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How to Start a Lottery Business Online

Lottery Business

Do you want to start a lottery business online? If YES, here is a 24-step guide on how to start a lottery ticket business with NO money and no experience.

Every now and then more and more people become millionaires just at the snap of the fingers. The lottery business is one where there are huge odds to get massive profits if planned right. One important aspect of this lottery business is the technology platform you intend to use.

It must be a platform that must be simple and secure for both employees and customers. You would need to carry out a thorough research on the best technology platforms available and choosing the one that would be best suitable for your business.

Your technology platform should be one that allows you control on your data analytics and in also managing the lottery operations. A good technology platform will also include training modules that will be of use to you when you get new staffs who aren’t experienced in lottery operations.

Steps to Starting a Lottery Business Online

1. Understand the Industry

The lottery industry is one that has been plagued by recession and just recovered as customers now have more money to spend on discretionary items. The industry is one with revenue of $218 billion with an annual growth of 1.2% between 2010 and 2015, which is projected to have increased by 2019.

Interesting Statistics About the Industry

The reason for the projected growth has been pegged down to emerging economies as well as gradual reduction of regulatory barriers as government and relevant agencies stamp out illegal gambling activities, and an increase in the per capita income which will lead to an increase in customer demand.

This industry is one where there are no dominant lottery companies, even as online gambling is taking a greater prominence due to increasing technology and also an increase in smart phone ownership which has led to the internet being penetrated, reaching into areas that would otherwise have been impossible.

Most of the industry’s revenue is distributed according to the regulatory framework in the region of operation. Regions that have banned some aspects of betting would likely see a reduction in revenue for some lottery companies than their counterparts in other regions.

The industry revenue can also be determined by the per capita income that is disposable in the region of operation. This means that profit is likely to be made more in the regions where there is more disposable income than in the other regions.

Globally, the lottery industry has been pegged to grow at a CAGR of 8.85% over a five year period of 2014 – 2019. The lottery industry isn’t a rosy one as lottery has banned in the Middle East with the exception of Israel. Another thing that the lottery industry is experiencing is the emergence of mobile lottery which has led to individuals being able to gamble with their mobile phones.

This is part of what has led to the surge in the lottery industry. The gradual economic recovery worldwide which has seen to the income level of consumers increase has seen more customers spending on leisurely activities.

The internet has also brought about a change in the previous distribution model as geographic barriers have been removed. For instance, in the united states, before the rise of the internet, lottery ticket sales were restricted to within state boundaries.

This means that even tourists could play as long as they purchased tickets within the states. However, the internet has brought down those restrictions as someone in another country could now play whatever game they desire in another country.

Brick and mortar lottery companies that have not evolved with the times are having difficulties especially as online lottery companies are having the upper hand not only with innovative new games that keep customers hooked but in also having less overhead.

Since every aspect of lottery is slowly becoming digitalized from paper-based tickets, games, to non-existence of regional barriers, the industry has become more competitive globally as any lottery company with the right strategy can compete with already established and large scale lottery companies.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic compositions of those who use the lottery are segmented to individuals who are looking for quick ways to make money. These include:

  • adult males
  • females
  • young adults
  • Senior citizens.

This can basically be anyone who is earning an income – low, medium and high – and yet looking for ways to earn extra through luck.

3. Decide What Niche to Concentrate On

The aim of lottery companies is to ensure that innovative games are put forth for customers to bet against and hope to make money. While this is the general aim of lottery businesses, there are still some who specialize in different areas. Basically some of the niches in the lottery business industry include;

  • draw lotteries
  • scratch tickets
  • sport betting
  • Bingo
  • Lotto
  • VTL
  • Keno

A small scale business that is just starting up might need to choose areas that would be most suitable for it to handle, and concentrate on those rather than trying to offer all the services, so as to be able to cater to their target market well. This however is different for a large scale company as they can afford to offer all the niches in a bid to be able to get into all segment of the large market.

The Level of Competition in the Industry

Starting a lottery business might look easy; however with the number of operators in the industry, it is going to be difficult to stand out if you had not carried out your research as regarding the business. The amount needed to start this business is very cheap and very few equipment are required to run this business.

However, it is majorly easier if you are a small lottery business to concentrate on areas that would allow you favorably compete with larger lottery businesses by either offering a discount or better service on certain areas.

Also, the internet has made it easier for any scale of business to compete amongst themselves, and while this is good overall for the industry; it has made the field tighter as operators are losing customers to their competitors over one or two aspects.

Customers can easily switch over to any lottery business they feel is favorable to them easily and this is an aspect that no operator has monopoly over.

