It has been several years since the first binary options operators entered the industry and started marketing their offering as the easiest way to trade the financial markets. At the time, there were enough sceptics who expressed their doubt that this new way of betting on moves in financial asset prices would stick around for long. Several years later, we are seeing the never-ending growth trajectory of the trend confirmed by data from Google Trends, which provides an approximate insight into what has happened to binary options since the product started to gather steam.
After the initial buzz established itself after the introduction of the new product, starting from the ground up, several companies piled into providing white-labelling services. As the number of binary options brokerages has been gradually increasing, the quantity of white- label providers hasn't dropped - on the contrary - from merely a couple of major players only three years ago, we are now seeing new technology providers piling up with their proprietary solutions every quarter.
Why are we mentioning all this? Because from the perspective of careful observations over the white-labelling solutions in the Forex and binary options industry, we are seeing a new trend forming. You are about to get introduced to…
Lottery Messenger
I can feel the sceptics already raising their eyebrows and quietly asking the question “What the hell is this guy talking about?” Without further ado, allow me to start with deciphering the name of the game. Lottery Messenger is not a brand, nor a white-label, it's the idea which brings the new business opportunity.
Imagine that you live outside of the (allegedly) rich western countries, which draw huge lottery jackpots and prizes every week, or you simply want to have more lotteries to play with aside from your country’s single draw once or twice every week. You browse through the web looking for something interesting to read, and suddenly you bump into one of those modern “sensationalist” journalism pieces which are announcing the lucky winner of the Mega Millions US lottery. You figure, why not play the lottery today?… You start browsing online to find out how you can buy your ticket and voila - it turns out that the lottery is only for residents of the country where the prize is drawn.
Here is where Lottery Messenger comes in. There are three main types of companies which are offering end customers a way to profit from the draws of big lottery prizes globally.
Courier Service
The first mode of operation is rather straightforward. It involves agents in the different countries who are physically buying the lottery tickets around the world and have operations in place to process the client’s purchase. The ticket is scanned and emailed to the customer, as the company stores it in case there is a winning to be paid out. Needless to say, there is a markup on the ticket price when compared to the lottery ticket sold by the corresponding lottery.
Insurance model
The insurance model involves the company not actually buying a ticket. Within its own brand, it allows its clients to place bets on the outcome of a certain lottery. In order to protect itself from having to pay out a huge jackpot sum to a winning client, the firm goes to an insurance company and essentially is selling a form of a contract for difference (CFD), if we look from the Forex industry’s perspective.
This model makes the firm operating officially a gaming business, as it uses the random number generating process of real lotteries to allow its clients to place their bets on the results. This is where our next subject comes in.
As far as regulation goes, since the courier service of real life lottery tickets is still currently quite new, according to participants in the industry there is no necessity to obtain a regulatory licence if the first type of service is provided. That said, as our sister website, Payment Magnates has recently reported, there is an Isle of Man licence which is most likely going to be used by the majority of industry players to provide the insurance model mentioned above.
There are already bigger gaming companies which are properly regulated, most frequently in Gibraltar, and are involved in providing bets on the outcome of real life events. This is the dedicated licence which every gaming company needs in order to provide the insurance model to its clients.
Current Industry Players
Amongst current white labelling providers are LottoYard and LottoTech. LottoYard already has several white labels connected to the company’s platform and its own label - IceLotto.
Forex Magnates reporters have got an exclusive tour in the office of LottoTech company and got acquainted with the different games with which clients can get involved. While most of the details remain private as the company is yet to launch its full solution, we will simply take a glimpse at the variety of possibilities related to the outcome of real life lottery draw.
From guessing the digit of only the first number of the draw, to predicting how many even numbers will be put into the basket at the end of it or whether the second number drawn will be above or below a certain level. For fans of gambling, the games associated with the lottery draw are very likely to bring exceptional levels of excitement.
According to information obtained by Forex Magnates there is certainly one more player which is dedicated to delivering a platform solution. Keeping a close eye on the industry our reporters will announce the new player once their service launches operations.
Established Brands
After some thorough research, Forex Magnates' reporters have found out that there are already some relatively big companies from the gaming industry involved in the insurance business. Among them is LottoLand, which is fully regulated in Gibraltar and has been enjoying substantial growth in the past years.
The third type are companies which are participating in this business are those which are big enough to pay out the jackpot win without using insurance, however we wouldn’t be touching much on the latter category since there is currently only one company which is operating in this manner.
Inauguratory Conference
The industry convened an international conference back in May. The Global Lottery Messenger Forum (GLMF) was held in Tel Aviv, and according to data provided by payment processor, Counting House, which organized the conference, there were 80 attendees from 16 countries, representing close to 30 brands involved in the Lottery Messenger. An event, GLMF 2015, will be held in Gibraltar this coming April.
Challenges
As with any new product, there will always be entities who will try to take advantage of a recently created niche market and will start proclaiming that they are buying lottery tickets for their clients. However, whether or not they are really doing this will remain unknown. We live in times when a good photoshop artist wouldn't need much time to fake a copy of a lottery ticket, engaging in the art of scam and allegedly buying tickets without physical or real digital delivery.
It is up to existing market participants to do their best to convince their clients that they are really purchasing lotto tickets around the world, and that winnings are really paid out accruing to the outcome of the draw.
