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It didn't take long for online lotteries to catch on in France. In fact, most of these French Web sites were launched less than six months ago. And the sudden success has come as a surprise even to the giant Bananalotto, which, thanks in part to an enormous advertisement budget of $2.6 million, has become the 20th most visited site in France. It is also the biggest online lottery site, with 11% market penetration in France. Says Managing Director François Lhemery, "for July, we were counting on getting 50,000 sign-ups per day. We ended up with more than 140,000." The concept of free online lotteries began a year ago and has since spread like wildfire. Two Frenchmen developed the idea when they created their Web site Luckysurf in the U.S. in September of last year. Because paid lotteries are state monopolies, with the exception of Britain, the founders of Luckysurf developed a cost-free lottery financed by ads Web users have to click on in order to fill out their lottery cards. "The beauty of the concept," says one of the founders, Daniel Laury, "is that although Web users are forced to go on to these sites, they are just as likely to sign up or make a purchase as they would be if they had voluntarily clicked on the advertising banner.'' SLOW SALES. The system is meant to attract Web users and to boost e-commerce. Users fill out lottery forms cost-free, hoping they will be the 1 in 10,000,000 who actually ends up with a jackpot of up to $1 million. To finance the operation, lottery sites charge advertisers 40 cents to 65 cents per click on their site and some take from 5% to 15% on additional sales their customers help generate. "Our goal is to help e-commerce companies reduce the cost of attracting new clients," says Pascal Magne, managing director at French online lottery site Eldorawin. The formula isn't entirely flawless, though. Expected sales figures for this year range from half a million dollars for Milkado to $1 million for Luckyvillage to $2.2 million for Bananalotto. Only Koodpo expects sales to reach $13 million, thanks mainly to a partnership currently being signed with a major national media group. Most have been able to attract from 20 to 40 advertisers. But profits all around aren't expected until the middle to the end of 2001. "Our audience numbers are going through the roof, but sales figures are progressing much slower," says Ouriel Ohayon, marketing director at Luckyvillage. Sales figures may slow down even more with the speedy arrival of competitors on the French online lottery scene. Behind pioneers like Luckyvillage, Bananalotto, and Koodpo are a string of newbies such as Mildkado, Lotree, Eldorawin, Bingopoly, Goodluckcity, Emilio, and Duoloto, as well as French versions of Luckysurf and Tropplotto. Laury speaks of how surprised he is by the fact that Luckysurf has more competitors in France than in the U.S., especially since "the online advertising market in France is modest, with a value of roughly $132 million in 2000." Increased competition means that not all online lottery players will survive. Many are already looking for extra financing. Lotree has just recently negotiated a second financial package with Swiss financial group Harwanne, giant French hypermarket chain Casino, and French insurance company Groupama, and Luckyvillage has just concluded another deal with online video gamemaker Gameloft. And many others, including Bananalotto, Eldorawin, and Koodpo are eyeing investors. Online lottery sites may soon be playing for the jackpot themselves. |
