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A Mountainous “Hill”

In 2017, both the New Hampshire and Pennsylvania state governments expanded their respective lotteries, allowing for new games and sales channels. But approval was only the first step in the process. Their staff made a frenzied dash to accomplish a lot in only a few months. It required (and still requires) immense individual effort to overcome obstacles not on their job description. But those very human stories are often lost in the overall achievement of the organization. Yet for lotteries which want to take on similar endeavors, those stories of sacrifice are the necessary building blocks to replicate the New Hampshire and Pennsylvania lotteries’ success stories.

New Hampshire Lottery

The New Hampshire Lottery was the first to take on this endeavor. In June 2017, the state approved Keno being sold in the state. Twenty days later, the legislature approved online lottery sales. Four days after that, the lottery was told it would regulate the newly legalized daily fantasy sports market.

Keno, however, has been the predominant story over the past year. Once the legislative approval came in, the next step was to get approval from the cities and towns to allow it. The ultimate decision would come down to the voters to let Keno be sold in their community. But for the voters to get the chance to decide, the New Hampshire Lottery had to go to city and town councils all over the state to get it on the ballot.

They had to get as many people playing as quickly as possible. Their focus was on the 11 cities, which each needed to put Keno on the ballot. Voting would occur in November. A lot of decisions had to be made without any assurances on what the state would do. “I had to agree to a bunch of equipment before we had approval because I said we were going to be up and running by December 15th,” New Hampshire Lottery Executive Director Charles McIntyre said.
It was going to be difficult to get approval from so many jurisdictions in so little time, but the lottery had a strong case to present. Proceeds from Keno would go to providing full time kindergarten for the state. “Kindergarten is important,” McIntyre said. “There is more than enough data to suggest that kindergarten makes a huge difference in the later years of a child’s life. It was a huge motivation for me too. That’s what helped me drive to weird places and get yelled at a lot.”

Employees would have to drive to city councils all over the state to present their case. Meetings would last into the early hours of the morning. Once the meeting ended, a long drive home was to be expected, plus work the following day. But the staff kept each other’s spirits up. “We would always check in with each other to ask where people were going any particular night. It was great to be able to show support to people in different locations,” New Hampshire Lottery Marketing Director Maura McCann said.

There was also an infamous fish taco dinner promised to the staff after a particularly long night. “We’re still waiting for that taco dinner,” noted one source with a chuckle.

Some nights, the support from the team wasn’t necessary. “I drove up to a small, blue collar city. I was just sitting alone in the chambers and the mayor asked who I was. ‘I’m the executive lottery director.’ He told me to come in. It was like I was good friends with him. I wasn’t there as an adversary. It was just open dialogue that I so appreciated,” McIntyre said.

Some nights, it was. “There was a… vacuum cleaner man,” Kelley-Jaye Cleland, Director of Sales & Product Development, New Hampshire Lottery, said. “He had a vacuum cleaner hose. He also pieced together many pieces of construction paper to make a sign … with specific words and numbers in many different colors and sizes. He wanted to let that city know that Keno sucked from both ends and that’s why he had a vacuum cleaner hose.”

“He was clearly passionate. He was accusatory. But this is another case that some of his information was incorrect. I took the opportunity after to gently re-educate the city council and the people in attendance about some of the information that was inaccurate,” Cleland added.

A quick fact-check also revealed that by the laws of physics, vacuum cleaner hoses cannot suck from both ends at the same time. Yet even with their detractors’ bad metaphors, the lottery didn’t know if their arguments would be enough to convince voters to approve Keno. “[Election day] was like those political drama television shows, when they need to pass a certain legislation… It was like a War Room. We celebrated every city that said yes, and if we lost a city or town, we were disappointed,” McCann said.

Seven of the 11 cities approved Keno in their jurisdiction. Over the next few months, the lottery staff got 63 towns to vote for Keno as well. In total, it represents about 50% of the New Hampshire population.

“We got this up and running in five months—not just with the administrative things but getting it on the ballot and getting it approved in all these jurisdictions. I don’t think there’s another group who could have done what they did,” McIntyre said. “The governor even said, ‘wow you guys crushed it.’ He was impressed by how fast we pulled it off. No one … moves that fast, that efficiently.”

But there still is more to do. Now the New Hampshire Lottery staff must get iLottery running as fast as possible. But Keno isn’t something that can be put on the back burner. The towns and cities that said no the first time will get more chances to vote in the future. And now with sales data, the lottery can construct an even more compelling case. “Our biggest time for selling Keno is between 5 and 8 p.m.,” McIntyre said. “This is not folks who are up late at night and aren’t at their best wits. These people are staying for dinner and maybe even dessert because they’re playing Keno as well. That has an impact on the bar. This is an economic engine.”

Looking back, they all felt good about what they accomplished. “It was a hill to climb, but once you get to the top, you can feel good about what you did,” McIntyre said.

“It was a big hill—like a 4,000 footer,” Cleland quickly emphasized.

Pennsylvania Lottery

Due to a $2.2 billion budget deficit, the Pennsylvania legislature and Governor Tom Wolf approved and signed Act 42, a massive gaming expansion bill, in late October 2017. The measure legalizes online casino games, satellite casinos, gambling at airports and truck stops, fantasy sports, and sports betting among other initiatives.

