Dutch Novamedia Well Posted to Become a Global Lottery Player

25 October 2001
Novamedia, operating and participating in lotteries in Europe, Asia, North-America and South America, is established in the heart of Amsterdam. On the lowest floor in one of the many old distinguished and very expensive manor-houses, turned into offices, we meet the CEO Boudewijn Poelmann, 52. He is responsible for the daily hands on management of the international operations in the Netherlands (National Postcode Lottery, NPL, and SponsorBingo Lottery), Uzbekistan (Ecolot), Sweden (BingoLotto), Germany (the German version of the Postcode Lottery), Netherlands Antilles (Goodlot, to be launched November 16, 2001) and Prince Edward Island, Canada (Earth Future Lottery, EFI, planning to start from February, 2002).

In 1983 Poelmann started, "in just a friend's room," a small marketing company: Novamedia. One year later Herman de Jong, now 53, joined the company. The two already knew each other from prestigious Nijenrode, the Dutch Business and Diplomat University, and later they went together to the University of Oregon, where they studied marketing. De Jong now handles financial matters for Novamedia.

A few months later Frank Leeman, now 52, an aggressive and creative marketer who introduced sweepstakes as a marketing technique, became the third partner in the company.

Simon Jelsma, now 83, originally a catholic priest who Boudewijn Poelmann met when they were both working for a Dutch good causes organization, completed the "four-leaved clover" luck club. Jelsma was contracted due to his close relations with the good causes organizations and he should raise capital for Novamedia's clients.

Poelmann got sick of continuously running after money and got the idea of starting a lottery with telephone numbers. Just a couple of hours later he decided that a Lottery with Postcode numbers would be better. At that time the Dutch National Post was just starting to introduce the postcode numbers and they thought that sponsoring the Postcode Lottery would be a great tool to promote the postcodes awareness. Nearly at the same time commercial television matured in the Netherlands and program sponsoring became possible. Special Postcode Lottery-television shows added another successful dimension to get the Dutch players acquainted with this new, "aggressive" lottery.

The first draw of the National Postcode Lottery took place in January 1990 with a main prize twice as big as the monopolistic rival, the Dutch StateLottery, which by then had a dull and sleepy image. Direct marketing, accelerated by the possibilities of the new postcodes, was elevated by the founding "four aces" to a new science.

"Yes, that is true," Poelmann confirmed. "We have covered and canvassed the Netherlands with a mailing rolling-machine. From the very start we were also able to personalize all our mailings. Now our information system has become the biggest and most detailed database in the Netherlands, with an automatic subscription collecting system and a special program for our telephonic help desk. Moreover, even from the very start we already had a good operating help desk."

National Postcode Lottery

In 2000 the turnover of National Postcode Lottery grew by 7 percent to a total of 578.8 million NLG*. Of that, 133.4 million NLG (23 percent) is prize money and 350.3 million NLG (61percent) is going to charity. With this, the NPL maintains its position as the No. 2 lottery in the Netherlands and No. 1 private fund raiser for charity. The Dutch StateLottery topped in 2000 a turnover of 1,313 million NLG; 250.2 Million NLG (19 percent) goes to the exchequer and 876.2 million NLG (67 percent) is prize money. The Dutch population is 16 million. Per household the Dutch spent 388 NLG on lotteries and lottos in 2000.

The starting point was to generate money for good causes. "We will stick to that formula," Poelmann explained. "Whatever lottery we start or take over, we will always work for beneficiaries."

The Dutch Postcode Lottery has 7 regular beneficiaries and 28 smaller beneficiaries:

  • UNICEF
  • NOVIB, Dutch Organization for International Development Cooperation
  • WWF, World Wide Fund for Nature
  • Natuurmonumenten, Dutch Association for Nature Preservation
  • Médecins sans Frontières
  • Vluchtelingenwerk, Association for Refugee Work
  • DOEN Foundation, founded by the Postcode Loterij (DOEN's objective is to work toward sustainable development and nature conservation in an innovative and businesslike manner.)

The Sponsor Lottery had in 2000 a turnover of 111,1 Million NLG, a growth of 2 percent. The prize money was 20.3 Million NLG (18 percent) and the good causes received 66.9 Million NLG (60percent).

