Lotteries in Australia - Industry Risk Rating Report

Lotteries in Australia - Industry Risk Rating Report

INDUSTRY RISK RATINGS REPORT

This is the replacement for December 2008 edition of Lotteries in Australia Industry Risk Ratings Report.

Industry Risk Ratings Synopsis

This Industry Risk Ratings report evaluates the inherent risks associated with the Lotteries in Australia industry. Industry Risk is assumed to be 'the difficulty, or otherwise, of the business operating environment'.

The report looks at the operational risk associated with this industry. Three types of risk are recognized in our analysis. These are: risk arising from within the industry itself (structural risk), risks arising from the expected future performance of the industry (growth risk) and risk arising from forces external to the industry (external sensitivity risk).

This approach is new in that it analyses non-financial information surrounding each industry. Industries are scored on a 9-point scale, where 1 represents the lowest risk and 9 the highest. The Industry Risk score measures expected Industry Risk over the coming 12-18 months.

Industry Definition

This report deals with businesses mainly engaged in operating lotteries or in selling lottery tickets.A lottery is commonly defined under state legislation as a draw that has a cost to enter and a prize and the prize winners are drawn randomly by lot.As such it includes lotto, traditional lottery draws, instant/scratch tickets, Soccer Pools, minor gaming, such as bingo and keno - but only in the latter case operated outside of pubs and clubs, since these are separate industries.

Report Contents

Risk Overview

The Risk Overview chapter includes sections on Industry Definition and Activities, Industry Risk Score and Risk Rating Analysis. The Industry Definition and Activities section provides a detailed definition of the activities carried out by operators in this industry as defined in NAICS. A list of the primary activities of the industry is also included. The Industry Risk Score section provides the Overall Industry Risk Score as well as the Risk Scores for each of the three types of risk covered that combine to form the Overall Industry Risk Score. These three types of risk are Structural Risk, Growth Risk and External Sensitivity Risk. The Risk Rating Analysis section discusses the underlying factors contributing to the Overall Industry Risk Score.

Structural Risk

The Structural Risk chapter looks at risk arising from within the industry itself and provides a detailed discussion of the industry’s level of exposure to seven key indicators. These key indicators are Barriers to Entry, Competition, Industry Exports, Industry Imports, Level of Assistance, Life Cycle Stage and Volatility of Industry. The Overall Structural Risk Score is a weighted aggregation of these seven key indicators. Each of the key indicators is discussed in detail in this section.

Growth Risk

The Growth Risk chapter looks at risks arising from the expected future performance of the industry. The Overall Growth Risk Score is determined by amalgamating the scores for Recent Industry Growth and Forecast Industry Growth. Detailed analysis is provided discussing the reasons for the growth scores of both.

Sensitivity Risk

The Sensitivity Risk chapter looks at risks arising from forces (sensitivities) external to the industry. The Overall External Sensitivity Risk Score is determined by identifying the most significant (up to 6) external factors and weighting them to represent how significant each sensitivity is to the performance of the industry. Examples of External Sensitivities are Exchange Rates, Interest Rates, Commodity Prices and Government Regulations. There is also a detailed analysis of the affect each of the sensitivities has on the industry, including charts and data tables where appropriate.

Industry Risk and Industry Risk Scoring Methodology

This chapter provides an overview of how the author defines Industry Risk and discusses the methodology used to arrive at an Industry Risk Score. There is also a table that provides a definition of the seven levels of Industry Risk.

P9321 - Lotteries in Australia
G5124 - Bread and Cake Retailing in Australia
G5243 - Newspaper, Book and Stationery Retailing in Australia
H5720 - Pubs, Taverns and Bars in Australia
H5740 - Clubs in Australia
G525a - Pharmacies in Australia
G525b - Cosmetic and Toiletry Retailing in Australia

RISK OVERVIEW

Industry Definition & Activities
Industry Risk Score
Risk Rating Analysis

STRUCTURAL RISK

Barriers to Entry
Basis of Competition
Domestic and International Markets
Industry Assistance
Life Cycle
Industry Volatility

GROWTH RISK

Recent Growth Analysis
Forecast Growth Analysis

SENSITIVITY RISK

Real Household Disposable Income
Expenditure Distribution - Gambling - Real per Capita Expenditure on Gambling
Gaming Technology - No. Poker/Gaming Machines
Competition from Substitutes - Horse and Sports Betting - Lotteries

INDUSTRY RISK AND INDUSTRY RISK SCORING METHODOLOGY

What is Industry Risk?
The Industry Risk Scoring Methodology
Risk Rating Score Definition