Feeling e-Lucky in the UK

U.S.-based online lottery firm eLot, Inc. (Nasdaq: ELOT) has signed a four-year contract to sell lottery tickets over the Internet to the general public in the United Kingdom.

eLot said its eLottery subsidiary signed the deal with the Gaming Board for Great Britain to become the online arm of the UK charity lottery that is expected to begin later this month.

eLot said that online lottery sales are expected to begin in the second quarter of this year. It added that it will receive a cash commission for every lottery ticket it sells online.

The company said it will introduce the UK gambling public to its first “Pick 3” game, a popular lottery public in the U.S. that accounts for some $6 billion (US$) or 16 percent of conventional lottery ticket sales.

Current lottery sales in the UK amount to $12 billion, the firm said. eLottery will be only be allowed to sell the tickets online to the public in England, Scotland and Wales.

First Major Contract for eLot

The firm reported that this deal represents its first significant contract after investing millions of dollars into developing a Web-based lottery system for governmental lotteries. However, the company does have contracts with the Jamaican government and the state of Chaco in Argentina through its $21.3 million acquisition of San Diego, Calfornia-based Virtgame.com last month.

Sales for both lotteries are also expected to start in the second quarter.

“We anticipate the introduction of Internet lottery sales in Great Britain will be a great success,” said eLottery Senior VP Charles Degliomini. “Importantly, this contract will allow us to demonstrate just how eLottery experience, technology and know how can make just about any high traffic Web site Internet lottery ticket-enabled.”

A Roll of the Dice

The Norwalk, Connecticut-based eLottery has been watched closely since being spun off from then-parent company Executone Information Systems last year. Despite its status as a publicly-held company, it has booked no sales, and the investor relations section of its Web page offers only a caveat saying that its pursuit of government lotteries offers no guarantee of success.

There are myriad problems, of course. Underage participation, online security, gambling abuses and other issues have clouded the industry and have forced companies like eLottery to walk a fine line in trying to develop its product.

The company said it has dealt effectively with those issues and is now poised to offer a greater demographic participation to government-run lotteries worldwide.

Still Long Way to Go in U.S.

While eLot is taking a major step in the UK and, possibly, in other European countries that will be taking a close look at the system, it likely has a long way to go in the United States before such lotteries will be accepted.

The U.S. recently convicted World Sports Exchange president Jay Cohen for breaking U.S. gambling laws on an Internet site that was operated out of Antigua.