09/10/2012 10:30 BST | Updated 09/12/2012 05:12 GMT

Mapping the Future of Online Lotteries

In the days of Xbox Live, Netflix and Spotify, it's easy to find yourself indignant at the prospect of having to leave the comfort of your own sofa to buy music, play computer games with your mates or rent a film (Blockbuster who?). Today, when there is such a constant stream of innovation in the online sphere, and where a trip to the shops to pick up a DVD seems like a tribulation to many, you'd think all industries were leaping to move their products or services online.

However, not every industry can be quick on its feet to adopt new technologies. When innovation comes along with the power to revolutionise the market, it can be difficult for businesses to abandon long-established practices. The lottery industry is a prime example of this.

Lottery vendors are typically large organisations (facing the dual challenges of public and private ownership) with operations traditionally focussed on printing and bricks-and-mortar retail, and processes developed over many years. Indeed, the act of playing the lottery has changed very little in the last decade; you go to the newsagent, select your lucky numbers and go home again.

Although lottery still enjoys widespread popularity, it faces fierce competition for Generation Y's attention from websites like Facebook and social gaming developers like Zynga and Rovio. Considering that Zynga's 250 million active monthly user base is over twice the size of North America's lottery-playing population, it's natural to ask whether lottery risks becoming obsolete in the 21st century. There is growing consensus within the lottery industry that the future of lotteries is online; the challenge is how to get there. How can the internet shake up an industry steeped in 1980s technology (ball machines and scratch cards) and give it a twenty-first century overhaul?

In order to succeed online, lotteries must acclimatise and adapt to suit online player bases, their expectations, and their preferred ways of communicating. And when I say 'adapt', I do not mean simply recreating the traditional lottery format online. That the attention of this modern class of consumer can be captured and retained by simple lottery games is doubtful.

To use an example, Google Maps and other location-based technologies allow vendors to put a new, more exciting spin on the age-old idea of a postcode lottery. Instead of simply entering chosen numbers into a form and hitting 'submit', online mapping technology can allow players to interact on a more meaningful, visual level (such as a satellite picture of their home), and will ultimately keep them coming back to play again.

In the same way, social media will (and should) play a big part in lotteries' efforts to connect with online users. Networks and forums add a vitally important social dynamic to playing the lottery - one that will turn lottery-playing from a solitary activity to a more engaging, sociable, one. They also let lotteries engage in a two-way conversation, allowing players to feed back on games.

In a sense, the lottery industry's caution when it comes to investing in new technology is practical. It's a heavily-regulated quasi-public-sector industry in which bringing a new product to market can be tricky at the best of times. With software becoming more complicated, the potential for delay increases. Security is another huge area of concern and, as lotteries migrate online, it's unsurprising that operators have had their reservations. In answer to this, suppliers need to ensure that the games they develop not only engage players but also have security, scalability and reliability built in from the outset

There still exists an element of fear within the lottery industry that internet gaming has monopolised the online market; that Zynga and Rovio (and the thousands of other game and app developers out there) are to lottery what Netflix has been to Blockbuster. I would argue that this simply isn't the case. There are distinct differences between lotteries and social gaming developers, whose games are free to play, require a considerable investment of time and, above all, don't allow players to win a million dollars. What's more, lotteries are in a favourable position because they enjoy a protected monopoly that ensures private lottery newcomers cannot 'do a Netflix' and destroy their business.

A precedent has been set by the online gaming industry. Now that lotteries have seen the great potential online, they recognise that before they can tap into this lucrative market they need to update the industry's use of technology.