Cryptocurrency analyst. Founder and editor at btcpeers.com
With the lottery being the most widespread form of gambling across the world, I sought to understand this industry better. Nils Thomsen is the founder and CEO of Lotto Nation (LN). His experience in the gambling industry spans over two decades, with a special focus on international operations, strategic planning, and customer relations.
In our discussion, Nils shared how Lotto Nation’s approach to gambling is helping shape an industry that has, for decades, been plagued by unfairness, low jackpot prices, and lack of team participation. Of particular interest is how a team can contribute to a single lottery and rewards evenly distributed between the team members.
Also, Nils gave his thoughts on how the upcoming Bitcoin halving and the current coronavirus pandemic will affect the gambling industry.
Can you introduce yourself to the Hacker Noon audience? How you started out as an entrepreneur?
My career started as a shipping trainee with a global Danish operator - at the age of 22, I was catapulted in a parachute and landed in Senegal where I stayed for 2 years and established the operation of my company.
After 6 years I left the job and decided to become self-employed as an entrepreneur.
Over the years my main focus has been building scalable companies with a focus on cutting-edge technology. I love being the challenger and fell instantly in love with the lottery market many years ago. How often can you get across an existing market of the size of USD 350 billion annual sales with so little innovation? I felt very lucky and we don't need to reinvent the market but “just” do it better.
We initially established our various consumer brands in the Nordic region as a pure B2C business. Having seen the huge potential of the lottery market in our relatively small region, we decided to go more international - we searched for a suitable software partner but decided ultimately do build our own platform which now has been in operation for more than a decade. On a personal level, I also act as an angel investor in cooperation with Scandinavian and Swiss family offices.
I understand you have been in the gambling industry since 1995, have there been any improvements/ advancements in the industry? If there are, do you have one or two that you feel were the most significant?
Yes - and some very significant ones.
The change from an offline to an online industry has completely changed the perception of running a gaming/gambling operation. Multiple smaller players have emerged as entry barriers have been lowered - cheaper access to better and more standardized technology and internet, have enabled outsiders to enter the historic monopolistic market.
Compliance and the KYC/AML requirements to the industry have made it more difficult to operate “under the radar” - which I personally believe helps the entire industry getting more accepted as the massive industry that it is.
Seeing that you have been in the gambling space 10 years before blockchain arrived, which aspect of gambling did you concentrate on back then, and why?
Our focus has always been to build up cash-generating and brands with stable income - that is one of the big advantages of a lottery compared to other verticals - the churn is lower and you can have customers for years with the right CRM activities.
Our technology (microservices) is built on the “LEGO building-block principles” where you can combine solutions easily and in a very flexible manner.
What Lotto Nation is, its components, and why it’s heavily making use of blockchain technology?
Lotto Nation is a new type of a worldwide decentralized lottery platform run on the blockchain, that allows companies, charities or individuals to connect with players through the most reputable and acknowledged technology. The ultimate goal of our company is to remove the risk and issues inherent in the current traditional way lotteries are run by making it decentralized, transparent and trustful for everyone involved.
As the digital economy matures, blockchain is revolutionizing the way we do business and have fun.
Adoption of smart contracts and blockchain technology provides a solution for the most crucial problems in the online gambling industry, such as rigged results, low payouts, lack of transparency due to the lack of information, and, consequently, lack of trust.
The social lottery is one component of LN. How will LN enable a team to pool together their money and participate in a lottery? How will the winnings be distributed equitably to all the team members?
Historically, playing the lottery has never been a social activity. This is very contradicting to the digital age where connectivity is everything as people want to stay connected everywhere they go and whatever they do.
For this purpose, we will allow private people, organizations, or charities to launch their own lottery and invite friends and family to become members of a “group”. With a team of players, they can pool their money together and buy more entries for the same amount, which increases the chances of winning. In the event that a syndicate wins, the prizes are shared amongst all team members.
I believe that the success of a peer-to-peer platform is determined by the transparency between all parties involved. Through the use of smart contracts, we will ensure a fair and transparent distribution of winnings to each team member.
Can you tell me more about why insurance is vital in the lottery sector? Which insurance firm or firms is LN working with?
We have used our many years of experience, as not only a software developer but also as an operator when deciding our focus area.
When establishing a brand new lottery and becoming a lottery provider you suffer from two major issues - nobody knows you (lack of trust) and you have no income (no funds to pay jackpots).
We decided very early that you can't outperform a hundred years old national lottery in trust and jackpot sized but you can ease the access to the same and how you play together with friends and family which is rarely done in the current product offerings on the market.
Our unique business model enables new operators to get access to the biggest jackpots in the market from day one in operation - without running the financial risk as the risk is being taken by global insurers against payment of a premium.
Of all the blockchain platforms available, you chose Ethereum. Apart from being developed to power smart contracts, is there any other select reason why you settled for Ethereum?
