Aussie frenzy over $1.3 billion lotto jackpot

TENS of thousands of Aussie punters have bought "tickets" in the second largest lottery jackpot in US history, despite the grey area surrounding third-party websites.

The MegaMillions jackpot soared to $US900 million ($1.3 billion) after no winners were reported in Tuesday evening's draw, making it the second-biggest jackpot in history.

The $US667 million ($940 million) payout would have already been the biggest MegaMillions prize on record. The biggest lottery win ever was the $US1.586 billion ($2.23 billion) Powerball draw in 2016, which was shared between three winners.

Lottoland, which allows users to bet on the outcome of overseas lotteries, said more than 20,000 people had bet so far and that was expected to at least double before the draw on Saturday morning Australian time.

The Northern Territory-registered, Gibraltar-based site launched in Australia in 2016 off the back of the Powerball draw, but as of January 2019 will no longer be able to offer its main product after the federal government passed legislation banning so-called "synthetic lotteries".

Lottoland chief executive Luke Brill said it would likely be the last chance for Australians to legally bet on an overseas jackpot of this size. "It's unlikely there's going to be a jackpot to get to this level again between now and January 9," he said.

"When we launched in 2016 we had 250,000 customers sign up (for the Powerball draw), it was a perfect storm. We've got a database of 750,000 now, but I would realistically expect (MegaMillions entries) to double (to 40,000)."

Before Tuesday's draw, TheLotter.com said Australian ticket sales were "going through the roof", citing "tens of thousands" of local punters. TheLotter differs from synthetic lotteries such as Lottoland in that it claims to actually buy the physical ticket in the US on behalf of the overseas player.

"After multimillion-dollar jackpot wins by TheLotter players from Europe, Canada, Australia and Latin America, the current MegaMillions is again drawing in countless visitors from Australia," TheLotter spokesman Austin Weaver said in a press release.

"(The) MegaMillions jackpot is the second largest in history and our US couriers are working around the clock to get tickets to customers."

The jackpot skyrocketed after Tuesday’s draw didn’t find a winner. Picture: John Minchillo/AP

It will be second only to 2016’s record Powerball draw. Picture: Nam Y Huh/AP

Tens of thousands of Aussies have bought tickets online. Picture: Nam Y Huh/AP

Mr Weaver said TheLotter had seen rapid growth in Australia.

"Australians especially trust TheLotter, as TheLotter is quite an exception when it comes to online lotteries. We are one of the few operators to physically purchase official paper lottery tickets on behalf of players around the world," he said.

"Many competitors in Australia look to be doing the same as us, but read their fine print and you'll discover they actually only offer betting options. In other words, they are just betting shops, with no relation to the actual lottery."

Mr Weaver said TheLotter works "completely differently" as its couriers in the US "go out every day and physically buy and scan tickets for customers".

"When someone wins they are flown out to the US to personally claim their prize," he said. "It's legal, we've done it for more than a decade and it's secure. The paper tickets are kept inside a safe."

According to Mr Brill, however, TheLotter's "messenger" model is "not actually legal in Australia". "If you look at the legislation in most states, you can't resell international lottery tickets," he said.

"They target Australians from overseas but the reality is they're not licensed or regulated here in Australia. I'm not saying they're not going to pay but (that is) the chance people take when they bet with companies outside Australia."

Mr Brill insisted Lottoland would pay out any jackpot - either as a lump sum minus 40 per cent tax, or as an annuity over 30 years - "exactly the same" as the US payout conditions.

"We're not going to renege on it," he said.

"We paid out the biggest ever online payout of 90 million euros in Germany. We're insured by the biggest insurance company in the world. In Australia alone we've paid out $40 million now, globally over $1 billion since 2014. We've got the track record."

Ben Kearney, chief executive of the Australian Lottery and Newsagents' Association, which led the lobbying campaign against Lottoland, said consumers should "consider the terms and conditions very carefully before purchasing bets on these products".

"These betting products might look similar to the lotteries here where the prize is guaranteed by a pool of entries, but they are in fact very different," he said.

"These are not entries in a lottery but are bets on the outcome of the underlying overseas lottery. The prize amounts being promoted can often be confusing as well, as the jackpot promoted is often not the prize amount that consumers can actually win. These are often substantially discounted for taxes, or paid as an annuity."

Campaigner Stephen Mayne from the Alliance for Gambling Reform said despite the government "smashing" Lottoland's business model it would be "very difficult to stop Australians from participating" in global lotteries.

"Their business can stagger on," he said. "Lottoland still has a licence from the NT Government, which was probably disgraceful by the NT Government to start with to undermine the revenue base of all the other state lotteries."

Mr Mayne said "we shouldn't be shedding any tears" for Lottoland.

"No violin is small enough to feel any sympathy for Lottoland getting smashed by our legislators, but they were motivated by money, protecting the revenue base of state governments after a multimillion-dollar lobbying campaign by Tatts," he said.

"It's probably one of the toughest anti-gambling steps our politicians have taken, yet meanwhile $14 billion a year gets lost on the pokies, the world's worst. For us it's all about pokies and too much gambling advertising for sports betting and this sort of stuff. Lotteries are at the margins, they're relatively benign compared with everything else."

Mr Mayne said the best advice for anyone thinking of taking part was to "keep your bets small". "It's a one in a billion chance, have a flutter," he said.

"It's like any lottery, it's all ridiculously overtaxed. The Victorian Government takes about 70 per cent. It's an absolute rort in a government taxing sense, it always has been - but lotteries around the world have created thousands of millionaires."

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