Lottery operations: safeguarding player funds

Usually, people view putting in for the prize draw of a lottery as a risk. After all, the odds of getting your money back are small, let alone making any substantial winnings. However, what about the risk that the lottery operators manage.  

Whilst everyone looks at the large prize draw, people forget that this is made up of money that people are placing into the pocket of operators. All of this must be safeguarded, if not there could be no prize draw.

Ultimately, safeguarding of prize draws (player funds) is a part of lottery operations which despite being commonly overlooked by the public, is something that financial teams cannot. In this blog we will therefore explore how – despite the extremely high stakes – they can relax a little over this regulated necessity.

The ins and outs of funds protection

On average, 80 to 100 million tickets are bought for the Euromillions, every week. Inevitably, the ticket sales total to an eye-watering figure – just look at some of the prize draws.

Protecting these funds is therefore paramount. As such, regulators like the UKGC usually make lotteries subject to various forms of funds protection, including:

• Funds protection criteria – documentation which sets out the policies, rules, and measures an operator will enforce and enact to safeguard player funds.
  

• Funds protection outcome – evidence to showcase the funds protection criteria is operational and effective.

On paper, funds protection criteria might appear to be the most important. After all, a plan of action is integral for success. Yet a plan without action means nothing, and that is what funds protection outcome demonstrates.

How to prove your funds protection outcome

Although lotteries are a gambling activity, the inclusion of a regulator wishing to examine operators’ funds protection outcomes makes it more closely related – than most would imagine – to industries that abide by CASS regulations.

After all, just like how the likes of Moneybox must prove that client money is segregated from operational funds, so too must lottery operators when it comes to making sure that their operational funds and player funds are kept separate.

With this being the case, it is therefore not surprising that the methods for lottery operators to uphold their integrity closely imitate those which must be CASS compliant. For instance, to prove their funds protection outcome, lottery operators must:

• Allow independent audits so that an assessment of funds protection measures can take place
  

• Provide regular financial statements to prove the segregation, protection, and availability of player funds
  

• Reconcile regularly across their ticket sales, player fund accounts, and good causes accounts

Don’t rollover to high volumes of transactions

All of this sounds reasonable; however, that doesn’t mean that it is easy to achieve. In fact, despite being a requirement of lotteries, proving funds protection outcome is anything but a walk in the park. This is especially true when large volumes of transactions are involved, as is usually the case with lotteries.

Yet around the world there are many lottery firms such as Norsk Tipping in Norway, Svenska Spel in Sweden, Allwyn in the UK. Evidently, operators are therefore finding a way to make sure that they can prove that funds are segregated and protected. How though?

Whilst manual reconciliation is an option, it isn’t viable. With so many transactions to reconcile, this method would inevitably leave lottery operators extremely time-poor, and the accuracy of their reconciliation would no doubt be equally limited. Furthermore, they would be left with only a surface-level audit that would be of no use to auditors. Overall, manual reconciliation isn’t an approach conducive for lottery operators wishing to comply with safeguarding regulations.

A better way does exist though – automated reconciliation. With automated reconciliation, lottery operators can:

• Prove segregation as regular as tickets are bought – thanks to reconciliation completing in seconds, operators can show where client funds are being held as often as they like in a click of a button.
  

• Assist in audits – thanks to reconciliation software such as Aurum logging every action taken in relation to all transactions, resulting in a complete item history being assigned to each one, auditors are granted an uncensored insight into all transaction movements, resolutions, and other actions.
  

• Eliminate human errors – automated rules result in reconciliation being completed methodically and without the risk of mistakes.
  

• Free up resources – importing transaction reports through APIs, matching items in seconds, eliminating the need to resolve mistakes, and filtering out exceptions immediately all add up to save finance teams a lot of time, allowing them to shift their focus from repetitive tasks to those that add value.

Hit the jackpot with automated reconciliation

Ultimately, there is irony in the fact that when it comes to safeguarding play funds for lotteries, nothing can be left to chance – and rightly so. Proving the safeguarding of such money ensures that the industry retains trust and that players continue to play.

With such high stakes involved, the speed, quality, and accuracy of automated reconciliation is therefore the only viable option for operators who wish to remain compliant and competitive. However, the best option is the automated reconciliation provided by Aurum Solutions.

With over 20 years of expertise and a reputation which transcends the gambling industry as iGaming’s number one reconciliation software, the Aurum software helps boost the productivity and ensure compliance with regulations for the likes of finance teams in Lottoland, Throne Entertainment, La Tinka, and more.

To discover why Aurum has the solution you’re looking for to scale your operations securely, hit the jackpot and book your Aurum demo today.