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Against All Odds.

4 October 1996

Fortibus est fortuna viris data (Fortune is given to the bold). And, one year ago, some bold investors put together a deal with the Government of the tiny European country Liechtenstein (population around 30,000) and started the first fully on-line Internet lottery operation.

Hopes were high and some wild forecasts were made. Including one by one of the Interlotto founders David Vanrenen, who when asked about an estimate of 1 million tickets a week being sold by the end of the first year commented , "I would suspect that is on the low side."

Well, things did not go quite according to the early estimates or plans but, one year later, there is still an Interlotto in Liechtenstein and a team of people who have learned the hard way about the good and the bad of the 'Net. Their first birthday, on October 7th 1996, marks a real milestone in cyberspace for the gaming industry.

That cyberspace gaming has not yet had a big impact around the real world can be seen in the slow responses by governments to this "threat" to their state lottery revenues. Only recently has a task force been put in place to study the issue from the US point of view (the NAAG). There has been no outcry in any real sense, anywhere.

In the meantime, Interlotto has struggled doggedly on, improving their site and developing new forms of lotteries. The online Lotto game has been a disappointment so far with very low play levels, although it now seems to be growing, albeit slowly. Whilst figures on the overall operation are not available, there seem to be two things that have helped the operation survive. One is the operating margin of 30% including commissions paid to agents (65% is paid as prizes, 5% goes to charity); the other is product innovation and continued effort to improve their site.

Overall, Liechtenstein gets an A for effort at the end of year one of operations. An A+ for persistence, and an A for site management and innovation.

Given some of the stories I have written on Interlotto, you will see they also deserve a "A" for good manners and forgiveness in agreeing to an interview with me for this birthday report.

James Tucker, Interlottos' Public Relations and Administration Manager was my victim in this instance and here is an tidied up version of our email webchat.

THE INTERVIEW.

JAMES: Hi, Glenn. Thanks for the email. We would be happy for you to do a positive story on InterLotto for its first birthday.

GLENN:I know you don't always like what I write but I do keep you in the news. You might note I do the same sort of job on people like NAAG who are trying to stop you. I take the "positive" as a fair retort.

JAMES: Thank you. Appreciate your humour. InterLotto will be 1 on the 7th of October. We are very proud of the fact that we are the only legitimate Lotto site on the Internet and have survived under the threat of competition and the usual start-up obstacles that a new business has to contend with.

GLENN: Do you want to say something about your site, equipment, software, the good the bad the ugly. For instance, has any equipment let you down, has any been a godsend ? Do you love Apple and hate IBM?

JAMES: We run a bunch of really big Dec Alpha computers that have loads of computing power and cost a fortune! Seriously, I am not technical but I know that the biggest problems we are having are with the Internet as a whole, not with our local machinery. The Internet is getting really busy, and connections to Europe are very busy.

It is great to see the new technology coming out for more interesting interactive games and we will be implementing many exciting games based on things like Java, Shockwave and ActiveX in the next few months. We also feature Live Video and very soon Live Audio broadcasts from our draws.

GLENN: Have you any comments on the type of issues I have been writing in "The Gambler" series on market size. What you thought a year ago, what you think now. It does look like a slow acceptance.

JAMES: InterLotto got off to a slowish start but we are very happy with the growth at the moment. We have still only reached a very small fraction of the Internet market. Our marketing team has developed and is continuing to develop novel and exciting ways to include the Internet users in benefiting from spreading the good name of InterLotto.

GLENN: Is it fair to say you may have misread the "Internet" market at the start and are now creating products more suited to the medium?

JAMES: We are learning all the time and enhancing our product to suit our players better. I doubt that anyone could claim to have understood the Internet market, particularly when we started last year. Introducing the instants was an obvious and well-executed move to supply what the players wanted to fulfil the break between the weekly lotteries.

GLENN: Do you think you have got the mix right right yet?

JAMES: We believe that we are now onto a winning formula. With our new site release and high percentage of retained players, we look forward to the near future when InterLotto becomes a household name and the weekly jackpots increase to sizes comparable to the larger National Lottery jackpots. Starting a lottery on the Internet was also a world first and the challenges that have been overcome (such as the facility to clear credit cards)

GLENN: Yes, on the subject of credit cards, today here for instance we had the head of Mastercard for the Asia region on TV saying "don't use your credit card on the 'Net". You don't need that.

JAMES: Sure. And don't buy flowers from a mail order house either! You have no way of knowing who gets your credit card number when you phone in an order - but the mail order business is huge.

