Lotteries could have the opportunity to collaborate in sports betting as well. However, a few things need to be clarified here. There are two product groups in betting: fixed-odds and pool-based (totalisator) games.
In the fixed-odds game, customers play against the company and, in that game, the company has a slight advantage of scale.
The best example of a pool-based game is lotto. A large number of customers participate in the game, the company gets a risk-free share of the sales and the winning customers share the rest of the money among themselves.
In a pool-based game, economies of scale work very well and lotteries should focus on this.
Sportsbooks, with a few minor exceptions, only offer fixed-odds betting. On the other hand, horse race betting operators use pool-based betting in several countries, including the US.
Thanks to this – and, of course, the lottery games – most customers know the principles of pool-based (pari-mutuel) betting. Even if the products in question are not as familiar to a fixed-odds consumer, they could still be a commercial success for lotteries.
In this area, lotteries could also further leverage collaboration, similar to Euromillions or Powerball, to offer a product that other companies would not be able to match.
In Europe, pool betting is already common, especially in the Nordic countries. And it's already prevalent in lotteries – before the Covid-19 pandemic, about 10% of sales for European Lotteries' (EL) members came from pool betting, with 17% from fixed odds.
While its contribution in terms of revenue is smaller, pool betting is robust in my home country Finland, Sweden and Norway. Spain's SELAE and France's FDJ also offer reasonably large pool-based games, while the UK's football pools remain popular.