Lottery Gift Card Startup

OLG is capitalizing on holiday gift sales by launching its new gift card program. On October 11, OLG began sales for its Defined Offer (Lotto Max and Lotto 6/49) gift cards in partnership with the two big players in the gift card space, Blackhawk Networks and InComm.

Defined offer means that the gift cards can be redeemed for a single multi-draw Lotto Max or Lotto 6/49 ticket at any lottery retailer.

“Christmas shopping represents the biggest gift card sales period of the year,” declared Adam Caughill, Director, Lottery Business Development, OLG. “Missing the 2016 holiday season would’ve left a significant opportunity untapped.”

Plus Blackhawk and InComm have only two resets a year (spring and fall). “Fall 2016 lined up with our IT development,” explained Caughill. “And in November we’ll launch our homegrown solution—a declining balance gift card that can be sold by all of our 9,800+ retailers.”

Distribution of OLG’s gift cards will grow as InComm and Blackhawk roll out their planograms through the fall.

“We increased our lottery points of distribution by about 1,000 stores—including some major retailers like Home Depot, Staples, Canadian Tire, No Frills (grocery), Business Depot, Sears and Home Outfitters,” said Caughill. “But our top brands also gain much better placement in large format stores where we already sell product, such as Walmart and all of the major grocery and drug chains.”

In terms of compensation to InComm and Blackhawk, Caughill said “it’s less than 10% that we pay to IC/BH. From that fee, the Gift Card retailers earn less than 5% commission from IC/BH for selling the cards.”

OLG will support the gift card launch with a holiday advertising, including a full POS campaign at retail promoting gifting, 30-second TV ads paired with lotto ads, radio ads, mall posters, digital screen ads and several key account programs.

OLG’s Lotto Max and Lotto 6/49 Gift Cards are what the lottery calls defined offer gift cards. They are one-time use cards and generate a C$30 or $C20 multi-draw, quick pick lotto ticket.

“So the denomination for Lotto Max had to be a multiple of $6 ($5 + $1 spiel) and for Lotto 6/49, $4 ($3 + $1 spiel),” said Caughill. “ We designed the cards like this to: (a) deter retailer double-dipping, (b) minimize replace sales/cannibalization, and (c) maintain profitability by using our highest margin products.  Thankfully, they’re also our most popular.”

OLG also developed an internal declining balance gift card solution. These cards can be activated and redeemed through the OLG lottery terminal. Customers can load the cards with whatever amount they want.

“At launch, over 85% of our lottery retailers will sell and redeem these declining balance gift cards,” reported Caughill. “Some retailers have some work to do to accommodate our SKU’s on their POS systems and a couple of our major chains have chosen to stay focused on their own gift cards . . . for now.”

Canada’s gift card market is estimated at C$6 billion annually. “We’re really excited about the opportunity that gift cards give us to expand lottery distribution and to take advantage of the proven giftability of lottery,” said Caughill.

2016-11-29T19:02:50+00:00 November 14th, 2016|