Lottery company Jumbo Interactive (ASX: JIN) can start selling lottery tickets in Germany through digital channels after being granted a five year license in all 16 states.
The company is optimistic that based on growth rates in neighbouring countries, the German Internet lottery market could reach A$2 billion value within five years.
Jumbo can sell the EuroJackpot which is the largest lottery game in Germany with a minimum jackpot of €10 million and a maximum of €90 million.
The German lottery market is opening up and Jumbo's 13 years of lottery software experience in Australia will be deployed in Germany.
Like Australia, Jumbo will earn a commission based on tickets sold, requiring an investment of $2 million to $3 million to establish a beachhead and a customer database of regular players.
This will funded out of Jumbo’s existing cash reserves and future net cash inflows of the Group.
In Australia, Jumbo has eked 1.5 million accounts from a population of 23 million taking two to three years to gain profitability. As the number of players increase, the gap between income and expenses decreases until a break-even point is reached and the business becomes profitable.
Jumbo will need to obtain operational agreements with each lottery operator in each of the 16 German states.
To date, agreements have been reached with 3 states (Schleswig-Holstein, Baden Weurttemberg and Berlin) and agreements with the remaining 13 states are expected to be completed over the next few months.
Meanwhile, Jumbo recently forecast an annual dividend to be at least at the current $0.03 cents per share paid in FY2012. A $0.015 per share interim dividend has already been paid for the current financial year.
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