La Fleur’s 2017 Lottery Symposium was held May 8-11, 2017 at the Jack Morton Auditorium at George Washington University in Washington, DC. It featured topics such as federal gaming developments, Powerball brand expansion, retailer incentives, $100 scratchers and apps.
The D.C. Lottery was the co-host of La Fleur’s 2017 Lottery Symposium. The Gold Sponsors were Alchemy3, IGT, INTRALOT, NOVOMATIC Lottery Solutions, OpenMarket and Scientific Games. The Silver Sponsors were EquiLottery, Linq3 and Vision Critical. The opening night reception co-sponsors were ICF Olson and Jackpocket.
Jeffrey DeWitt, Chief Financial Officer, D.C. Government, discussed “Continuous Improvement in Government.”
“Technology is changing everything rapidly. We all have to keep up. MGM just opened another casino very close to D.C. We have to compete with that. What D.C. has done is work on the culture of continuous improvement. Consider: Government is struggling to regulate Uber and yet driverless cars are maybe five years away. That is kind of scary considering D.C. traffic. How do we keep up as government?” said DeWitt.
The lottery did a best practices study. “The result was a focus on employee empowerment. Our strategic plan is called Be SMARTER,” said DeWitt. “Service oriented. Motivated.Accountable. Respectful. Trustworthy. Empowered. Results oriented. That is the culture we want. These are the employees and contractors we want.”
The D.C. government has a web portal for suggestions. The ideas are employee evaluated and if your idea is selected you get to be part of the team to implement it,” said DeWitt. “How do you get good government? You get to it by hiring and promoting good people. You get it by listening to the people you have. You can’t keep doing things the same way,” he said.
DC Lottery Marketing Director John Gorman put the spotlight on DC-7’s.
The D.C. Lottery’s most successful instant ticket this past year was not one of its spotlight games that benefitted from a big advertising budget. Instead, it was a game that was actually never meant to be.
Gorman detailed how the D.C. Lottery overcame several production hurdles to launch DC-7’s, an ambitious 21-scene game that featured a Collect & Win second-chance contest that set all-time records for the D.C. Lottery.
Jodie Warren, Director of Campaign Management, MDB Communications presented “Connection Marketing: Product Development Beyond the Expected.”
“How do you find brands with a natural point of intersection that already exists for lottery players and their customers? Uncovering these connections can yield success for both parties and elevate the lottery in ways that exceed the idea of being known for lottery tickets alone,” said Warren. “Additionally, the marketing strategy and lift can be shared by both brands and provide a larger footprint of effort resulting in further success,” said Warren.
The WMMJ 30th Anniversary Scratcher is an example of the intersection of two brands coming together for a mutually successful product and marketing strategy.
The panel entitled “Making Majic” looked at the risks and rewards for launching a licensed radio station ticket.
Radio One DC approached the D.C. Lottery with the concept. “I will say this, they blew our minds,” said Samuel Tatum, Director of Sales, Radio One DC. “We came in with heart in hand saying that we wanted to do this partnership. They could have said no because they were celebrating their own anniversary. Instead, they tabled their own efforts and decided to go all in with both feet.”
For the D.C. Lottery, it was a labor of love. “I think lottery needs to be part of the fabric of the community,” said D.C. Lottery Interim Executive Director Tracey Cohen. “And if you believe the same, then partnering with a top grossing radio station that has been a great partner for you is definitely the thing to do. If we’re both invested in the Majic program’s success, how can it not be a winner?”
The lottery did a complete 360 degree campaign with all of its assets. “We allocated a huge portion of our unclaimed prize fund to it,” reported Gorman. “The prizes were monthly $30,000. We did the drawing. The reveal will be over the air on WMMJ. Our players are their listeners and their listeners are our players. The scratch ticket makes so much sense. It is so marketable. It had great colors. Their call letters (102.3) in D.C. are numbers our numbers players love. We used a micro image technology from Scientific Games. We increased the size of the ticket to enlarge the display area.”
