Q.& A. | Ales Kulich

30 May 2008

Ales Kulich, 47, studied at The University of Gothenburg in Sweden and in 1998 founded QLot, a consultancy serving the lottery industry.

Previously, Mr. Kulich was responsible for numerous sales and implementation projects covering online systems in Europe, North America and South America on behalf of EssNet, the Sweden-based lottery solutions provider.

Mr. Kulich, president of QLot, is currently based in Prague, Czech Republic. The consultancy, an associate member of the World Lottery Association, serves lotteries, lottery suppliers, investors and governments.

Mr. Kulich answered questions via e-mail about his experiences in the gambling industry, the consultancy's role in the coming privatization of Turkey's national lottery, the European cross-border gambling debate and more.

    Q: Do you have shares in the company? If so, how many?

    A: Last time I checked I had 100 percent.

    Q: How did you get in touch with the gambling industry?

    A: EssNet was seeking a marketing executive for selling its lottery on-line systems. I knew nothing of lotteries or on-line systems, but I knew the international business arena. I had solid experience in marketing and sales, and most of all, I found the job absolutely fascinating. New product, new markets, new industry. It was a challenge I could not resist. This was in 1992 and I have to say I have not regretted my decision since.

    Q: Sweden, with 9 million inhabitants, has a very impressive gambling industry, with companies like Svenska Spel, Cosmopol AB, QLot Consulting, EssNet AB, Solna Leisure AB, ATG, Folkspel, BingoLotto, and Unibet, to name a few. Where do those activities come from?

    A: The gaming industry is actually not so unique for Sweden. Consider how many international giants come from Sweden: Volvo, Ikea, Saab, Abba, Roxette, Atlas Copco, Swedish Tax Authority (they HAVE TO be a giant also on the international scale, considering the taxes I have paid to them over the years . . . ) and many more. So Swedes are very industrious people, in spite of the size of the country. Of course, the gaming propensity combined with purchase power is also a very positive factor.

    Q: Do you know how many people are working in the Swedish gambling industry?

    A: That’s a little bit of "how long is a string." It depends on how you count. For example, if you include all the volunteers selling BingoLotto tickets, you end up with hundreds of thousands. If you count only "product production" such as programming, etc., you would be in the one thousand range, I guess.

    Q: How many of them are working for QLot? And from which locations?

    A: That is an easy one: Two. Myself and Johan Thorpenberg. The remaining staff is in Austria and in the U.S.

    Q: What is your company's main area of expertise?

    A: Our strength is the fact that we truly have experience from A to Z of our industry. Within QLot’s staff, we have done everything from business analysis, licensing, legislation and regulation, through procurement and implementation, to operation, product and business development, marketing and training, all the way to technology conversion. But the activity which we spend the lion’s share of our time on is procurements and project management.

    Q: Can you describe the two biggest projects you have executed?

    A: The biggest is actually for a "hidden gem" in Europe. We were a very instrumental part of converting the Luxembourg National Lottery from a manual, 3 product organization, to become a fully modern, on-line lottery operation with a broad, healthy range of products. Over the past eight years of our involvement in Luxembourg, the revenues have tripled.

    Luxembourg is a gem not only geographically, but also as far as the lottery goes. In spite of Luxembourg being our customer, I believe I can be reasonably objective. It is one of the best managed lotteries that at least QLot knows of. The lottery management has had the ideas and vision, where QLot has had the good fortune of being able to help the lottery fulfill those visions. It takes a strong leadership to have the courage to do what Luxembourg did.

    To QLot, while Luxembourg is one of the smallest countries and lotteries in the western world, the project was never the less very significant. A lottery needs pretty much the same amount and quality of consulting services, irrespective of the number of zeros on the balance sheet. On top of that, Luxembourg is today among the world top lotteries in per capita sales. It’s 100 M EUR total sales are impressive, too.

    The other major project was just recently concluded. We assisted the Dutch lotteries De Lotto and Staatsloterij to carry out a revolutionary project: these two fully competing lotteries joined forces in obtaining one common I.T. platform, while continuing to be competitors in the Dutch market place. Not only that, but both lotteries decided to outsource their entire system operations to the technology provider.

    After well over a year’s work, a contract was recently signed with Intralot as being the new technology provider and operator for the combined system

    To QLot this was a great success as not only have we been able to assist the lotteries in achieving a dramatic cost saving, we have also had a small share in making this entire project come through at all.

