Last week I was busy at the annual conference of the North American Association of State and Provincial Lotteries. Held in Providence, R.I., the event brought together executives from lotteries around North America and beyond, and representatives from a wide variety of companies servicing the industry. Not surprisingly, a few topics were the focus of all the attention, both in formal session and casual conversation.
Internet ticket sales. Illinois and Georgia were the first to offer traditional lottery ticket purchases via the Web (outside of subscription-based options). Illinois, which launched Internet sales in March 2012, is a limited test, and sales have been unremarkable. Georgia, which began through its Players’ Club last November, will continue down its path by introducing online keno later this year, and electronic instant games next spring. Other lotteries are hot on the heels of these early adopters. But significantly, the Delaware Lottery will launch the first regulated online casino games in the United States at the end of this month. That will most certainly be the most interesting project from the broader gaming industry perspective, but its experience won’t be relevant to most American lotteries.
Many lotteries would love to move into this realm, but face resistance from political leaders so they continue to sit on the sidelines. It’s only a matter of time, however, before the positive experiences of the pioneers will show that the activity provides incremental revenues and offers safe and responsible options for consumers raised in a digital world.
Mobile applications. All lotteries, even those unable to offer some form of product sales online, are increasingly using mobile channels to reach a new audience. Many vendors on the trade show floor were showcasing mobile solutions for such things as lottery information services, promotions, free play games and second-chance drawings.
Mega-jackpot games and their long-term impacts. Large jackpots in Powerball and Mega Millions over the past two years have driven lotteries to record sales and profits, but it is very hard to sustain that momentum when you can’t predict game results. And increasingly, it is taking higher and higher jackpots to generate the same public and media excitement of smaller jackpots in years past. Lotteries are looking for ways to enhance the games these games without relying solely on the jackpots – Powerball has an NFL legends promotion this fall, for example. And Mega Millions undergoes a major change later this month. Although it will dramatically lengthen the odds of winning the jackpot (from 1 in 176 million to a whopping 1 in 259 million), there is an improvement in the overall odds of winning any prize (from 1 in 40 to 1 in 15). The goal is to raise jackpots to levels that drive sales, while increasing the number of winners across all prize categories. A significantly higher second-tier prize of $1 million is also part of the new game, which can potentially reach up to $5 million if the winning player added a bonus Megaplier purchase. Other discussions during the conference included ways to create a higher-value national game that is not dependent upon a jackpot – lifetime-prize games, for example, with an attractive weekly or annual payment for life.
Retail relations. Retailers are the lifeblood of the lottery industry, and lotteries are always looking for ways to improve policies and procedures to make their life easier. As retail continues to evolve, lotteries are reaching out to the big box stores and the big convenience store chains. Many have had great success working with these companies, but there is still work to be done. And as lotteries move down the online path, retailers are concerned that they will lose sales. However, in jurisdictions around the world, two facts stand out: where lotteries sell tickets online, those sales have almost always been incremental and sales at the bricks-and-mortar stores have also typically increased; and total sales through digital channels remains a relatively small portion of total sales.