But there are risks with such a unique product. “We are very restricted where we can promote this ticket,” said Warren. “We can’t promote it on any other radio stations, can’t do this on TV. It really has been a labor of love from our side in creating a ticket for one of our long-time partner for them to promote. It is really going to be up to them, and they’ve gotten behind it in a huge way. This is a one-of-a-kind opportunity for us too.”
Sara Slane, SVP, Public Affairs, American Gaming Association (AGA), discussed her association’s federal priorities.
The AGA is now switching from a defensive approach to offensive approach when it comes to national legislation. This is because the times have changed.
“Forty states have both commercial and tribal gaming operations, lotteries in place. Clearly it’s a much different landscape than in the early 90’s,” said Slane. “… people have seen the economic upsides of the casino industry—[it has] a very positive reputation.”
The AGA is focusing on a robust 2017 agenda. The association wants to advance sports betting, develop gaming champions in Congress, drive next generation gaming policy, increase partnerships with the tribes and modernize tax code and regulations.
Darryl Nirenberg, Partner, Steptoe & Johnson LLP, discussed NACS’ position on internet lottery betting.
NACS believes that online gaming is currently illegal because the Department of Justice’s 2011 reinterpretation of the Wire Act was flawed. He also pointed out that it does not carry the force of law, it can be revoked at any time, and there is no grandfathering if the law is restored.
“The opinion is wrong on its face. When you first read the opinion, it sounds reasonable. But… they got the legislative history behind the Wire Act incorrect. Reading the opinion, they were not aware … that the wires were used for the conduct of lotteries.”
Former Congressman Jon Porter, Founding Member & President/CEO of The Porter Group, talked about how lotteries can play an active role in shaping federal legislation.
“You’re not Wall Street… Your CEO is your governor. Lotteries are state operations that have been and should be left alone by the federal government,” Porter stated. “As of today, you have a choice as a state. Your legislature is going to make that decision. Your governor is going to make that decision. There are forces out there that would like to take away the ability for states to make their own decisions.”
Porter clarified, in likely response to Nirenberg, that as of right now, online gaming is legal. He also stated that it is a problem that some entities want to take over the right of states to regulate gaming themselves.
Paula Otto, Executive Director, Virginia Lottery, discussed NASPL’s white paper that said that internet gaming is a state issue.
In the last six weeks, NASPL created a white paper on the issue of internet gaming in regards to state sovereignty.
Quoting from the white paper, Otto said, “The DOJ opinion leaves to the states the responsibility for regulating gaming within their respective borders. This deference to state legislatures and governors and citizens regarding gaming regulation is appropriate and in accordance with historic precedent.”
“NASPL is opposed to federal legislation that would encroach on the traditional state’s perogative to regulate gaming within each state’s borders. [Federal bills that would encroach] impair the ability of states to represent the sensibility of their citizens which states are uniquely qualified to do,” ended Otto.
The afternoon panel focused on “Promoting Powerball as a National Brand.”
The Development Committee for MUSL has been looking at several different options for the Powerball game. The proposal is to launch a twice-weekly bonus draw that would occur on non-Powerball draw nights (Thursday and Sunday). It would be separate from the base game. The price point is $1.
“We are looking at autumn for the Mega Millions change which is going to be a huge benefit to the industry. Realistically first quarter of 2018 for the Powerball bonus draw,” said MUSL Executive Director J. Bret Toyne.
Gary Grief, Executive Director, Texas Lottery, said he expects the Powerball directors to vote on the measure in June. It would require a simple majority to be implemented.
“The format is ‘Winner Take All’. The concept is something we have talked about for years in MUSL. This is a way to excite players in a different way. We think it has great potential. In Texas, we are looking at a $5 million to $10 million increase in sales just from the option.”
“We don’t have any projections yet. In Pennsylvania, we like to have research and data to back up projections. Once it is approved, we will do the homework. Just from what it will do for the base game and the brand, we expect some incremental revenue,” said Drew Svitko, Executive Director, Pennsylvania Lottery.
Grief also discussed the importance of putting the national Powerball brand in front of the consumer in a consistent way.