    Also in the case of Holland, I believe the lotteries’ managements are to be commended for their courage, wisdom and foresight in undertaking such a controversial and innovative undertaking. I believe the Dutch people will be reaping the financial rewards for many, many years to come.

    Q: What will be your next project?

    A: Well, I guess the on-going Turkish privatization can be one.

    Q: How is the privatization country's national lottery coming along?

    A: Slowly.

    Q: How can they ever privatize this national lottery within such a short term?

    A: It depends on what "short term" means. There is actually not a fixed date set, all information in the media is still just rumours.

    Q: How is your cooperation with the privatization authorities?

    A: The Privatization Agency sought a lottery expert to assist the P.A. with the privatization. This was a wise move, as of course there are many industry specifics which require expert assistance. The P.A. can not be expected to have expertise in all various fields being subject to privatization. We are providing the P.A. with all possible advise [sic], making sure they have access to all relevant information regarding the facts, habits and practices applicable within the lottery industry. Clearly, it is a challenge to apply that information into the established habits and procedures of the P.A. and of the Turkish legislative environment.

    Q: Is it easy to get all the needed information?

    A: If nothing else, our Turkish is a bit rusty, so that in itself creates a bit of a delay, if nothing else.

    Q: How is the coop with Ernst &Young? [Ernst & Young announced on Jan.15, 2008 that it had been recruited by the Turkish government to commence work on privatizing Milli Piyango, the country's national lottery. -Ed.]

    A: It is very valuable for us to have a cooperation with a local partner on this project. Not only do they provide us with market info and serve as a communication link with the P.A., they are also providing important cultural "filtering." Not everything can be copied from outside Turkey (or as one of my favourite sayings goes: "All business is local."). We therefore have a close cooperation. Of course, E&Y do not have any lottery expertise, so we are providing 100 percent of that knowledge. On the other hand, E&Y are providing its significant experience in Turkish privatizations, financial modelling [sic], etc., so the two parties are complementing each other very well.

    Q: When will they release the national lottery's results for 2007?

    A: You are asking the wrong guy.

    Q: When do you think the privatization will take place, exactly?

    A: You are asking the wrong guy . . . QLot is standing ready since 2004 to fully support the privatization whenever the authorities are ready to go. I have an expectation, but it would be wrong publish it, as it may or may not be consistent with what our customer has in mind or will be able to execute.

    Q: Do you foresee a free and open cross-border betting market throughout the whole of Europe?

    A: Yes, I believe technology will make it more or less impossible to stop.

    Q: How do you see the future for the national lotteries in such an arena?

    A: I believe the national lotteries had and to a large extent still have an enormous credibility potential with the playing public. This credibility is their biggest asset in the competition against new gaming operations, whether grey, black or white. Unfortunately, it has been evident for many years that our politicians, and to some extent some lottery managements, chose to disregard the competition, proclaiming ourselves to be the only righteous choice.

    In the meanwhile, the competition is growing stronger and stronger, where we are offering credibility while the competition is offering better terms, better service, wider choice, etc. From a situation five to six years ago, when the competition could have been eliminated by commercial means, we have more or less "let them in" to the market and can not, or will very soon not be able to, eliminate them by commercial means. Given some more time, we will for political reasons not be able to eliminate them by legislative means either.

    Please understand that I am not anti competition, on the contrary. Let the best man for the job do the job. But let’s face it: the lotteries generate a very, very important revenue to society, and we are losing that revenue to the new market players. This lost income will have to come from somewhere else, or alternatively we must cut down on important social activities for which the lottery revenue is (hopefully) used for.

    Q: What is your biggest passion/hobby besides your professional work atmosphere?

    A: Skiing. On snow or water. Snowmobiling. Great fun. Food. Great belly.

    Q: Besides journalists, what irritates you the most about the gambling industry?

    A: Probably the hypocrisy, the pompousness. I always have to smile when a change in the lotto matrix "from 6/49 to 6/50" is presented as a great, innovative step. We tend to think we are so great, so skilled, etc. We point to the monies we generate. But in all honesty, a majority of us are working within a monopolized market, selling a product that would sell itself, given the chance. Our product is a bit like drugs and se . . . alcohol. Even if forbidden, people will use it or do it. So a bit of humbleness would not hurt.

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.