• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

K.G. Kumar

FINALLY, after watching other cash-starved States lure corporates with deep pockets, technology and good distribution skills to come and set up shop to sell dreams, Kerala falls in line too. The Government will allow private players to run online lotteries, for which national tenders will soon be floated, the Minister for Finance, Mr K. Sankaranarayanan, told the State Assembly last week.

Some of India's most prominent business groups such as Essar, Forbes, Modi, Ispat and Videocon, have ventured into the online lottery business, signing deals with State Governments. The reason is simple: the online lottery or i-gaming business is a low-risk, high-return business with virtually no expenses apart from the initial technology investment.

Small wonder then, that break-even is around 10-13 months. The Rs 4,500-crore Essel group, promoters of Zee Network, Essel Propack and Essel World, pioneered Indian online lotteries by introducing Playwin Games of Fortune in 2002.

The group soon found that the new business was delivering anywhere between 10 and 25 per cent of its turnover in the first year of operations itself. The lure continues. An advertising budget of over Rs 85 crore has been earmarked for `Dhandhanadhan,' India's newest online lottery, run by Shapoorji Pallonji and Co for the Arunachal and Meghalaya State lotteries.

Globally, the lottery market is worth $128 billion and is growing annually. The paper lottery market in India is estimated to be Rs 50,000 crore, and over two million people buy lottery tickets every day. Only 15 per cent of the population has taken part in a lottery and hence, there is great scope for expanding the market. With a presence across 120 countries through 4.5 lakhretail outlets, the online lottery business is sometimes regarded as the world's largest entertainment industry. But entertainment, of course, is not what is motivating the Kerala Government to plunge into online lotteries. It's revenue.

Reserve Bank of India figures show that in 2001-02, State Governments earned Rs 3,896 crore from ordinary lotteries. Analysts say that figure is not as high as it could be, considering the size of the market.

They say that a lot of money leaks out of the system, which is not so easy in the more transparent online system. The returns to the State Governments depend on the revenue-sharing model chosen.

Some private players offer guaranteed returns, others a fixed percentage commission. The key players usually divide the prize kitty in the ratio of 50:20:30, where 50 per cent goes towards the prize, 20 per cent to the Government and the rest to the promoter.

Is this a case of everyone laughing all the way to the bank? Most definitely not. But anyone who has witnessed the way the two leading newspapers of Kerala have recently been using the charm of Lady Fortune to boost their circulations via daily lotteries will only vouch for the Malayalee's penchant for the quick buck.

That is what the State Government seems to have realised too. Once, it used to be said that the lottery was a way of taxing the poor. But the poor in Kerala - to paraphrase F. Scott Fitzgerald who said the rich are "very different from you and me" - are different. And now that they have become IT-savvy, who can deny them their daily online fix?

The writer can be contacted at kg@tug.org.in

Article E-Mail :: Comment :: Syndication

Stories in this Section
DK receives record rainfall

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line