A coffee for $10? It’s too much, but in the world of lotteries, monopolies often exist. Monopolies in regulated wagering markets have advantages such as offering exclusive products, having trusted brands, and maintaining strong relationships with the government and the industry. However, these monopolies can sometimes result in suboptimal outcomes for consumers due to a lack of competition and limited product offerings.
One example of a monopoly in the lottery industry is Happy Valley, established in 1884 by the Hong Kong Jockey Club (HKJC). The HKJC has a rich history rooted in horse racing and actively contributes to charitable causes in Hong Kong’s economic landscape. The HKJC incurs significant duties on its gross margins from football and racing, with a large portion of its profits being contributed back to the community through government taxes and charitable donations.
For businesses that provide critical or innovative services to wagering operators (B2B suppliers), there is a great opportunity to work with monopolies. Monopolies, like other operators, can benefit from technological advancements and integrate with innovative B2B products to enhance their offering and customer experience. By expanding geographically and utilizing their domestic experience, product offering, and technology stack, monopolies can follow the success of companies like Flutter, which has established global wagering businesses through strategic expansion.
However, monopolies face challenges from unregulated operators in the digital age. These illegal and overseas betting operators often pay no taxes or operate under low tax regimes, resulting in significant revenue leakage and decreased competitiveness for regulated monopoly operators. To combat this, monopolies must consistently innovate, deliver attractive product offerings, and provide strong customer experiences. They could also consider filling gaps in their product range through monopoly licenses to prevent leakage to unregulated operators and increase taxation and charitable contributions.
Overall, monopolies in the lottery industry must adapt to the changing landscape and competition from unregulated operators. By providing comprehensive wagering products and enhancing customer experiences, monopolies can maximize their potential domestically and internationally while protecting consumers and increasing their contributions to the community.
For wholesale investors interested in following wagering and gaming industry news and trends, Waterhouse VC provides updates on Twitter (@waterhousevc) and their website WaterhouseVC.com.