GLENN: Let us have a paragraph about your views on Credit Card use on the 'Net.

JAMES: Credit cards have their inherent problems; but, they are also prolific and a great for the general public to participate. We will adopt new technology as it becomes available to increase security of the cards; but, I do believe that the level of security currently available, even with export versions of SSL (Netscape's secure sockets layer which we use) is far superior than that available in every day life where credit card slips are left in restaurant waste bins, or numbers handed over the telephone to unknown people.

GLENN: What is working for you and what isn't?

JAMES: The InterLotto site has moved consistently forward in positive ways since our release to the Internet, most notably with the introduction of the first instant Lotteries on the Internet. The instant lotteries have proven to be very successful and popular with our players.

GLENN: Can we indicate some criteria for this success? I guess you don't want to state actual figures but I would like to cover this even more than the Lotto. My feeling is that Instants might be your future.

JAMES: Players like an immediate return, and with Instants we can provide that. Look out for some exciting hourly and daily lotto type games in the very near future

GLENN: How many instant games to you plan to have up at any one time? How many games in all (you don't want the site to become too confusing)?

JAMES: Our new interface copes with multiple games in a much more tidy fashion; so, we will be able to have many different games to suit all players. The number of games will be entirely dependant on player demands. InterLotto is also happy to offer our players a Guaranteed SFr 1.2 million lump sum jackpot in our major 6 from 40 ball weekly lottery.

GLENN: I'll mention this again (I always do), but as there hasn't been a top level winner yet maybe let's talk about which countries (if you know) are the best Lotto players (i.e. the Japanese are better than the Americans.

JAMES: It is very international. With all our games in Chinese, Spanish, German, Italian, French and soon Korean, we are trying to cater to all Internet users. The majority of our players have International domains, such as .com and .edu. Next we have the Asians, Americans and Japanese. Italians, and people from the Netherlands are also big players.

GLENN: Whatis the break up Europe to the rest of world at this stage...60%/40%?

JAMES: Hard to tell as we do not ask players for their whereabouts, and have to go on email addresses. As you know, there are many email addresses (such as compuserve.com) which could be anywhere. I would say its very close to 50%/50%. I do believe that when we get in touch with the Asian markets that this will become the dominant force behind our playing population.

GLENN: Shall we talk about the Interpad concept you are promoting?

JAMES: The introduction of touch screen technology is also an area that InterLotto is happy to be involved in. The increase in users accessing the Internet in a cost effective and user friendly way is anticipated to be staggering. InterLotto is excited by the opportunity to provide software that will not only open our site to new users but will also allow InterLotto to provide its software to parties interested in using touchscreens to develop their own businesses. InterLotto already has its touchscreen software operating on a number of live sites in Liechtenstein, with beta sites operating in the UK and Austria.

GLENN: You want Agents or Players at this stage?

JAMES: That depends largely on how InterPad decides to market their touch screens. The more agents InterPad manages to get to take on the InterLotto software the more players InterLotto will see in the front door. It's all a factor of itself, the big snowball, and we feel that it is beginning to roll.

GLENN: Can people use these "airport kiosk" type coin in the slot Internet connections to play now?

JAMES: In Liechtenstein, we have a number of kiosks running. I believe that Interpad will be placing kiosks in other countries soon.

GLENN: What about casual verses regular players?

JAMES: InterLotto is also proud of the good relationship that we have with our players, which is attributable in a larger part to our proactive response to our users comments on our site and games.

GLENN: Any unusual players? Eskimos? US military personnel at the South Pole. Funny comments, anybody "famous", does Bill Gates play?

JAMES: Famous players, not yet. We are working on it though!.

GLENN: Getting this far, given the initial dissapointing results of on-line Lotto, must have been a bit of a battle.

JAMES: We have won many small battles and are on our way to winning the war! I look forward to reading your completed article.

GLENN: It will be a "positive" one. You guys have done a good job, even just surviving, and I wouldn't want to be the one to spoil your birthday.



Editor's Note:

In celebration of InterLotto's first birthday,they're rewarding players by giving away Sfr 5,000 in prizes to thank all them for their support over the last year. To be a part of the Big Birthday Bash, all you need to do is to play any of the InterLotto games over Saturday (5th), Sunday(6th) and Monday(7th October). Cash prizes have been set to explode onto the playing screens throughout these three days. If you are playing when any of these prizes go off, you win.

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