4. Know the Major Competitors in the Industry

Every industry has well known brands that stand out. These well known brands become so due to a number of factors, standing the test of time, having favorable policies and deploying innovative strategies to keep ahead of the pack. Some of the well known lottery business brands around the world include;

  • Camelot
  • American Games
  • China Welfare Lottery
  • Hong Kong Jockey Club
  • Scientific Games
  • Française des Jeux
Economic Analysis

Before starting your own lottery business, it is imperative that you carry out a thorough research so as to know everything about the industry. The research will help you determine if the lottery business will be a worthwhile venture for you or if you would just be throwing your investment away.

The state of the economy is very important if you intend to start this business as a poor state of the economy will see less people wanting to spend money on leisure or discretionary activities. If the economy is in a state of depression, you might want to either wait till the economy improves or create a strategy that would make your services irresistible to the customers.

5. Decide Whether to Buy a Franchise or Start from Scratch

Starting a business from scratch or buying a franchise is a decision that lies solely with the entrepreneur which also depends on what objectives he has in mind for his company. Starting from scratch might be a bit difficult but this is for entrepreneurs who want to learn about the rudiments of the business themselves and craft their own strategies that would help their business become a success.

Buying a franchise on the other hand is a business decision for entrepreneurs that want to enter into the business but do not want to sweat it out by starting the business from the ground up. If you intent to go into this route then ensure that you carry out a thorough research on which franchise would best suit the needs of your business.

Call as many franchises as possible and check what they have to offer you. You should know that whatever decision you take has its advantages and disadvantages.

6. Know the Possible Threats and Challenges You Will Face

Every business whether new or existing has threats and challenges that crop up from time to time. These threats and challenges if not properly managed might lead to the death of the business.

A lottery business is no different. Some of the threats and challenges that a lottery business might face during its course of operation or when starting up include; poor state of the economy, emerging new technologies, and arrival of competition.

As earlier said, threats and challenges aren’t new; every entrepreneur should expect them and then have strategies in place to handle them.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

The legal structure you would decide for your business is very important, as this can make your startup run smoothly and also have an impact on factors such as your liabilities, taxes as well as control over your lottery business. There are four basic entities that an entrepreneur can choose from in the united states.

Each of this entity comes with its own advantages and disadvantages. Once you have carried out your research on the basic entities, you can then decide which would most likely suit your business needs.

The four basic entities that are available to you as a business person includes; sole proprietorship, which according to the Small Business Administration is a legal entity used by more than 70% of businesses in the United States. Another legal entity is that of partnership, which can carry a dual status as either a sole proprietor or a Limited Liability partnership (LLP).

The Limited Liability Company (LLC) is a hybrid kind of entity and allows owners enjoy the tax and flexibility benefits that the partnership structure enjoys. The corporation is an entity that is separate from the owners and has different types such as C corporations, B corporations and S corporations.

As earlier said, it is important that you carry out your research well and if you are still uncertain about the kind of structure that would be best for your lottery business, you might need to approach an experienced attorney in who has knowledge of the lottery industry and who would help guide you on which structure would best suit your business.

8. Choose a Catchy Business Name from the ideas Below

  • Catch Lotto
  • Odd Winnings Lottery Company
  • Sure Odds Lotto
  • Bet247
  • Sure Tickets

9. Discuss With an Agent to Know the Best Insurance Policies for You

Having an insurance policy for your lottery business is very important, as insurance protects you from any liability that might occur during the course of running your business.

Ensure that you carry out a thorough research on which insurance policies will be best for you, if you are unclear about some policies, you can approach a professional insurance agent or broker, who would advise you on the best and suitable insurance policies for your lottery business.

Some of the basic insurance policies that you would need to consider purchasing if you intend to start your own lottery business in the United States of America include;

  • Prize Insurance
  • Workers Compensation Insurance
  • Contractual Bonus Sports Insurance
  • Conditional Rebate Insurance
  • Over Redemption Insurance and Fixed Fee Solutions
  • Liability Insurance

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

The lottery business isn’t one that requires an entrepreneur applying for an intellectual property protection. If you however intend to protect your business logo or name, you might need to apply for an intellectual property protection on that aspect alone.

While some entrepreneurs might consider buying an intellectual property for their logo a necessity, others might not; so this decision is entirely up to you.

11. Get the Necessary Professional Certification

If you are looking to start a lottery business in the United States, you definitely would not need to obtain a professional certification as anyone could go into this business. The lottery industry is however closely regulated in the United States, as government not only heavily taxes it but also provide stringent rules as well.

For instance, sports betting such as football are banned in the United States. As an entrepreneur going into this business, these are things that you should be knowledgeable about as running afoul of the law can lead to a closure of your business by the authorities.

