The 2013 Annual Conference of the North American Association of State and Provincial Lotteries (“NASPL”) was held this October in Providence, Rhode Island, and provided a showcase for the energy and creativity of the women and men in the lottery industry. Among the many forward-looking panel presentations was one focusing on lottery interactive and mobile strategies, and how interactive and mobile applications may be used to extend players’ retail experiences and attract new consumers. This article presents some of the common themes and insights from that October 2, 2013 panel presentation.
ONLINE LOTTERY GAME SALES DO NOT APPEAR TO CANNIBALIZE SALES OF TRADITIONAL LOTTERY GAMES Recent evidence from North American lotteries suggests that the implementation of online games need not cannibalize existing “bricks and mortar” lottery ticket sales. Online games appear to attract a different – and younger –consumer than do traditional games. Cameron Adams, Director of Product & Business Development for the eGaming Division at the British Columbia Lottery Corporation, demonstrated that “[a]ll parts” of a lottery can grow simultaneously. In recent years, BCLC’s traditional lottery activity has grown at nearly the same rate as has gaming via its PlayNow interactive platform. MOBILE DEVICES ARE THE FUTURE OF ONLINE GAMING In order to reach younger players “where they live,” lottery games must be available on mobile devices. Research shows that mobile activity is becoming increasingly relevant. Statistics presented by Danny Bogus, the Interactive Manager for the Michigan Lottery, demonstrated that 56% of consumers own a smart phone and that 67% of consumers open emails using a mobile device rather than a desktop computer. The percentage of visitors to the Michigan Lottery website accessing the site via a mobile device (smart phone or tablet) as opposed to a laptop or desk top computer are increasing year-over
year, from approximately 9% in January 2011, to 17% in January 2012, to 30% in January 2013 and to 5% in May 2013. Further, 51% of Keno “To Go” games watched in Michigan were watched via a mobile device. Similarly, Jack Dimling, the Georgia Lottery Corporation’s Vice President of Sales, explained that the Georgia Lottery recognizes that mobile accessibility is critical to drive lottery sales going forward. The Georgia Lottery intends to launch the first phase of its mobility project in late-spring 2013, and the second phase during the summer/fall 2013. RELIANCE ON MOBILE DEVICES BRINGS WITH IT NEW CONCERNS Interactive platforms must be simple and familiar to players. Adams cautioned: “make it easy, not flashy.” Mobile applications are not always under the lottery’s control, which means that a lottery must rely on third party developers with respect to application uptime. Interactive application testing can be complicated and expensive. Bogus noted that 156 devices are required to test 80% of Michigan’s mobile market. Lotteries should begin thinking like media companies, Bogus suggested, adding that they should focusing on brand recognition and availability across multiple platforms. Bogus mentioned that factors leading to the success of mobile applications generally overlap with factors that contribute to successful lottery-related mobile applications. Dimling reiterated the value of a media focus, noting that communication and product awareness have been a challenge for Georgia’s interactive activities and that increased marketing is a focus going forward. CONSIDER DIFFERENT PRIZE PAYMENT OPTIONS As explained by Dimling, the Georgia Lottery Corporation conducts internet lottery game sales via a “Player Portal” for Georgia Lottery “Player’s Club” members. Player’s Club members wishing to purchase games via the Internet must register to receive a Georgia Lottery “iHOPEcard,” which is a pre-paid debit card cobranded with Discover. Players can fund their iHOPE accounts in order to purchase lottery tickets online. In addition, the IHOPEcards can be used to purchase lottery tickets at bricks and mortar retailer outlets. Funding can occur via cash top-up at retailer outlets, via winning lottery ticket prizes and, using the Player Portal, through transfers from player bank accounts. This pre-paid system eliminates some of the risk associated with delayed payment methods, such as credit cards. ONLINE GAMES ARE A SMALL PART OF OVERALL LOTTERY SALES Experience suggests that, at present, online games represent only a small portion of overall lottery sales, and thus online games should constitute only part of an overall strategy and should not be the entire strategy alone. In Georgia, which has been operating online games since November 25, 2012, online sales to date are $1.2 million, constituting 0.4% of overall lottery game sales. (These results are similar to those in Illinois, where the Illinois Lottery has been offering certain games for sale online since March 25, 2012. Online lottery ticket sales in Illinois also make up less than 0.5% of the lottery’s total revenue.) (1)
In British Columbia, the BCLC has been offering games online since 2004.(2) For the year ended March 31, 2013, online games brought in revenue of 73.3 million Canadian Dollars, 6.7% of BCLC’s total revenue from lottery and online gaming operations. The prior year (2012), online games brought in 65.6 million Canadian Dollars, 6.1% of BCLC’s total revenue from lottery and online gaming operations, and in 2011, online games brought in 42.9 million Canadian Dollars, 4.0% of BCLC’s total revenue from lottery and online gaming operations.(3) Thus, while online lottery sales are increasing year-over-year, even after 10 years of operation, revenue from these games is less than 10% of total lottery game sales. Given these realities, some lotteries are launching models that concurrently promote multiple gaming platforms. Delaware’s model integrates internet with bricks and mortar play. Ed Sutor, President and CEO of Dover Downs Hotel and Casino, stated that the Delaware system allows players to earn points for internet play, but that these points can only be redeemed at Dover Downs.(4) LOTTERIES SHOULD CONTINUE TO BE “FORWARD THINKING” (5) Finally, although online gaming may not be the entire solution to the problem of lottery player demographics – i.e., that the average age of lottery players is increasing – it should be part of the solution where permitted under existing law. As stated by Vernon Kirk, Director of the Delaware State Lottery, which plans to launch the United States’ first online casino platform on October 30, 2013: “It’s not a silver bullet, and it’s not going to solve all the state’s or our casinos’ financial difficulties, but if you’re standing still, you’re going to get passed. If you get out there, you’ll be well placed to take advantage of whatever happens.”(6)
(1) CBS St. Louis, “Illinois Lottery Pushes for Online Expansion,” March 25, 2013, at http://stlouis.cbslocal.com/2013/03/25/illinois-lottery-pushesfor-online-expansion/ (last accessed October 21, 2013)
(2) See BCLC website at http://corporate.bclc.com/what-we-do/online-gambling/about-online-gambling.html (last accessed October 21, 2013)
(3) 2012/2013 BCLC Annual Service Plan Report, at http://bclc.com/resources/documents/corporate/who-we-are/AnnualReport1213.pdf (last accessed October 21, 2013), p. 59.
(4) WrB USA conference “Rolling out the PowerBall of iGaming,” October 22-23, 2013 in Philadelphia.
(5) Presentation “Mobile Insights for any Lottery,” by Danny Bogus, Michigan Lottery Interactive Manager, at NASPL 2013 Annual Conference.
(6) Quote from Gambling Compliance, “Delaware on track for September Online Launch,” July 18, 2013, by James Kilsby.