How much would you be willing to spend to test your luck? While the cost of a Powerball lottery ticket might not be much—ranging between $6 and $31 (or more, depending on the game type), Aussies collectively spend billions on lottery tickets.
However, for consumers, affording the luck of the draw has been paling in comparison to the cost of living crisis. This was reflected in Aussie lotteries and keno company The Lottery Corporation’s (ASX: TLC) dwindling earnings in H1 FY24.
The Company’s revenue saw a minor decline from H1 FY23’s $1.9 billion to H1 FY24’s $1.8 billion. Its diversified game portfolio delivered EBITDA of $399 million, down from $409 million. Lottery participation remained steady, but customers adjusted their frequency and spending habits to seek the most attractive options within The Lottery Corporation’s weekly games.
The Lottery Corporation Managing Director & CEO, Sue van der Merwe, said, “The first half of FY24 showcased the resilience of The Lottery Corporation’s diversified and balanced portfolio to deliver in softer economic conditions. The performance of our business was solid, driven by proactive initiatives and strategic management of the game portfolio as a whole. During the half, we reaped the benefits of the change we made to Oz Lotto in 2022 to increase the probability of bigger jackpots. The $90m draw on Boxing Day was the biggest Oz Lotto jackpot in more than a decade. We have also seen strong retention of the Powerball price increase.”
The Company’s retail partners benefitted from the commission rate increase, which is also driving higher margins for The Lottery Corp on digital sales. That said, sales of smaller lottery games like Set for Life, Lucky Lotteries and Scratch-Its dipped 9.3% compared to the previous period. But Powerball sales improved thanks to a price change and higher commissions for retailers implemented in May 2023. This positive trend extends to digital channels, which rebounded with a 12% growth, now accounting for almost 40% of total sales.
The Lottery Corporation maintains a strong player base, estimated at 9.6 million across all its channels.
What’s more, digital did not win on all fronts. Its lottery-style game Keno’s sales grew at physical locations thanks to more people visiting venues and targeted marketing. However, online sales dropped initially due to competition in Victoria. This, combined with changes in revenue sharing and higher costs, reduced Keno’s profitability margin.
Merwe added, “This is a business with a bright future. We have hit the ground running in the second half with a record $200 million Powerball jackpot on 1 February, following $100 million and $150 million draws. These draws captivated Australians, driving strong customer acquisition and reactivation, and engaging customers in both our retail and digital channels.”
Going forward, the Company has introduced a newly evolved Weekday Windfall game and a digitally enhanced retail membership program. The introduction of Weekday Windfall is the next phase in the evolution of its game portfolio. Weekday Windfall is a major refresh of Monday & Wednesday lotto, with a new brand and a Friday draw.
The Lottery Corp paid $885 million in taxes to governments and $347 million to retailers and venue partners. The Company is optimistic about the impact of its new initiatives and investments.
Alinda is a Business Reporter for The Sentiment
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