12. Get the Necessary Legal Documents You Need to Operate

The basic legal documents that you would need to successfully start and run your lottery business include;

  • Certificate of Incorporation
  • Business Plan
  • Business License
  • Non Disclosure Agreement for employees
  • Operating Agreement
  • Insurance Policies
  • Employment Agreement

13. Write a Business Plan

A good business plan would show strategies that will help in ensuring that the lottery business is properly managed. Such strategies might include how to generate startup capital, how clients will be attracted to the business, and how the business will be managed overall.

While these are important components that must exist in a business plan, there are other key components that your business plan should have if you intend to run your lottery business, such as;

Executive summary which shows your investors in clear term what your lottery system is all about, the strategies you intend to use in marketing and also getting people to buy tickets. Your target market and the kind of services you intend to offer.

You are also expected to state what is unique about your lottery business that stands you apart from others in the same industry. Other important components in your lottery business plan that should be included are; SWOT analysis, your advertising strategy, your budget as well as financial projections for at least three years.

14. Prepare a Detailed Cost Analysis

Due to several researches, it has been known that the cost of starting a lottery business is almost the same or would be within the same range depending on the scale of business. This point to the fact that one could have a startup as low as they want it to be, depending on the budget at hand and the vision and goals of the business.

However, keep in mind that those operating from home would spend lower than those who would lease a facility. Some of the requirements that you would be required to undergo or have undergone before starting your lottery business in the United States of America include;

  • Total fee for Incorporation and other legal expenses $1,000
  • Insurance coverage fees $500
  • Business license and permits $1,000
  • Amount needed to acquire a facility for the purpose of running the lottery business $15,000
  • Cost of equipping the facility with administrative and work equipment $3,000
  • Cost of acquiring a technology platform $1,000
  • Cost of launching a website $700
  • Advertising costs $1,000
  • Additional expenditure for miscellaneous items such as signage, business cards $500

From the detailed report above, if you intend to start your lottery business in the United States of America, you would need an average of $24,000. If you are looking to start your own lottery business on a medium scale in the United States of America, then you will need an average of $48,000.

If your intention is to start your lottery business on a large scale in the United States of America, then you might need to look towards getting close to $100,000.

15. Raise the Needed Startup Capital

Finance is a very crucial part of any business, because no matter how good your business idea might sound to you or look on paper, without the required finance, it is likely to remain just a fantastic idea. Sourcing for finance is not easy for any startup but it is a task that every serious entrepreneur must go through if they intend for their business to succeed.

  • Approaching family members and friends for a soft loan
  • Raising money from sale of personal stocks and properties
  • Approaching investors for a loan
  • Raising money from business partners

16. Choose a Suitable Location for your Business

Choosing the right location for your lottery business is very important. You should locate your lottery business in an area where customers are going to feel comfortable coming to. For instance, you might not have many customers if you locate your lottery business in the suburbs or in the ghetto.

While the former might have people not wanting to associate with gambling, the latter might put your business at risk and even the safety of your employees.

Another thing to consider when looking for a facility is the convenience it will pose for your employees and customers. They should be able to conveniently access your lottery business and there should also be consideration for parking space for customers that have cars.

The facility should be a spacious one and be able to accommodate as many people as possible, especially if you are going to add other related businesses to it as well. As much getting the right facility for your lottery business is very vital, you must ensure that it is within your budget so that you don’t break the bank and be left with no money to run other aspects of the business.

If you are starting off on a low scale, you can rent a small facility for use and only move on to a bigger one as the business grows. Getting a large facility for your lottery business should only happen if you are going to employ a large number of people to work for you and also offer other additional but related services.

17. Hire Employees for your Technical and Manpower Needs

The lottery business is an easy one to start as the equipment for use is fairly cheap and easy to come by. What is major in the lottery business is the technology platform, which has to be a good one, and can be built from scratch or purchased and adapted to suit the needs of the business. Some of the equipment that you would need in order to fully launch your own lottery business include;

  • Computer
  • Phones
  • Lottery Software
  • Database software

If you are starting the lottery business on a small scale and will majorly be operating from online, then you can start this business from home. If you however intend to get an office facility, you might need to lease a property so that clients who want to physically visit and buy tickets to play games can do so.

Regarding the number of employees that you would need in order to run your lottery business, it would vary depending on the size of your business. If you are going to run a medium or large scale lottery business, then you would need to employ Managers, Marketing Executives, Field Agents, Front Desk Officer, I.T personnel, and Security Officer. This is about 9 to 15 people.

The Service Delivery Process of the Business 

There is no production processes involved in the lottery business as this is basically a service based business. Basically, what goes on in a lottery business is that tickets either real or virtual are given to a customer after they pick out what they feel are odds that would make them win this ticket.

The odds if won are then translated into cash for the customer in a process that is determined by the lottery business owner.

18. Write a Marketing Plan Packed With ideas & Strategies

You should be careful when copying marketing strategies from seemingly successful companies as what worked for them might not work for you. Also, marketing strategies for larger companies might be different from that of smaller companies.