Private operators were not the only organizations who benefited though. The lottery had been working with key representatives to allow iLottery sales. But the legislature didn’t stop there. They also approved Keno. And virtual sports betting. “Keno came out of left field. We had been asking for 20 years, for as long as I have been at this lottery. I remember being really grateful and soon thereafter sobered by the amount of work ahead of us,” Pennsylvania Lottery Executive Director Drew Svitko said.

Like New Hampshire, there was no time to wait. The lottery was told that there was money built into the budget in the current fiscal year for all the initiatives that were approved. The goal was to get everything up and running by May 1. “When Drew talked to legislators down at the capitol they would ask him how much time lottery would need. He would always say: ‘Six months for iLottery, six months for Keno,’” Stephanie Weyant, Deputy Executive Director, Marketing & Product Development, Pennsylvania Lottery said. “We never imagined we would have to launch them at the same time!”

The lottery didn’t have time to hire additional staff. In fact, they had 16 vacant positions. There was already an extra work load for just the core business. To keep the ship moving, the executive team took on as much of the extra burden for the two projects as possible.

The team turned to a tried-and-true method of developing a plan: sticky notes. “That’s how we organized our thoughts at first. Everything from research, marketing, customer acquisition and retention, contracting, etc.,” Weyant said.

Launching on time became the priority, but that would have consequences. Launching a perfect product would not be practical with such a short timeline—but the product had to be viable. “We couldn’t confuse perfect with viable. While our mantra is ‘you only get one chance to launch a product,’ we knew we might have to accept 80% and launched instead of launching late with 100% functionality. The core functions had to work, but some things would have to wait. If the core product didn’t work, it risked disenfranchising players and retailers,” Svitko said.

Both projects would have to be done in tandem. For Keno, procurement and retailer recruitment had to start immediately before doing research and drumming up support for it through marketing efforts.

Monitors, brackets, cables, and media servers all had to be purchased before any retailers had signed up so they would be available in time. “Keno depends on having retailers with monitors. Our sales team knew they needed to recruit as soon as possible,” Weyant said. “We hadn’t started developing a product yet. We didn’t even know what we were going to name it.”

“We also knew that Xpress Sports was going to be a part of it too but we didn’t know what sports would be part of that package. We didn’t even know how many monitors we would have to set up,” Svitko said.

The iLottery project was moving forward in parallel to the Keno project. A few things made iLottery easier. In 2009, Weyant’s team had implemented their VIP Players Club, and in 2010 they created a dedicated division to focus on Interactive. “We started preparing for the eventuality of selling online. We didn’t know at the time if it would be 10 days or 10 years, but we knew that we needed to start and be ready,” Weyant said.

Their work paid significant dividends with 650,000 active players in their community by 2018. Certainly, a strong foundation to build from—but still just a beginning. They had a long way to go to set up a completely new sales channel. A few days after the passage of Act 42, Weyant was on a call with Shannon DeHaven, Deputy Director, Digital Operations, Michigan Lottery. “We had about a three-hour call with her. I still look back to those notes from that conversation,” Weyant said. “Shannon has been amazing. I still keep in touch with her.“

“We had about 400 conversations with Michigan,” Svitko joked.

One of the biggest things that came out of these discussions was payouts. Act 42 removed the 25% profit mandate for iLottery, which meant much higher payouts were possible. At first, Pennsylvania Lottery considered mimicking their scratch portfolio payouts. After many talks with vendors and other lotteries, they went with an 85% payout.

By late December, the lottery had a vendor and things really began to take off. Teams from around the world were helping to launch iLottery. Due to the time zone differences, the sun never truly set on the project. “While we slept, [the team in Europe] would be working,” Weyant said. “There are different work rules and different holidays. Sometimes it was a challenge, but many times it was an opportunity.”

Keno launched on May 1st. They had 269 locations on launch day. By July, they had over 1,400 Keno retailers operational across Pennsylvania, as Svitko put it, even “in towns in the middle of the state where there are more elk than people.”

iLottery launched 21 days later—1,200 people participated in the launch, spending $139,000 in lottery play. “It was a little after noon when they launched. Drew and I went on the site and it was live. We both got choked up,” Weyant said. “It was incredible. All that work for so many months and to see it live on the computer. It was absolutely amazing to be a part of history.”

Weyant continued: “Looking back it really was a blur. Every day we are making dozens of quick decisions. You’d hit a roadblock and you just had to come up with a creative solution. It’s about powering through.”

The next release will be Xpress Sports, which should be coming out soon. But there is still more to be done. “You asked when they’ll be done,” Svitko said with a chuckle. “I’ll let you know. We have already identified what Lottery 2.0 is going to be. We have some rather large additions to it and we’re already working on those things. Xpress Sports hasn’t even launched yet and we’re already working on Xpress Sports 2.0.”

No rest for the weary. Both teams have accomplished so much in so little time. A little reward is certainly in order to celebrate how far they’ve come. If anyone is looking for suggestions, perhaps a fish taco dinner?

THANK YOU!

One thing both lotteries mentioned was how appreciative they were of the support from the industry as a whole.

“We had a tremendous amount of support from the vendor community, IGT, Pollard Banknote, Scientific Games, IWG and other smaller companies, which reached out to us to offer help and advice. It was immensely helpful and we are appreciative,” Svitko said.

“We also couldn’t do without our vendor partners: Scientific Games and our advertising agency Marc USA,” Weyant said.

“We were working so closely with Intralot on a level we just hadn’t before for a project like this,” Cleland said at La Fleur’s 2018 DC Conference.

2018-08-23T17:12:32-05:00

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