Important Update on The Lottery Office & Lottoland

Important Update on The Lottery Office & Lottoland
Dear Members,

You may have recently seen some advertisements for a new player in the lottery market
called “The Lottery Office” and with the federal ban on betting on the outcome of lotteries
coming into effect on 9 January, Lottoland has relaunched a new betting product offer.

Rest assured your national association, ALNA (in conjunction with LRA) are already
assessing the potential threat and likely impacts of these industry developments and taking
appropriate actions.

ALNA CEO Ben Kearney is quoted in an article in the Sydney Morning Herald this morning
on the issue of Lottolands new offer – HERE

The Lottery Office appears to be a carriage service or type of reseller arrangement. When
you purchase one of their ‘lottery tickets’, they will purchase a matching ticket in an
overseas lottery which ensures they can pay out any prize that is won. The Lottery Office
promotes itself as fully Australian owned and operated with a licence from the Northern
Territory Government.

                                                  Is a carriage service legal and can they
                                                  sell their products to Australian
                                                  consumers?
                                                  This is something we are currently seeking
                                                  advice on. This is a murky area and we will
                                                  need to review the business model
                                                  against individual State legislation and the
                                                  Interactive Gambling Act (IGA) to see if it
                                                  contravenes any laws, codes or
                                                  regulations etc. There are also the obvious
                                                  complications relating to the current laws
                                                  and regulations in the countries they are
                                                  buying lottery tickets in on your behalf,
                                                  and they have very different and unique
                                                  prize payment and tax requirements, etc.

We will provide further updates and our strategy to deal with The Lottery Office once we
receive our advice and have assessed the threat further.

                                     ALNA is also monitoring and seeking advice on
                                     Lottoland’s latest offer; Lottoland - Betting on Financial
                                     Markets. Lottoland says ...“Placing a bet on a financial
                                     market is not new and has been done for years. In fact,
                                     all the major online bookmakers will offer a betting
                                     market on interest rates, the Australian Dollar
                                     (compared to the American Dollar) or on financial
                                     market indices.”

We believe three regulators, including the nation’s corporate watchdog, are investigating
Lottoland after it began offering this exotic new betting product based on financial markets
following the federal prohibition, that we championed, on its international lottery betting
business in Australia.

The Australian Securities and Investments Commission (ASIC) is considering a complaint
against Lottoland’s new “jackpot betting” product just days after its launch. “Jackpot
Betting” determines winners by taking specific numbers from financial markets like the ASX at
particular times of the day, arranging them into one long number, and using a computer
calculator to convert it into the winning numbers.

Separately, the Australian Communications and Media Authority – which regulates online
betting – is examining the new product to check if it breaches interactive gambling rules.
Federal Communications Minister Mitch Fifield has sought advice from ACMA on Friday “to
ensure there are no activities that are contrary to the law” after Lottoland began offering its
new product.

“As Lottoland is registered in and regulated by the Northern Territory government, the
Communications Minister will also seek the views of (Northern Territory Attorney General
Natasha Fyles) on this latest activity,”.

ALNA has already responded to media enquiries where we highlighted our key concerns
about Lottoland’s new offer. We have emphasised that Lottoland have never been a
regulated lottery provider, yet they are once again appearing to try to align themselves with
lotteries. This is controversially still marketed it seems like the original lottery overseas and a
jackpot product.

Here is a short list of some of the ways Lottoland seem to again be attempting to appear like
a lottery with their current site:

   •   Brand name - Lottoland contains the word
       Lotto in it. Advertising is about a message
       and the message to consumers still
       appears to be that they sell lotteries. This
       fails the reasonable person test.
   •   The odds of winning the MegaMillions in the
       US and the Lottoland Jackpot betting one
       are listed as being the same 1; 302,757,350
   •   The betting form on the Lottoland website
       looks like a typical lottery entry slip.
   •   Uses approximations of lottery product
       names and imagery for betting products –
       ie. US MegaMillions appears like MegaMillions (lottery in U.S.) and US Power appears
       to be a bit like Powerball in the U.S.
   •   The website calls on consumers to “Bet on US Power online” which seems like you
       might be betting on US Powerball online rather than buying a ticket, and yet it is
       something entirely different.

•   The graphics for US MegaMillions is very similar to MegaMillions and all jackpot offers
       include graphics that are roughly similar in approximation to lottery balls and shapes
       and colours similar to Oz Lotto for example.

ALNA has already raised these developments with Lottery Operators in all states and we will
also discuss this with the relevant Federal and State Government Ministers, and we will also
write to the ACCC to raise our concerns.

If you have any questions in relation to this matter, please contact your relevant State
General Manager.

Yours sincerely

Ben Kearney
Chief Executive Officer