Anonymous
Threats: Some are more obvious than others; obviously, other forms of legal gambling are becoming more prevalent in our states, such as sports betting. However, our biggest threat is acquiring new, younger players. That is where sports betting has the edge, so the lotteries have to find a way to be more interesting to those players.
Opportunities: The one thing that lotteries have is amazing beneficiaries and the ability to talk about all the good each lottery has done and will do for their state. However, as a group, that number is much larger and benefits people in different ways. Being able to leverage this as a group could make a significant national impact on relevancy. Is there an opportunity for a national beneficiary campaign?
Joshua Johnston, Washington’s Lottery
Threats: The biggest threat is pretty obvious and thoroughly discussed: online sales. Some lotteries are legally restricted (Washington included) and are not likely to change anytime soon. Fortunately, I think most people consider gambling an in-person activity, but with iLottery, sports betting, and online gambling, that perception is changing. This is both good and bad: Good, it shows some of the benefits of online gaming (RG, larger beneficiary contributions); bad, it makes the legal restrictions a more acute barrier.
I think lottery relevance is a growing concern. Nationally, lottery players are aging. It takes a fair bit of time to bring new products to market, so catching trends is hard. Coming up with IRL products that appeal to a younger population is crucial. There are several ways to solve this challenge: promotions that appeal to younger players, brand partnerships, and game design that is exciting and new.
Finally, I think manipulation of our drawings will always be a threat. This includes both the manipulation of random number generators and the narrowness and specialty of our industry. There are only a few companies that do this type of work, which can be concerning when it comes to groupthink.
Don’t get me wrong, people who work in this industry have the highest levels of integrity and would never do anything inappropriate intentionally, but familiarity and specialization are things to watch out for. This can be solved with peer-review audits and system designs.
Opportunities: AI is an obvious one but not necessarily in the way that most people think. It can provide efficiencies in our processes that could allow for resources to be used elsewhere. For example, using AI to input license applications that don’t need human intervention, assisting players with inputting claim information, generating graphics for marketing purposes, and teaching it to play a draw or scratch game to identify weaknesses in the game.
I think various methods of paying players, both claiming and paying, are a terrific opportunity. Most of us require a player to visit our office to claim a large prize. Most of the verification can be handled online and money transferred. This lowers the barrier for players to collect their winnings and improves the overall experience. Imagine the benefits of a player who just won being able to reinvest their winnings into a new ticket. That is exciting for both the players—because they have another chance to win—and for those who receive the lottery profits.
Finally, leaning into self-service options with suggested selling is key. Vending is the way of the future. Integrating AI to alert players about high jackpots, promotions on a particular game, or a scratch game’s inventory is low, but there are still high-end prizes available.
Adam Prock, Minnesota Lottery
Threats:
- Market Saturation: Limited opportunities for new retailer recruitment
- Sustained Relevance: Remaining relevant/appealing to younger players
- Technology Disruptors: Disruption from new/emerging technologies and the potential of not keeping pace
- Regulatory and Compliance: The potential for changing regulations or banning certain types of lottery games/platforms
- Cybersecurity Risks
- Economic Volatility
- Changes in Retail Shopping Habits
Opportunities: Our Minnesota Lottery team collaborates with players, retailers, vendors, and partners to stay abreast of opportunities and challenges in the lottery industry.
Our team sees opportunities in the industry, such as:
- Utilizing artificial intelligence, advanced analytics, and data-driven insights into player behaviors and market trends. Increasing player engagement through personalized/customized scratch tickets, lottery experiences and promotions, loyalty, and interactive programs.
- Expanding digital presence to the extent allowed by state/jurisdiction.
- Addressing increasing competition—online gaming, sports betting, mobile gaming, and other alternative forms of entertainment.
Mark Michalko, North Carolina Education Lottery
Threats: Lotteries in the U.S. are again in the midst of great change. In times of change, the biggest threats come from the risks that threaten the integrity of our games. Lotteries will enjoy popular support as long as they are played for fun, operated fairly, and make the health of our players our top concern. The history of lotteries tells us this: Since Colonial days, lotteries have come and gone. They flourished when they were run fairly and responsibly to serve good causes. They were outlawed when they became corrupt and preyed on the players. Since lotteries re-emerged in the U.S. in 1964 in New Hampshire, we have worked diligently for 60 years to protect the integrity of our games. No matter how games change in the years ahead to stay relevant in a fast-changing digital world, integrity and responsibility must always come first. It’s our values that will sustain us, our games, and the good causes we serve.
Opportunities: The biggest untapped opportunity in the lottery industry is a full embrace of healthy play as the path to sustainability. Gaming is expanding all around us. The differentiator for lotteries will be showing they care about their players first. Map the journey to success. You’ll find the player at the center of it all.
Jay Finks, Oklahoma Lottery
Threats: The easy answer is sports betting, but the deeper issue is that these massive sports betting entities are not going to be satisfied with just the sports betting dollar. They are going to look for multiple ways to incorporate online gaming (including iLottery) into their portfolios. We have to be aggressive in defending our space, especially on the digital front. While we have some built-in protections around the production of physical instant tickets, the draw game space is really only a matter of population. As sports betting grows, so too does the potential for someone to put up a national game that can compete with ours.
Opportunities: We need to grow our presence on a national level in both game design and marketing. We have incredible buying power if we pool our resources into something stronger on a wide-scale basis. The stronger our national brand is, the harder it will be for our competitors to tear pieces of it away.
Tom Seaver, Colorado Lottery
Threats: Not having a clear understanding of what “value” means to consumers and designing games and promotions accordingly.
Economic Stagnation: Players having less discretionary income.
Opportunities: The industry is broader now than it has ever been. That means good ideas can come from more sources if we keep an open mind. Differentiating the lottery from other forms of gaming via our good works.
Matt Strawn, Iowa Lottery
Threats:
- Remaining culturally relevant in a time of decreased consumer attention spans and increased competition for the discretionary gaming/entertainment dollar
- Maintaining net income/profit margins for statutory beneficiaries amid increased input costs and higher product price points, which reduce gross margins (an operator-specific challenge)
- Speed to market (product innovations, programming schedules, multi-jurisdiction approvals, etc.)
- Lack of a coordinated, industry-wide approach to engaging in public policy and advocacy
Opportunities: Leveraging talented and experienced lottery staff to the benefit of the entire industry. Outside of a handful of opportunities (NASPL PDS, PGRI SmartTech, LaFleur’s Conferences, etc.), there are few instances in which key lottery staff (such as marketing, product, and retail sales leads) truly have the opportunity to engage with each other, develop relationships, and share best practices that can be scaled across jurisdictions. I don’t have a solution, but anything that develops a more formal and regular cadence of connecting (even if virtually) with lottery functional leads would significantly benefit the entire industry.
Powerball Double Play Product: There are currently 23 lotteries that are not offering—or actively preparing to launch—the $1 Powerball Double Play product add-on. Since its introduction in August 2021, Double Play sales have exceeded $500M and represent an average incremental sales gain of approximately 9 percent across all jurisdictions currently offering the product, with no measurable effect on base game sales. I’d encourage lotteries to consider working with their system vendor to find a window in their programming schedule for Powerball Double Play.
Fully leveraging the Powerball brand to grow the overall lottery category: Recent and extensive research commissioned by MUSL and the Powerball Product Group indicates that Powerball has brand penetration and affinity scores rivaling many of the world’s top consumer brands. The success of the current Powerball relationship with NASCAR—and potential relationship with the NFL—only starts to scratch the surface of high-value partnerships that can be leveraged to further increase Powerball’s (and, thereby, lottery products in general) cultural relevance to infrequent or new players.