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International Powerball?

Powerball’s brand equity has never been higher. The large U.S. jackpots have captured the attention of a global audience, who desperately wants to be able to purchase tickets. When coupled with U.S. lotteries’ need to routinely grow their profits for good causes, an interesting proposal arises. Should the U.S. lotteries find a strategy to sell Powerball tickets outside the country?

During a jaw-dropping panel at La Fleur’s 2017 LotTECH Connect, which was held Nov. 13-16, 2017 at the Intercontinental Stephen F. Austin Hotel in Austin, Texas, Powerball’s future was debated.

U.S. lotteries’ goals for this blockbuster game for the next five years are not small either. Powerball reached $8 billion in sales, which represents a large amount of U.S. lottery revenue. “This may startle some people but we have an attainable realistic goal in our mind of going from $8 billion to $16 billion in Powerball sales by 2022,” asserted Gary Grief, Executive Director, Texas Lottery.

A double digit increase in Powerball revenue will require a dramatic change in strategy. “I think that all of us have had some provision to maximize profits. In this industry, there’s only a few ways you do that—you sell more tickets to new people and you do it in a way as cheap as you possibly can,” explained Barry Pack, Director, Oregon Lottery. “We’re looking at market saturation in Oregon in terms of our retailer network. We have to look at new markets and new players.”

The biggest potential player group is the global market. Reaching those players requires a new strategy since not all the U.S. lotteries could directly sell outside of the U.S. due to legislative constraints. In fact, if this strategy was adopted, some lotteries might have to discontinue selling Powerball in their jurisdiction. But one potential strategy would be to allow third party companies to purchase tickets and resell them on the global market, which would mimic the courier services the lottery industry is beginning to see on the domestic level, as is the case in New Jersey.

“We could have a vetted MUSL third-party ticket facilitator if we could get an agreement with a country to sell Powerball. In return, we could sell that country’s particular jackpot game here in the U.S. through a reciprocal agreement and a revenue sharing agreement. MUSL would have all the controls: the security, the integrity over that ticket facilitator. It would allow us to move to market quickly since we would not have to integrate the game of Powerball into brick-and-mortar retailers in a foreign jurisdiction,” Grief explained.
The Oregon Lottery has already implemented this strategy. “In Oregon, we have been able to tap into an international market for the sale of Powerball, Mega Millions and Oregon’s game Megabucks… This has been going on for several years now, and we’ve only been expanding it over the last year . . . The market is there, it is untapped, and we need to move fast to market if we want to take advantage of it,” asserted Pack.

This would also allow MUSL to protect the Powerball brand. Since Powerball is not sold outside the U.S., MUSL can’t trademark the Powerball brand outside the U.S. “You know we need a bit of defense as well. We need to look at this market because right now other companies are in the market and representing our brand (without permission). Obviously there are revenue implications, but maintaining control of the brand is necessary. Making sure the brand represents what we think it should represent rather than acquiescing that control to third parties that we have no control over,” stressed Bret Toyne, Executive Director, MUSL.

There are concerns however. “I think one legitimate concern is about player blow back. How will players react to a jackpot potentially being won in another country? I think there are folks who are concerned about the political blow back and that’s very real as well,” Drew Svitko, Executive Director, Pennsylvania Lottery pointed out. “This is absolutely something that we have to figure out. It’s an opportunity for growth. Growing player base is a proven technique that could grow our sales. It is absolutely something we have to figure out.”

The timeline for implementing something like this is tricky however. “The calendar is always as quick as I can get the 36 people to agree on something . . . We’re going to bring people along as necessary, discussions as necessary of course, but in as timely a fashion as we can,” Toyne said. “I mean this is the model that’s going to be likely quickest to market; it has perhaps the least number of hurdles and challenges that have to be addressed; and, it’s actionable. We can talk all day about different approaches but if they’re not actionable then you know it’s not really of any value. This is something that the group could do.”

2018-02-23T10:43:58-05:00