Spain's €10.6bn Lottery Still Runs Through 10,867 Corner Shops

Spain's state lottery operator SELAE sold €10.6bn of tickets in 2025, yet less than 3% of that came through its own website and app. The rest flowed through 10,867 authorised retailers, the neighbourhood shops that Tom Waterhouse's venture fund visited in Madrid in October and came back convinced have a lasting role.

Waterhouse VC, the gaming and wagering-focused fund run by the Australian bookmaker, laid out its case in its October newsletter. The fund has returned a net +2,792% since inception in August 2019, equal to 60.5% per year annualised as at 30 September 2026, assuming reinvestment of distributions each 1 July. Past performance is not a reliable indicator of future performance.

Why does retail still dominate Spanish lottery sales?

The habit is embedded. Spain's Christmas draw, best known for its top prize El Gordo, sold €3.55bn of tickets in 2025 — a third of SELAE's annual sales. Each €200 ticket splits into ten €20 décimos, so friends, families and office colleagues share a number. Nobody wants to opt out when the office syndicate wins.

At the three mixed outlets Waterhouse VC visited, lottery tickets shared the counter with tobacco and parcels. One owner showed the team a printout recording around 1,300 lottery transactions that single morning. Owners knew their regulars, who bought tickets and checked results while collecting parcels or buying cigarettes.

SELAE paid its retailers €775m in commissions in 2025. Commissions run 4.5% to 6% depending on the game, so any technology a shop adopts must pay for itself through extra earnings or time saved.

What breaks the syndicate bottleneck?

Syndicates, known in Spain as peñas, pool money for regular draws and share winnings. The consumer organisation OCU advises keeping written records of ownership. Two owners told Waterhouse VC they avoid offering syndicates because of the paperwork. Software that automates parts of the process exists, but feedback relayed to the fund suggests it still leaves too much of the organising and record keeping with the retailer. A subscription is hard to justify if the shopkeeper still does most of the work.

Letting customers create and organise their own groups could lighten the retailer's load. Software would keep participation records, while an authorised retailer issued the tickets and earned its normal commission.

Australia shows retailers will join digital growth when paid to. The Lottery Corporation launched online store syndicates in 2022, paying the same commission as counter sales. By February 2026, around 80% of its retailers were selling syndicate shares through the platform. Those groups are retailer-created, but the lesson holds: shops need a financial reason to participate. The same logic applies to ordinary online ticket orders, which can reach younger customers provided the shop still records the sale and earns the commission.

How do suppliers reach a fragmented market?

FENAMIX, the national federation of more than 6,500 mixed lottery outlets, offers a route in. Its February 2026 agreement with Correos Express lets members add parcel services — one commercial agreement opening access to thousands of shops, though each decides whether to take part.

Working through the federation could cut a supplier's cost of finding retailers and earning their trust. Demonstrations and training could be coordinated across groups of shops before wider rollout. An agreement is only the start: shops must sign up, install the product and keep using it, and revenue must cover the cost of winning and supporting them.

The counter relationships could also support income beyond lottery commissions. Parcel collection is one example. Digital screens showing results and promotions alongside paid advertising are another, with revenue shared between retailer and supplier and brands booking campaigns across participating shops through a single platform. Advertising could add recurring income alongside software subscriptions or transaction fees, though it depends on advertiser demand covering equipment, maintenance and sales costs while leaving retailers an attractive share.

What is Waterhouse VC actually buying?

The fund says it looks for measurable extra earnings or time saved, regular use, an economical route into the network, and recurring revenue that stays profitable after installation and support. It would also examine federation and retailer agreements, including termination rights and dependence on SELAE's sales arrangements, and whether customers stay long enough for the supplier to recover acquisition and installation costs.

"Operators hold the licence. We'd rather clip the ticket," the newsletter concludes. The bet is that suppliers making each of those 10,867 shops more profitable have a reason to be paid year after year.