Africa Focus
HOW TO WIN
in
LOTTO
Andrea Bargholz explains why lotto is still a winning formula
after 500 years of history
Lotto’s surge in popularity can be traced back hundreds of years to
the Italian city-state of Genoa. Following a coup d’état in 1575 it was
decided that five senators would be chosen out of a civil list of 90 people.
However, “chosen” isn’t really the correct word to describe the process.
Instead of being selected, the names of the senators were to be drawn
by chance, and over time the residents started to predict the result of
the election.
By 1643, the state had taken over the organisation of a first official
lottery independent of the election. An orphan boy was tasked with
picking five out of 90 numbers and the classic Italian lottery was born.
Since then Lotto has conquered the world. Almost every country
now offers at least one official lottery, with most being run by the
government. In part, this is to prevent pathological gambling, but it’s
also because the revenue generated is so enormous.
It was only a matter of time until business-minded individuals,
who were not part of the governance of a state, would find a way to
grab a share of this lucrative market. Resourceful business people these
days pin their businesses to official lotteries by offering secondary
lotteries – basically, betting on the outcome of official draws.
The question is, though, how do you start a business offering huge
jackpots without first building up a financial reserve to cover any
substantial payouts in the event of someone winning? Do you offer
lower jackpots? Or do you simply mirror the jackpot amount of
the official state lottery and hope that it isn’t won? The latter is a
dangerous game where secondary lotteries risk damaging their
reputation if the jackpot is won.
To serious businessmen this cannot be a question. If the economic
demand is there, then there is an answer. One option for an operator
of a secondary lottery is to simply buy a corresponding ticket from
the state lottery every time a customer places a bet. In this way, if the
operator has a winner it is covered by the ticket of the state lottery.
Andrea Bargholz is COO at Emirat AG and
has 12 years’ experience in the insurance
business. Her main focus is on insurance of
over-redemption promotions, online lotteries
and any other insurable event or promotion.
There’s an obvious flaw here, though: the online operator has to sell his
tickets for more than the state lottery ticket in order to cover all his costs.
The second option for an operator is to insure himself and let his
players bet on the results of the official state lottery, taking us back to
good old Genoa where everything began.
One of the world’s leading companies offering coverage of lottery
winnings is the Emirat group. Emirat specialises in coverage of all kinds
of games based on odds with high prize money. As Marisa Rusche, head
of the lotto department, explains, “Emirat AG has years of experience in
dealing with African clients. The most important thing with any new
client starting a new business is to understand their needs, provide the
best service and take the financial concerns off their shoulders.”
The insurance model works with the odds of a lottery. The cost per
attempt is based on the specific lottery and the corresponding sum
insured. Usually clients are covering only tiers one and two because
all winnings from tier three and below are easily covered by monies
paid by the players.
Lotteries never seem to go out of fashion – after all, who doesn’t dream
of changing their life or their family’s lives for the better? This fantasy is
the engine of a growing industry because it influences and fascinates
humans all over the world, regardless of colour, religion or culture.
The insurance in the background lets the operator of a lottery sleep at
night while the player dreams of the big jackpot. This is true today with
online lotteries more than ever.
i GamingBusiness | Issue 112 | September/October 2018
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