We have chosen Ethereum for its popularity, functionality and security capabilities. The latest updates to the Ethereum blockchain addressed some of its well-known issues such as lack of scalability and its high transaction cost. As the core of our project are the Ethereum smart contracts, this blockchain gives us greater modality and functionality when developing custom features for the platform.
The gambling industry, especially lotteries, is prone to manipulation when it comes to selecting the winner. How is Lotto Nation tackling this issue to ensure there’s fairness and transparency when selecting a winner?
Traditional lotteries are plagued by a host of issues and inefficiencies -manipulations of the results, a lack of trust between players, developers, and service providers due to multiple intermediaries, high fees, and unintuitive user experiences. There is a pressing need for an overhaul of the whole online lottery industry. A solution to a fair and modern gambling system is a decentralized gaming platform that leverages the advantages of blockchain technology.
The core process of any lottery is how winners are selected. This is done through a Random Number Generation (RNG), which in the vast majority of cases, is a method of which the winning numbers in a lottery are chosen by the lottery organization using some kind of internal or external software.
While the RNG is an effective way to ensure fair winner selections, it’s implemented by centralized organizations and has proven itself open to manipulation and tampering. Unfortunately, manipulation within the lottery industry does happen and Lotto Nation wants to put an end to that.
By carrying out RNG protocols on a distributed ledger, the entire process can be made transparent and visible to all network participants. With the integration of blockchain technology, inherent transparency can eliminate manipulation and create greater trust in lotteries.
LN is developing its own token, the Winners Group Token (WNT). What will it be used for? Will it be useful outside the LN ecosystem?
WNT is purely a utility token it is expected that the buyers during the IEO (Initial Exchange Offering) will be end-users of our service and although we do not encourage speculation we will not restrict market forces and the token will be fully and directly transferable.
We have so many tokens being dumped in the cryptocurrency space with some being used to defraud cryptocurrency investors, what will determine the value of WNT? Will it be listed on reputable cryptocurrency exchanges?
The value of WNT is tied to the presence (development) of the Lotto Nation platform. Its value will thus be governed by the stability and features of the platform as well as the user base of the same. The more users participating, the higher the demand for WNT tokens and their value.
Apart from employing blockchain technology and having an insurance model, tell me why you believe you can beat your competitors?
The Lotto Nation solutions enables anybody to run their own lottery with access to the biggest national lotteries in the world and at the same time have multiple draws during the day ( in principle a draw every minute with jackpots upto Euro 250 million).
Our solution provides a unique social interaction with friends and family as this is completely missing out with the existing solutions in the market.
Charities and good causes will be a key driver of the our ecosystem. They are part of our effort to encourage socially beneficial ventures to generate revenue through lottery as we offer the support and framework to charity organisation to generate alternative revenue streams and additional contributions by allowing them to launch their own lotteries. Charity lotteries do great work in raising money for good causes and charities across the globe. However, existing lottery models impose very high operational costs, leaving little money to the people and causes that need it.
Another advantage that we have is our unique mobile solution. We have several existing solutions that allow customers to buy lottery tickets directly from their phone by spending mobile data or SIM card top-up credit. This may sound simple, but it is a game-changer within the industry. This will help us in attracting the users and the Millennial segment who are more prone to participate in lotteries with multiple daily draws and instant games.
Do you think the coronavirus pandemic will negatively affect lotteries, or is it the other way around?
I believe that the pandemic will positively affect the lottery industry. The lottery industry is currently experiencing growth during the COVID-19 pandemic compared to the previous years.
During this pandemic, people's interest in playing the lottery has increased. However, we do see a shift in the way players choose to participate. Due to the current situation that is limiting physical contact across the globe people are not buying physical lottery tickets in stores as much. However, this means that players are gradually moving over to playing the lottery online.
I think that we will see a very interesting shift in user behavior in the time to come and I believe that this shift will be of great benefit to Lotto Nation. The lack of social interaction in people's lives during this time of lockdown and social distancing is definitely creating a greater need for people to interact online and allowing people to play social lottery together will become more vital in the present time.
Also, with Bitcoin halving on the way, how the historical event will influence blockchain lotteries?
The decreasing amount of cryptocurrency and increasing complexity of mining Bitcoin will naturally create a shift in the supply and demand in the favour of demand. As most people lack the buying power and/or specialized hardware to mine popular cryptocurrencies, they are turning to more suitable and affordable alternatives - altcoins. The value of altcoins, however, is affected by the rising cost and popularity of the main cryptocurrencies (Bitcoin, Ethereum, Monero, NEO, etc) as well as the validity of the projects. This will create a favourable climate for altcoins and blockchain-based lotteries where users have the opportunity to earn cryptocurrency, which they can then exchange for other cryptocurrency on exchanges.
Finishing the interview, where do you see the gambling industry, especially lotteries, in the next five years?
I see the blockchain technology becoming one of the biggest game changers in the lottery industry as this will enable that we get trust back in people. New segments will start playing and new types of operators will emerge - in the lottery segments. I believe that charities will be given new opportunities as well as we see a huge potential in activating friends and families or the local community to support your chosen causes.