The future of lotteries is moving online as younger customers seek new ways to gamble, according to the chief executive officer of Karma Gaming.

Karma Gaming International opening a development studio in Moncton

Karma Gaming International is opening a new development studio in Moncton with help from the New Brunswick government, officials announced on Tuesday. (Twitter)

Paul LeBlanc said lotteries must find younger customers who aren't interested in gambling like their parents.

Karma Gaming International, a Halifax-based company, announced it was expanding into Moncton and creating 26 full-time jobs over the next three years.

Karma Gaming specializes in web-based products for the regulated lottery industry.

Leblanc said there's a reason most winners of the Lotto 6/49 jackpot tend to be old.

"The average player, and I'm being generous here, is between 50 and 64 years of age globally," he said.

'Lottery revenues have flattened and they're declining in most jurisdictions, and the monopoly that used to exist in the landscape of lottery is under attack and under attack in a big way.' - Paul Leblanc, Karma Gaming International

Leblanc said young people don't care about traditional lottery tickets, scratch-and-win cards or bingo games.

They socialize, get their music and watch television and movies online and they will gamble online, as well, he said.

“When you look back at what happened during the trend of music to MP3, I don't think anybody today would look back and be surprised that's what happened with Blockbuster video. The same can be said about lottery,” he said.

Leblanc said young people prefer games such as Angry Birds or Candy Crush.

The trick for lotteries is to find ways to introduce gambling into those kinds of games.

He said 40 per cent of gambling revenues in the United Kingdom comes from online products. Meanwhile, only one per cent of gambling revenue comes from online products in North America.

“Lottery revenues have flattened and they're declining in most jurisdictions, and the monopoly that used to exist in the landscape of lottery is under attack and under attack in a big way and is showing no sign of changes anytime soon," he said.

GeoSweep's failure 

Leblanc said lotteries have to do more than just sell tickets online if they are going to survive this attack. He points to Atlantic Lotto's experience with GeoSweep as a lesson on how not to appeal to younger people.

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The Atlantic Lottery Corp. invested $8.7 million into the failed GeoSweep game and spent another $2 million promoting it. (CBC)

"Cloaking a sweepstakes product into something else with low engagement is probably not what customers are wanting and I don't think it's going to do much for a younger demographic," he said.

GeoSweep was a lottery game not unlike other corporation offerings. It did have a digital — and geographical — twist.

Instead of picking numbers, players could go online to pick a location on a map of Atlantic Canada. There were more than 2.3 million such locations, called Geos, up for grabs in the region.

The cost to own a Geo was $7.50 for 30 days, or 25 cents daily. A big prize of $250,000 was also up for grabs every day. That draw, however, included all Geos, whether they were occupied or not.

GeoSweep never paid out that daily $250,000 grand prize in more than a year's worth of draws in Atlantic Canada — mathematically, a near-certain indicator of poor sales.

The game was pulled in June 2013 after the Atlantic Lottery Corp. paid $8.7 million to GeoSweep’s U.K.-based creators. ALC spent another $2 million to promote the online game.