Every business needs a marketing budget; this does not however mean that you should create a strain on your bank by putting more money than necessary into marketing.

The internet has afforded many cheap marketing opportunities that would not allow you break the bank whilst still reaching out to a large number of customers. Some of the ideas and strategies that you can use to market your lottery business successfully includes;

  • Cleverly placing attractive games on your poster and pasting in conspicuous places
  • Ensure you include lottery products in gift packs bought at the supermarket
  • Ensuring that your lottery business is listed on online directories
  • Use your official website to promote your business
  • Apply direct marketing method
  • Let your loyal customers help in referring your lottery business by offering them incentives
  • Create different packages for your different categories of customers
  • Make the odds on your site to be attractive
  • Place advertisements on different websites and forums

19. Work Out a Reasonable Pricing for your Services & Products

Lottery businesses do not really make their money from selling tickets at a particular price. Tickets are sold according to the odds a customer has picked for his game. Setting the right prices for tickets might not really be a huge deal; however, ensuring that the odds are set right is the main deal for any lottery business.

Before setting odds for your game ensure that you check what your competitors are doing. Remember this is a business by where profit is to be made and so whatever odds you fix should be fair but also make you profit as well.

20. Develop Iron-clad Competitive Strategies to Help You Win

This particular industry is one where businesses that want to survive always need strategies in place to stay above competition. Customers in this industry are always on the lookout for lottery companies that give better odds than their counterparts.

This is because the better the odds for the customer, the more money he or she is likely to make if a winning takes place. You can increase your odds to be a bit better than what your competitors are offering so as to draw more customers to your business.

Another competitive strategy that can be used to compete in this industry is in ensuring that you offer bonuses on certain games. This will ensure that your clients prefer your lottery company to others. You might offer the bonus on certain games or on certain days or after a game has been accumulated to a level.

One other competitive strategy that can be used is in offering additional but related games for customers’ asides the one they are accustomed to.

21. Brainstorm Possible Ways to Retain Clients & Customers

Customers are the lifeblood of any company as without customers, a company has no reason for existence. Every business owner knows that customers are to be treated like the kings that they are and the lottery business is no different.

Any business that wants to remain operational knows that increasing customer retention is very vital. Having loyal customers for your lottery business means that you will not struggle to generate revenue for your business, as these customers will ensure that you have a repeat business.

One sure thing that would increase customer retention in your lottery business is to ensure that you provide an excellent customer service for your clients. Customers love where their enquiries and complaints are quickly attended to. Also, ensure that they experience a hitch-free service when buying tickets or playing games on your platform.

22. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

To stay vital, you would need to generate the right strategies for your business. These strategies are one that should boost the awareness of your brand whilst also creating a corporate identity for your lottery business. If you are going to be starting your lottery business on a large scale, you might need to hire consultants that would help create strategies that would promote your brand.

Some of the strategies that can be created to boost the awareness of your brand and also create a corporate identity for your lottery business include;

  • Using your social media platforms to promote your lottery business
  • Promoting your business vigorously on your website
  • Using websites pop-ups to ensure that your business is visible to potential customers
  • Sending cold mails to potential customers
  • Ensuring that your business is listed on online directories
  • Placing posters in conspicuous places
  • Distributing handbills and fliers
  • Having agents in targeted areas
  • Providing incentives to customers that refer your business by giving referral links and codes so as to identify such customers

23. Create a Suppliers/Distribution Network

This is a virtual service business and as such really has no suppliers involved. However, since most lottery businesses use a technology platform so as to be able to serve its online customers, those that supply this platform can be termed a supplier.

It is very vital that before you choose a technology platform that will be supplied to you, you check for certain factors. For instance, your supplier has to be available always to answer complaints that might arise from your customers and which you might not be able to handle.

Once, you have a good relationship with your supplier, it is likely to have a positive effect on your business overall. Also, your supplier could pass some tips and advice to you that would benefit your business overall.

24. Tips for Running a Lottery Business Successfully

Running your lottery business successfully requires more than just selling tickets or games to your customers as any business or agent can do that.

Running your business successfully would require that you have strategies in place that would give you leverage over your competition. These strategies if effective must be followed as they are likely to ensure that your lottery business has a healthy bottom line.

One of the ways that you can run your lottery business successfully is by ensuring that you pay out winnings on time and without any stress to the customer. Once potential customers know about how efficient your payout is, they are likely to want to patronize your services, thereby leaving your competitors for you.

Lastly, you can make winners of your lottery business become brand ambassadors of your company. This will make them more loyal to your company and also help in referring more customers to your lottery business. More customers bring in more revenue thereby causing a healthy bottom line for your lottery business.