“PowerCruise is the Powerball promotion that we are doing with our trusted partners at Alchemy3. Most of you are familiar with Alchemy3. They are a very talented group that have pulled off some of the more tricky promotions in the lottery industry history,” said Grief. “I have a lot of confidence in them. They have never let us down. When this opportunity for PowerCruise came along and A3 shared with us that Royal Carribbean was going to be the brand we would be partnering with, we felt it was a no brainer. It is a very inexpensive way to get chatter in the lottery social media space at a cost that is significantly lower than advertising. Texas went in a big way. We purchased over 100 state rooms. We have seen the entries grow exponentially over the three drawings. I have been thrilled with it. Now, we have to execute it. A3 already has its eyes on the next prize. It is a rare opportunity to do something on a national scale that is consistent across jurisdictions. A3 did a great job of presenting content that we could use on social media and in advertising.”
Panel members also discussed the international crisis—private operators that fradulently sell Powerball, Mega Millions and other bloc lottos.
“The defense here is offense,” stressed Toyne. “We are disappointed that someone is taking our lunch money. The best way to combat that is to offer our product around the world. Other entrepreneurs have stepped in and filled that vacuum. That causes challenges when you are trying to protect your trademark because you are not offering it for sale. If we were able to offer Powerball in a foreign country, then it is much easier to protect your trademark. Having said that, we are going to aggressively pursue expanding the protection of the brand in the United State and the world.”
“We need to put out our brand in other parts of the world,” stated Grief.
Tom Delacenserie, Secretary, Florida Lottery, talked about leveraging the success of lottery products to increase space awareness.
Companies fight for space in supermarkets and mass merchandiser stores. It is so important because companies cannot grow their revenues unless they have the space requirement in stores. The fight is for counter space.
Most retailers think that if they increase the store counter, they have to do more work replacing instance for less margins. Delacenserie began an interesting analysis to do a category growth comparison between 15 game instant tickets on counter vs. a high margin product (Tic Tac display). He concluded that the profit per square inch for lottery is $1.01 compared to .52 cents for Tic Tacs. “More display facings are what the lottery deserves,” he ended.
Anne Kerstetter, Manager, Store Operations Payments & Reconciliations, Wawa, Inc, talked about the lottery’s impact on its bottom line.
Wawa started offering lottery with full service terminals in 2010 in Pennsylvania. Today it is licensed as a lottery retailer in five states plus it is coming soon to Delaware.
“We are absolutely able to look at customer account lift during jackpot extremes and see an increase in customer count based on these lottery products. After jackpot extremes and each December holiday sales periods helped our growth year after year,” Kerstetter said. “Overall, we see a 25-30% sales increase year over year since 2011. Merchandise GP for this 3-foot section is one of the highest inside the store at $181 psw.”
Wawa did a study on their weekly customers, breaking this category down into six consumer segments. The top three segments of Wawa’s weekly customers were buying just over two-thirds of those lottery tickets. All those segments though were buying lottery tickets. The “Go Getters” segment is skewing 39 years old, female with a much higher mean income.
Andrew Kinnear, Principal Consultant, U35x, talked about how the lottery could better use WiFi at retail.
WiFi technology has evolved over the past couple of years, and it can help marketing at retail. One example is Subway which gives free internet to their customers. Subway realized that if their customers didn’t come in at least once in 30 days, then they were at risk of losing that customer. The chain looked at their WiFi connection, and saw who hadn’t connected in the past 30 days. This activated an email which was sent to the customer offering a free sub.
What does free WiFi do for lottery? “Engage the anonymous lottery player at the point of purchase. Promote responsibility with age-controls and message opportunities. Drive sign-ups and early-life cycle use of iLottery (where applicable). Learn unknowable customer behaviors. Deliver additional value to retailers and their vendor partners (thus increasing the value of good partnership). Increase frequency with reasons to visit. Add value to the purchase, building the basket without eroding margin. Create possible new revenue streams for small business owners. Build eCRM datasets and audiences to market cheaply in personalized ways (re-targeting),” said Kinnear.
Heather Tryon, Category Manager, Instant Games, BCLC, talked about a non-traditional approach to a traditional category.
BCLC, like many lotteries, pushed players up the price point ladder so that players would win more. But the result was a decline in player participation, which needed to be fixed.
