Unique, cash generating business model
ZEAL Network SE, Germany’s leading online provider of state-licensed and other permitted lottery products, is a Hamburg based e-commerce Group which mainly brokers customers’ tickets to the state lottery companies through the brands lotto24.de and tipp24.com, for which it receives a commission. The offerings include among others ‘LOTTO 6 aus49’, ‘Spiel 77’, ‘Super 6’, ‘Eurojackpot’, ‘GlücksSpirale’, ‘Keno’, lotto clubs, ‘Deutsche Fernsehlotterie’ and ‘freiheit+’. Founded in Germany in 1999 as Tipp24 SE, it was initially set up as a lottery broker. In 2005, it was floated on the Frankfurt Stock Exchange (Prime Standard) and became one of the most successful initial public offerings (IPOs) in Germany at the time. In 2009, the Group changed its focus from lottery brokerage to the secondary lottery business. Shortly after this, it moved its registered office to London and was renamed as ZEAL Network SE in November 2014. In May 2019, ZEAL completed the takeover of LOTTO24 AG, returned its Tipp24 secondary lottery to the German brokerage business in October 2019 and relocated its registered office back to Germany in the same month.
Our Germany segment
In our largest segment, Germany, we broker lottery products via the Internet (lotto24.de, tipp24.com) and receive brokerage commissions from the lottery operators. We can therefore generate income without bearing the book-making risk of products of the German Association of State Lottery Companies (Deutscher Lotto- und Totoblock, DLTB) ourselves. The winnings are also paid out by the lottery operators. In addition to the LOTTO24 brand, we have also transferred the former secondary lottery Tipp24 to the German brokerage business and have been brokering tickets to the lottery operators via the domains tipp24.de and tipp24.com since 15 October 2019. Amongst other things, we offer our customers the possibility to participate in the lottery products ‘LOTTO 6aus49’, ‘Spiel 77’, ‘Super 6’, ‘Eurojackpot’, ‘GlücksSpirale’, ‘Keno’, lotto clubs and ‘Deutsche Fernsehlotterie’. On behalf of, and in the name of, our customers, we enter into gaming agreements with the respective lottery operator. Our products are well-known on the market. In addition, we launched the new social lottery freiheit+ for the promotion of educational projects together with BildungsChancen gGmbH under the Tipp24 brand since March 2020 and also under the LOTTO24 brand since November 2020.
One of the sector-specific success factors of our business model is the loyalty of our customers: once gained, our active customers provide us with stable billings over the long term.
Our ‘Other’ segment
The ‘Other’ segment comprises the remaining elements of our business including our online lottery operation for the charitable organisation ONCE in Spain and our investments in early-stage start-ups under ZEAL Ventures. ZEAL Ventures continues to pursue new lottery-related, start-up investments using a risk-managed portfolio approach. We have made several start-up investments, which we are closely monitoring and supporting where necessary while continuing to pursue additional investment opportunities. Our objective is to learn from these companies, generate profits and/or integrate exciting business ideas into the ZEAL Group.
On the basis of the business segments presented above, our objectives are to continue to
- expand our tried and trusted business models, especially in Germany and Spain,
- develop new lottery businesses, and
- discover new start-up ideas in order to tap further target groups, gain important market knowledge and to test new product ideas quickly and cheaply.
Our Marketing and IT departments play a key role in these endeavours.
Based on a medium to long-term assumption of an online share of 50% of the total German lottery market (DLTB plus charity lotteries, GKL and other regulated lotteries) of €9.0 billion, this would result in an online lottery market potential of €4.5 billion. As our objective is to further expand our own market share to 50% or more, our long-term billings potential would therefore lie beyond the €2 billion mark.