Public Gaming International May/June 2020

3 5 PUBLIC GAMING INTERNATIONAL • MAY/JUNE 2020 Dr. Heinz-Georg Sundermann, Managing Director, Lotto Hessen GmbH How will the world have changed for the lottery industry after the Corona crisis? In order to answer this question, it is rst necessary to take a look at how the lottery business has been impacted by the crisis. I think it is important to note that in the pre-Corona period, we often talked about the gambling industry only as a whole. During the Corona crisis, we have now become aware that the gambling industry cannot be seen with this closed view any longer. Sports betting providers, amusement arcades and casinos have a completely di erent business model in comparison to that of us lottery providers. eir business model of entertainment providers has been particularly hard hit during this time when unnecessary physical contact has been banned almost all over the world. e situation is di erent for us lottery providers, who generally do not make independent o ers to our customers in our own shops, but instead combine our o er with that of food retailers or the sale of magazines, for example. is model has proven crisis-proof. For example, 2050 of the 2100 shops in Hesse are still open, and the situation is not much di erent in the rest of Germany. At the same time, our products o er a piece of normality, which people need more in some times, especially in times of crisis. In this respect, after more than 2 months of corona crisis in Germany and large parts of Europe, it can be stated that our business model is essentially stable, while at least the traditional retail business of our gaming competitors in the sports betting sector, amusement arcades and casinos has come to a standstill. We can even go so far as to state that our retailers in our di erent locations are very grateful that they can rely on our technical service and support even in times of crisis. And the reactions of our customers also show that we are not only, but especially in these times, regarded as a reliable, stable partner and provider. Can expectations for the coming period after the Corona crisis already be inferred from this? It is certainly not easy to say in the middle of the crisis how the time after the crisis will develop. But one thing should be clear. Traditional lottery providers, especially in markets like Germany, will emerge from this crisis stronger than before. is will be so rst, because they will have proven that their products are in demand even in times of crisis. Second, they will have proven to be stable and reliable partners for the retailers with whom they work, partners who are there when they are needed. is applies not only to the gambling o ers, but to almost all German lotteries, including LOTTO Hessen, who have also contributed to making life in the retail outlets safer for both sta and customers. If at all, there are probably only a few other consumer goods providers who have made the same commitment as the lottery companies to overcome this crisis together. I am convinced that this behaviour will yield not only recognition but also stability in the cooperation with our partners after the crisis. e situation is di erent for gambling providers in the area of sports betting, amusement arcades and casinos sectors, at least as to their face to face o ers in their shops. Whether indebted or not, they have not made any stationary o er to their customers throughout the crisis. At the same time, the costs have continued to run for them or their franchisees. Market leaders such as Tipico have su ered particularly badly from this situation. eir balance sheet therefore appears to be pretty sobering during the time of this crisis, especially since, in the absence of an adequate sports betting o er, not even the sports betting providers are able to make up for part of the losses via the Internet. If they survive nancially at all, they will encounter customers who, at least in the initial post-crisis period, will be very reluctant to accept their o ers. In summary, it can be said that in all those countries in which lottery providers have been able to continue to o er their products on a broad and stable basis to their customers and have provided a stable and reliable service to their sales outlets, they will emerge from the Corona crisis stronger than before. Exactly the opposite is the case for gambling providers on the ground who o er sports betting, or operate amusement arcades or casinos, as they are currently su ering great economic damage and have unsettled their customers at the same time. For the state-owned providers, life after the crisis will initially continue normally, while the other providers will have to work their way back into the market with di culty. Is the assessment the same for the Internet sector? For years now, the state providers have been trying, with varying degrees of success, to make their Internet o ering attractive enough for younger customers in particular to access it. If I look at the development of Internet sales and customer numbers during the Corona crisis for LOTTO Hessen, I can see that both gures have developed very positively, just like with most other state providers. Home o ce for many people as well as the restrictions in face-to-face shopping have led to a boom in the Internet sector. In addition to the positive e ects in the retail store sector, the Internet sector is a business area for state providers that has developed positively during this time of crisis. e more the individual state provider can claim that it has already made customer-oriented investments in its Internet system in the pre-crisis period, the more the increasing number of customers during the crisis will prove stable in the post-crisis period as well. For LOTTO Hessen, I can therefore say that I expect the Internet to account for a growing share of total sales in the coming years. If we are currently at around a good 10 %, a revenue share of up to 20 % in a 5-year period appears realistic. e situation is the same for gambling providers in the sports betting sector, for both traditional retail and on the Internet. In the absence of sports events, no satisfactory o er can be made and thus there are no customers to whom one can make an attractive o er. Continued at publicgaming.com VISION OF THE POST-CORONAVIRUS WORLD