Jumbo Interactive

Jumbo Interactive Limited (ASX:JIN) is an innovative and successful internet lottery business that has created the hugely popular Oz Lotteries website. Thousands of people each day play their favourite numbers in lottery games such as OzLotto using Jumbo's safe, secure and innovative technology. In 2013, Jumbo made the leap from an Australian business into a global business with operations in Germany, the USA and Mexico. Official lotteries around the world are beginning to adopt the "authorised e-retailer" model that Jumbo has pioneered in order to create an environment of reliable operators and protect lottery 'players'. In Australia, Jumbo's sales in 2012 reached $109 million and appear to be growing in the vicinity of 20% per annum. Jumbo has received licenses in all states (landers) within Germany to begin selling official lottery tickets on the Internet. The German lottery market contains their population of 80 million people and approximately $10 Billlion in lottery sales. The online site in Germany is anticipated to kick off this month, December 2013. In the USA, Jumbo signed an agreement with Hess Corporation, a company with over 800 convenience stores spread across 11 US states. And Jumbo also signed an agreement with Tops Friendly Markets, a grocery chain with 159 locations across New York, Pennsylvania and Vermont. Jumbo's 50/50 joint venture in the USA with Retail Gaming Solutions is providing interactive lottery solutions to physical retailers in preparation for full Internet lottery sales being rolled out across the USA in time. Jumbo also has an agreement in Mexico with Sorteo Games to begin selling official Mexican lotteries. This agreement was anticipated to begin by the end of 2013 however it will now likely to start closer to the end of 2014 due to 'approval' delays. Jumbo's goal is to constantly innovate and expand in order to benefit their lottery partners as well as thousands of Jumbo Interactive shareholders around the world. Does this business have a sustainable competitive advantage? Jumbo's competitive advantage comes from being a global leader in the provision of online lottery services. Jumbo have proven systems which provide a repeatable model to win new contracts around the world. And, with expanding outside of Australia in the past year with contracts in the USA, Germany and Mexico, it makes it easier for the company to expand into other countries online lottery markets.