Since August 15, 2001, the Dutch SponsorLottery has been rejuvenated and renamed SponsorBingo Lottery. According to the annual survey into organizations dedicated to good causes, the Dutch Sponsor lottery is known to 74 percent of respondents, while another 53 percent of them appreciate its work. The survey shows that the Dutch Sponsor Lottery is the best loved lottery in the Netherlands.

Permanent Beneficiaries:

  • Rijksmuseum, the Van Gogh Museum, the Kröller-Müller museum and the Mauritshuis; These four museums received 19.3 million NLG in 2000.
  • Humanitas; welfare agency (11.3 million NLG)
  • Fonds Slachtofferhulp, victim support organization (2 million NLG)
  • Epilepsiefonds, the Dutch fund for epilepsy (0.6 million NLG)
  • Johan Cruyff Welfare Foundation (8 million NLG)
  • Dutch Sportsmuseum (0.5 million NLG)
  • Doen Foundation (10.8 million NLG)

Ecolot

In November 1995 Novamedia launched a scratch-card lottery under the name Ecolot in Uzbekistan (population 24 million). The operator is Finoco, of which Novamedia holds 70 percent of the shares. The other shares are owned by Ecoson. The turnover in 2000 was 20 million NLG (60 percent of the total lottery market).

BingoLotto

The next of Novamedia's acquisitions was in April 2001, when BingoLotto Sweden was bought from IGS. BingoLotto Sweden had a turnover of 350 million Euro in 2000. Over 2.2 million BingoLotto tickets are sold weekly via sales outlets in Sweden only. (Sweden has a population of 9 million.) Youth sports clubs sell between 40,000 to 50,000 tickets weekly. From those sales, 40 percent goes directly to those clubs. Forty percent of the ticket sales benefit good causes in Sweden and 48 percent of the turnover is prize money. The exact price for the takeover has not been disclosed by the two parties involved. However, news media in Sweden mentioned the amount of US$10 million.

Shares Selling

This Novamedia acquisition was made possible by selling 30 percent shares to Joop van den Ende, founder of the Endemol Entertainment Company. Van den Ende used his investment company Chios B.V. to purchase the shares. Chios B.V. paid 50 million NLG and guaranteed, according to several sources, another 150 million NLG for Novamedia's international growth strategy. After a career in the television industry that spanned a number of decades, van den Ende resigned his positions of vice chairman of the executive board of Endemol Entertainment and managing director of Joop van den Ende Producties at the end of May 2000. John de Mol and van den Ende, who controlled a majority of the ordinary shares of Endemol, sold their shares to Spanish Telefónica, which made them both billionaires in U.S. dollars. Telefónica valued Endemol at approximately 5.5 billion Euro*.

New shareholder Joop van der Ende knows the lottery industry very well, since his company produced TV programs for all the Dutch lottery operators, as well as for other operators throughout Europe. Above that he stays in the picture with the German market, which has approximately 82 million inhabitants, because Endemol is the leading TV production company in Germany. And Novamedia will conquer the German lottery market soon.

Germany

Novamedia has been trying to enter the German market since 1992. And until last week, Novamedia was planned to start with the German version of the Postcode Lottery, the "Deutsche Postkode Lotterie," on Nov., 9. After suing the governments of the German Bundes Länder (land states) for the last eight years, Novamedia has acquired the license to operate in Niedersachsen (7.8 million inhabitants), Berlin (3,4 million), Bremen (0.7 million) and Bayern (12.1 million). Further, courts found that that NordRhein-Westfalen (18.0 million) and Hamburg (1.7 million) should grant a license to Novamedia to operate the German version of the PostcodLottery. And according to Poelmann Thüringen (2,5 million) will follow soon.

On Friday Novamedia had to postpone its launch in Germany after the federal state of Hessen passed a bill which would make it nearly impossible to get a license, and, according to the equal rights principle, other German states could adopt that bill as well.

The German version on the Postcode Lottery is planning to work in close cooperation with the following nine partners and beneficiaries:

  • Naturchutzbund
  • BUND
  • UNICEF
  • Welthungerhilfe
  • Kindernothilfe
  • Terre des Hommes
  • Misereor
  • Greenpeace
  • WWF-Deutschland

Goodlot

Nova media intends to launch its "GoodLot" internet lottery site from the Netherlands Antilles on November 16. According to Poelmann, Goodlot will become the worlds' biggest internet lottery for good causes. The startup costs will be around US$ 6 million and the Web site will eventually be in English, German, French, Russian and Chinese. The expectation is to sell 250,000 Goodlot tickets in the first month. After a couple of months that should reach 500,000. Goodlot will pay out the highest prizes in the world, and they mentioned a jackpot which should start higher than US$200 million. Oracle and Sun are building the site and its accessories, which will be operated from Curacao, a part of the Kingdom of the Netherlands. The auditing will be executed by PriceWaterhouseCoopers and KPMG.

