In Spain, we have thought or had that belief that, a lottery administration was a business where the owners became millionaires and stayed with part of the boat, if they played a Euromillion or the fat man of the extraordinary Christmas raffle, but nothing further from reality. It is a sector with minimal margins, frozen commissions for more than 17 years and a growing competition of mixed points and online sale.
To give visibility, the creator of content Adrián G. Martín has interviewed José Pastor, owner of a lottery administration in Palma, who explains with data how the real profitability of the business works, how much is earned for each tenth sold and what investment is necessary to open, as well as get a license. “From each Christmas ticket that costs 20 euros, the Lotero only enters 90 cents. The rest, 19.10 euros, goes directly to the state,” explains Pastor.
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“An administration average invoice between 90,000 and 150,000 euros in commissions”
Pastor explains that when talking about billing in this sector there is no reference to the volume of ticket sales, but to the commissions that the administration receives. “A small administration can be around 90,000 euros a year. If you have two workers you can reach 140,000 or 150,000, and from there we talk about larger businesses with three or four employees,” he says.
The commissions depend on the type of game. In Euromillones, for example, the commission is 5.5%, which is equivalent to about 10 cents per ticket. At Christmas, the commission drops up to 4.5%. “We are fighting to raise them to us, because they had been frozen and only 0.25 a couple of years ago. It is unfeasible to maintain a business with these margins,” he laments.
“The license can cost you 450,000 euros”
Far from what many think, opening a lottery administration is not cheap or easy. According to Pastor, at least 50,000 euros of initial investment are needed and a series of strict requirements: not having a criminal record, residing in Spain and having a local with security level 3 (the maximum), which implies armored crystals, surveillance cameras and certified alarms.
To this is added that the transfer price of an administration is calculated around 20% of its annual turnover. “In Palma, for example, there are now two in transfer: one for 380,000 euros that leaves 110,000 in commissions per year, and another that is sold for 450,000 and invoices about 140,000,” he says.
Is it profitable to set up a lottery administration?
Pastor is blunt: “If you do not have the property in property, with all current expenses it is practically unfeasible.” He acknowledges that the future passes more through the mixed points of sale (bars, watertight, stationery) that offer lottery as a complement to their main activity. “They charge the same as us for each ticket, but they have parallel income that allows them to survive. We depend exclusively on the commissions.”
The expansion of these points, together with the sale online, is increasingly reducing the profitability of traditional administrations. “Before the cake was distributed among less, now they do it between thousands. If the conditions do not change, many will disappear.”
Awards do not receive commission
A detail that surprises is that administrations do not win anything to give a big prize. “Not an Extra Commission euro. You only have the satisfaction of having sold it and the advertising that attracts new customers,” says Pastor.
The taxation of the awards is also clear: the first 40,000 euros are exempt, but from that figure farm it stays with 20%.
The interview concludes with a pessimistic reflection on the future of the sector. “Today we do not see administrations as a buoyant business. We have no government support and there are no strong associations that defend our interests. Each one goes free, while the mixed are more united,” he laments.
Despite the illusion that the lottery awakens in millions of Spaniards, Pastor insists that the business of selling tenths is no longer as profitable as years ago. “If tomorrow you open an administration thinking that you are going to become rich, you are wrong. With luck, you will cover expenses and you can live on it, but little more.”