One strategy BCLC applied to their holiday games was to make enhancements to their contest registrations. They allowed players to wager their tickets in a raffle.
Another strategy BCLC employed was to launch “Kooza” as an omni-channel product available on three channels (digital, retail and casino). “It was a great opportunity to actively identify the players that are participating in all three channels,” said Tryon. “Players active in 3/3 Kooza channels are +3x more valuable.”
Anne-Marie Voyer, Department Manager, Product Management & Development, Loto-Québec, discussed Ultime, a $100 scratcher.
This was not Loto-Québec’s first $100 ticket. In fact, it has sold six similar priced tickets, but discontinued them after lackluster sales.
They decided to approach the product with a retooled look. “First, we put the consumer first, then design. Another rule broken from our traditional product development because we never put design first. Designing a $100 ticket is all about creating a luxury brand—exclusivity and design. Luxury brands create desire and we needed to inject those ideas into the ticket,” Voyer said.
The final product was a holographic ticket with an envelope that zipped up. The sales were fantastic, reaching their objective in just a few weeks.
Maura McCann, Marketing Director, New Hampshire Lottery talked about the agency’s new Insight Community developed with Vision Critical.
This community helps deliver feedback from players and retailers, create marketing campaigns that excite and engage, develop and execute best-in-class product innovation, gain in-depth understanding of players’ motivations and move beyond transactional data to understand why.
Winning at player engagement required building a web-based portal to register a database of players in the Cloud, recruiting members from client databases, building a member profile to segment players for authentic member experience, capturing stories (through Vision Critical surveys and discussion tools) and creating stories.
Now, 74% of players respond to the surveys with a 46% completion rate. The New Hampshire Lottery uses these survey groups to collect valuable data on how their players think.
The Community’s first activity was using the WINnovators community to determine if the market mix with Chuck McLuck needed to be refreshed.
Amanda Veraldi, Senior Manager, Digital Marketing, OLG & Jason Hyde, VP, Creative & User Experience, Plastic Mobile gave an update on new mobile initiatives.
“Like many of you out there, our player base has been on a slow decline for the past decade. Younger adults are not playing the lottery,” Veraldi said. “That next generation player just doesn’t know where to begin…. We think we are really able to capture that player by engaging them on their own terms. Internally, I refer to this as delivering digital empowering.”
OLG is launching two apps. The flagship lottery app will focus on driving traffic to store by using coupons and push notifications to remind players to play. OLG is also integrating a quick draw game into the app. OLG is also launching a new sports betting app.
Terri Rose, Director, Advertising & Gaming, Virginia Lottery, talked about revamping internet subscription sales.
The Virginia Lottery began the process in 2015 and launched in 2016. The lottery has not done a lot of marketing with their new subscription platform, because they were focused on helping the legacy subscription players transition.
With limited marketing, the new platform was forecasted to reach $4 million in sales. “We feel very strongly at $4 million sales, especially with this $1 million win by the end of the fiscal year. Next year we hope to add marketing efforts to the program and we forecasted $10 million,” said Rose.
The lottery plans to add an online game card and add Cash4Life to the game card.
Drew Svitko, Executive Director, Pennsylvania Lottery, talked about advancements in retail.
“Points of distribution continue to be an opportunity for us,” he said. “As retail changes, we need to evolve with it. In an effort to expand our points of distribution, we’ve launched multiple pilots to see what makes business sense for us.”
One of the pilots is Play at the Pump program. It has an $11 average per pump. Currently the lottery has sales at 800 pumps.
The lottery has also tested gift cards. The lottery tested paying the $3.95 activation fee themselves versus asking the players to absorb the fee associated with gift cards. Svitko said the customer facing fee did not dramatically reduce sales.
Finally, he discussed the results of the cashless pilot. The average cash transaction was about $11. The average debit transaction was $24. And the average credit transaction was $43.
Frank Badillo, Director of Research, MacroSavvy, presented “Diverging Retail Trends by Generation: Millennials, Gen X and Boomers.”
Badillo suggested marketers differentiate growth initiatives by generation. “Generation X is the core target for growth,” he stated. “Millennials is the focus of mobile initiatives. Boomers is where to be adaptive and opportunistic.”