A Novamedia spokeswoman indicated that Goodlot had applied for the Interactive Gaming Council seal of approval, although Poelmann questions how necessary that is. "We do not need an approval from anyone," he said. "The way we operate our lotteries is our seal of approval. And above that, KPMG and PriceWaterhouseCoopers want both to be associated with Goodlot. For me that should be good enough for players' security.

"The Internet creates a worldwide market and at the same time we see that the good causes organizations are internationalizing. That's why we feel that Goodlot will be a success for all our partners."

Beneficiaries:

  • Médecins sans Frontières
  • Amnesty International
  • UNICEF
  • Foster Parents Plan
  • Greenpeace
  • WWF
  • Red Cross
  • NOVIB

Earth Future Lottery

Novamedia has become a strategic partner of the Earth Future Lottery of Canada. The Earth Future Lottery will be operated to generate money for the Earth Fund, a well known Canadian fund canvassing organization for human rights, nature and the environment.

The Earth Future Lottery is established on Prince Edward Islands in Canada. Novamedia, a 50 percent partner, will play an assisting role only in the marketing and the promotion department. Forty-two percent of the inlay will go to good causes. Players will have a daily, weekly and monthly chance at winning prizes ranging from US$50,000 to $1 million. Smaller prizes range from $1,000 to $25,000. Prizes will be drawn from tickets sold, guaranteeing that they'll make a millionaire twice every month.

Before the company can move forward with the Earth Future Lottery, however, there are legal matters to settle in Canada. The government of Prince Edward Island (PEI) has filed a reference in the Supreme Court of PEI (Appeal Division) to obtain a ruling on whether the Earth Fund's lottery license is legal. The reference is in response to an action filed in Ontario on Sept. 7, 2000 by the Interprovincial Lottery Corporation, claiming the Internet-based Earth Future Lottery would violate the Criminal Code. According to Novamedia, the court will make a decision before February 2002.

Swiss Postcode Lottery

Another project which should already have been launched by Nova media is the Swiss version of the Postcode Lottery. After a long during lawsuit Novamedia obtained a permit to start to operate their Swiss "baby." An appeal against the court decision will however cause at least another delay of one or even one-and-half years.

Opposition

"We have suffered tremendous opposition in Germany and in Switzerland," Poelmann said. "They may stop us temporary, but we will succeed in the end. Not only in Germany and Switzerland, but in whole Europe. At this moment we look for more possibilities in Scandinavia and Turkey will also give us a huge market possibility with its population of 67 million. Turkey will become an European Union member. Now Milli Piyango is still a state-ran monopolist and we will like to bust that. The Postcode Lottery will become a great Dutch export product. We have also tried to buy internet lottery PlusLotto in Liechtenstein, but that did not work out."

Europe

"The introduction of the Euro from the first of January 2002 will give a lot of new opportunities for international operators and in particular for international lottery players. They will finally get a possibility to compare the prizes and chances from betting companies throughout the European continent. Making international payments will become a lot easier as well. The Euro will create a great market for us," Poelmann said.

Austria, Belgium, Finland France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain will make a one-currency market of 292 million people. "And I think more European countries will join soon," he continued.

"In Europe the monopolistic operators have to either copy the USA powerball developments or they have to merge over the boarders, because money prizes will go up. And operators in small European countries with their small markets will get hard times," Poelmann predicted. However, he still sees growing potential in the Netherlands.

He continued, "Yes, the betting market is now 2.4 billion NLG, in a couple of years the Dutch market will be 10 billion NLG."

In 2000 the turnover of the lotteries operated by Novamedia was 1.5 billion NLG and the turnover of Novamedia marked 45 million NLG. The total number of staff is 450--300 of them are female.

*1 NLG = 0.41006 USD
1 USD = 2.43868 NLG
1 EUR = 0.90345 USD
1 USD = 1.10687 EUR




Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.