Lotteries are games of chance that offer prizes based on random number selections. They are extremely popular around the world as a form of entertainment and a way for governments to raise revenue. But who actually owns and operates lotteries? Are they run by governments or private companies?
The short answer is that it varies. Some lotteries are owned and operated by national or state/provincial governments. Others are owned by private companies that have been granted licenses or contracts to run lotteries by governments. There are also some lotteries that are jointly owned and operated through public-private partnerships between governments and private firms.
So lottery ownership and operation models can differ significantly between countries and even within countries. There is no one-size-fits-all approach. However, in many places, privatization and private sector involvement in lotteries has been increasing over the past few decades.
Government-Run Lotteries
Historically, lotteries were nearly always run directly by governments. The first recorded lotteries date back thousands of years to the Han Dynasty in China, where they were used to fund government projects like the Great Wall. In the Middle Ages, European governments conducted lottery drawings to raise money for their treasuries and wars.
Government-run lotteries continued to be the norm in many parts of the world into the 20th century. National lotteries operated by state agencies remain common today, especially in Europe, Asia, Australia, and Latin America.
For example, the UK National Lottery is operated by Camelot Group under a license from the government’s National Lottery Commission. All profits go to philanthropic causes like the arts, sports, heritage, and more. The massive EuroMillions lottery played across 9 European countries is state-owned through member country lottery organizations.
Provincial or state lotteries run by U.S. and Canadian governments also predate the rise of private lottery providers. State lotteries in the U.S. first began in New Hampshire in 1964 as a way to generate revenues without raising taxes. Today, 45 U.S. states plus Washington D.C., Puerto Rico, and the U.S. Virgin Islands have their own lottery systems. State lotteries in Canada also exist in nearly every province.
Government-run lotteries can have certain advantages. State ownership ensures uniform products and consistent branding across regions. Government lotteries may be perceived as more trustworthy since there are no profit incentives. And lottery revenues can be a stable source of public funding directed to social causes.
Private Lotteries
While government lotteries have a long history, private ownership and operation of lotteries is increasingly common today. In some countries, lotteries have been almost entirely privatized.
The U.S. is one example where privately owned lotteries have risen to prominence over the past 50 years. While state lotteries continue to generate significant revenues, multistate lottery games are now dominated by two private companies:
- Multi-State Lottery Association (MUSL) – Nonprofit owned by 36 member state lotteries. Operates games like Powerball and Mega Millions.
- IGT – For-profit company that runs Cash4Life and Lucky for Life games for member state lotteries.
These multistate games that offer gigantic jackpots have become some of the most popular lotteries in the U.S. and the world. The companies coordinate game design, marketing, and operations for member lotteries that sell the tickets.
Other major privately run lotteries include:
- People’s Postcode Lottery (UK) – Operated by Postcode Lottery Limited, a private firm overseeing multiple charity lotteries.
- Loterías y Apuestas del Estado (Spain) – National lottery operated by SELAE, a private company majority owned by ONCE, the Spanish blind association.
- Hong Kong Mark Six – Run by Manderport Investments Ltd, owned by private equity firms.
- Florida Lottery – One of a handful of U.S. state lotteries fully privatized through a long-term contract.
Private lottery providers tout their innovation and marketing capabilities. They argue privatization increases sales, resulting in more funding for government programs. Critics contend it redirects revenues to corporate profits and executive pay. But many governments still see benefits in outsourcing lottery operations.
Hybrid Public-Private Models
In between fully government-run and fully privatized lotteries are some hybrid public-private models:
- License models – Private firm operates lottery under license from government for a fee or percentage of revenues.
- Management contracts – Government hires private company to manage lottery operations for a contracted time period.
- Online partnerships – Government lottery utilizes private firm for new online gaming options.
- Joint ventures – Lottery is co-owned and operated by both government agency and private partner.
These arrangements allow governments to capitalize on private sector expertise in areas like marketing and game development, while still exercising some oversight and reaping a share of lottery profits.
The exact ownership and management structures vary. But hybrid models are increasingly popular to balance public and private interests.
Ownership Structures by Country
To illustrate the diversity of lottery ownership models across the globe, here are some examples from different countries:
United Kingdom
- National Lottery – Licensed to a private operator (Camelot). Profits go to good causes.
- People’s Postcode Lottery – Fully private operation with profits distributed to charities.
- Health Lottery – Run for profit by Northern & Shell with 20% going to NHS charities.
United States
- State lotteries – Operated by state governments (except privately run Florida Lottery).
- Multistate games – Run jointly through nonprofit (MUSL) and for-profit (IGT).
Australia
- Saturday Lotto – Government-owned through the lottery bloc.
