to a strategic investment of US$2m in Sorteo Games, which holds the two national systems and distribution licences in Mexico. The investment is equivalent to 6 per cent of Sorteo, and also includes an option for an additional $3m investment to assist with the expansion of the business in Latin America.
Jumbo said that the share purchase agreement remains unaffected by the notices of termination.
The company added that it has already expensed development costs and has minimal ongoing costs as it considers its options.
Meanwhile, Jumbo said that that a record high Eurojackpot lottery in Germany of €56m, passing the previous record of €46m set in April 2013, has helped to boost sign-ups to its business.
The company’s Jumbolotto.de portal is currently live in seven of the sixteen German states, covering approximately 75 per cent of the German population or 63m people. It is expected that the remaining nine relatively small states will be live as soon as formal documentation is completed in the near future.
“The record run of jackpots in the Eurojackpot game couldn’t come at a better time and helps our signups as we ramp up our marketing efforts,” continued Veverka.
In Australia, Jumbo said that the second half-year is off to a reasonable start with eight jackpots reaching $15m or more (with a peak jackpot of $30m) occurring in the March quarter.
“Jackpots in Australia so far this second half have been average, however our larger 1.64 million database is helping to continue our growth,” said Veverka.
As advised previously, Jumbo’s profits will be influenced while Germany grows to a break-even position.
Shares in Jumbo Interactive Limited (Co. Data) (ASX:JIN) fell by 2.08 per cent to close at AU$1.65 per share in Sydney earlier today, having dropped 6.15 per cent in trading yesterday.