- Oz Lotto – Government-owned through the lottery bloc.
- Powerball – Joint venture between government lottery bloc and private operator Tatts Group.
China
- Welfare Lottery – Run by the Ministry of Civil Affairs for social welfare causes.
- Sports Lottery – Operated by China Sports Lottery Administration Center.
South Africa
- Lotto, PowerBall – Licensed to privately owned Ithuba.
- Sports Betting – Licensed to privately owned TabSouthAfrica.
This small sample illustrates the complexity of lottery ownership models across different countries, and even within the same country. Some key takeaways:
- Government-run lotteries remain common around the world.
- Private sector involvement has grown through privatization and public-private partnerships.
- Multi-country lotteries are increasing through joint ventures and nonprofits.
- Ownership structures continue evolving in different directions.
There is no universal standard. Government, nonprofit, and for-profit ownership models all co-exist in the global lottery industry.
Factors in Privatization
In many instances, lottery privatization has been driven by a desire for greater efficiency, innovation, and revenue growth. Proponents argue private owners have stronger incentives to maximize sales and enhance lottery products in a competitive leisure market.
Specific factors that can motivate governments to privatize lottery operations or partner with private firms include:
- Raising more revenue – Private firms promise sales and profit growth, translating to higher revenues for government programs and causes.
- Access to capital – Private owners can leverage corporate assets and access capital markets more easily for technology and expansion.
- Expertise – Private lottery companies possess specialized expertise in key areas like marketing, game design, retail distribution, and data analytics.
- Mitigating risk – Privatization shifts financial risks associated with lottery operations away from government.
- Modernization – Private partners can accelerate innovation, especially in digital channels.
- Diversifying games – Private owners are motivated to maximize ticket sales through a wider variety of lottery products.
However, there are also arguments against privatization. Opponents contend profit-seeking private monopolies may be counter to the public interest in fair gambling regulation. Government ownership ensures lottery revenues directly support public causes.
There are certainly valid points on both sides. Each jurisdiction weighs the tradeoffs differently in structuring their lottery operations between state control and private ownership.
Growth of Online Lotteries
A notable recent trend driven by lottery privatization is rapid expansion into online sales channels. Online and mobile lottery games are growing exponentially thanks largely to private companies.
Online lottery sales in North America have surged from $100 million in 2013 to over $10 billion as of 2022. Industry observers project continued double-digit growth in coming years.
Top privately run lottery firms like IGT, SCIENTIFIC GAMES, and Pollard Banknote are at the forefront of digital lottery innovation. They provide the platforms, apps, payment integration, and cybersecurity that enables state lottery organizations to transition into interactive channels.
Government agencies have traditionally been slow adopters of new technologies. Private partners are helping them update antiquated lottery systems to align with 21st century consumer behaviors.
The global COVID-19 pandemic provided an unexpected boost to online lottery sales. Lockdowns accelerated existing trends toward remote buying of lottery tickets on websites, apps, and mobile wallets. These shifts appear likely to stick even after brick-and-mortar retail rebounds.
Privatization has clearly unlocked faster lottery innovation. However, it also raises responsible gambling concerns with 24/7 access. Public and private stakeholders continue working to update regulations and implement safeguards.
Key Private Lottery Companies
A handful of private firms dominate the lottery industry across retail and digital channels:
| Company | Key Facts |
|---|---|
| IGT |
|
| Pollard Banknote |
|
| INTRALOT |
|
| Scientific Games |
|
These companies continue pushing lottery privatization and public-private partnerships. They compete intensely for long-term lottery operations contracts across the U.S. and worldwide.
Ongoing consolidation is also occurring across the lottery vendor supply chain. Major corporations are acquiring key technologies, talent, and customer bases to reinforce their market dominance.
Despite some public resistance in places, the global trend toward private sector lottery involvement seems likely to continue growing in the years ahead.
Conclusion
In summary, lottery ownership models differ widely between jurisdictions. While government-run lotteries have a long history, private sector involvement has grown over recent decades through privatization and public-private partnerships.
Factors driving lottery privatization include desires to increase revenues, leverage private expertise in marketing and technology, and mitigate risks. However, critics argue state ownership better serves the public interest. There are reasonable cases on both sides.
One clear trend driven by privatization is rapid expansion of online and mobile lottery games. Private companies have accelerated innovation in these digital channels. This growth is projected to continue as more lottery sales shift online.
A handful of major corporations now dominate the global lottery vendor supply chain. They continue advocating for private ownership and management of lottery operations across the retail and digital worlds. This push toward privatization has reshaped the industry and will further evolve lottery ownership models worldwide going forward.