GenX represents the biggest employed group (39% of total share) and the highest income earners ($72,504 average or 35% share). Boomers have the largest share of income (34% share).
“GenX will remain the biggest opportunity,” said Badillo. “A big share of Millennials are still living with their parents (22% in 2016). It will be five years before Gen X overtaken by Millennials.”
In terms of the profile, GenX is unique in its own way (full child-raising stage), like Boomers in some ways (home-focused but lower divorce rate) and like Millennials in others (more Hispanic, diverse, Tech-social-mobile savvy).
Stephanie Weyant, Deputy Executive Director, Marketing & Product Development, Pennsylvania Lottery discussed the launch of Wild Ball, an add-on to its PICK family of games.
“The key takeaway from our experience is that with the right add on, it is possible to change the sales trend for number games,” Weyant said.
The lottery launched Fast Play in late February 2017 with four games, including a progressive top prize game.
Fast Play per capita sales were projected at $0.08 a week. Instead, it leveled off at $0.27 cents per week. They are planning to launch new Fast Play games every other month.
“Opportunities exist with younger players,” Weyant said. “There seems to be more of an appeal with the younger group with the Fast Play games.”
Shelly Gerteisen, Draw Product Manager, Florida Lottery, discussed the lottery’s draw game expansion. They offered six promotions, launched three draw games, added a new playstyle for two draw games and sold a raffle.
PowerCruise had so many unique selling features that Florida was able to emphasize the features that most appealed to their players, like VIP concerts. “Florida represented 21% of the total population in the Collect’n’Win promotion, but we accounted for 51% of the active players,” Gerteisen said. “We had an increase in Powerball sales when you are looking at Powerball sales with similar jackpot levels. While this promotion won’t cure your billionaire hangover, it is at least like two Tylenol to help get you through it.”
Robin Reining, Chief Administrative Officer, Wyoming Lottery Corp., talked about its draw game strategy.
The Wyoming Lottery Corp. is an atypical lottery. They don’t get any funding from state, so they had to secure a loan to start the lottery. Currently, Wyoming Lottery has only eight staff members. Plus they are only permitted to sell draw games; instant games are prohibited.
WyoLotto rolled out Lucky for Life, their fourth new game. As part of the campaign, they created a character named “Mr. Luck” to be the mascot for the game. They also did a retailer training campaign. “We wanted to make sure that our retailers understood the new game. We wanted them to help us sell it. But to sell it, they need to understand it,” Reining said.
Jamie Anderson, Executive Director, Strategy, ICF Olson presented “Stepping Outside the Comfort Zone: Thinking Outside Our Lottery Vertical.”
“The theme of this week is ‘Lottery Content Innovators.’ Or rather content innovation. In our regulatory prohibited environment, where digital is still the fastest growing channel, how do we do that?” questioned Anderson.
Lotteries push to innovate. “New connectivity, content and experiences,” said Anderson. “We focus on loyalty, second-chance, e-instants, etc. And often we succeed.”
But a game changer is moving from product to experience design. “We’re actually seeing many cases where customers prioritize the experience of buying and using a product over the performance of the product itself,” said Anderson. “In fact, customer experience is becoming a key source of competitive advantage as companies look to transform how they do business.”
Greg Buri, Creative Director/Writer, David&Goliath, examined how a dream machine could connect to people. The typical dream machine in years past consisted of a mansion or luxury car.
“But what if we stopped looking at ourselves like an organization and instead became an actual dream machine.
Buri also challenged symposium attendees regarding the composition of the “Dream Team.” He also asked how would the lottery start the consumer’s dream journey? Showing videos and photos, he steered the conversation to rethinking how lotteries can help players live their dreams.
Jennifer Spire Gove, President, Preston Kelly discussed “The Evolution of Influencer Marketing.”
She pointed out that Kylie Jenner generated 2.7 million impressions wearing jeans. While the lottery can’t utilize Jenner, they can use influencers. Potential players are constantly being advertised to influencers every time they scroll through their social media feeds.
“What we need to look at are micro influencers,” said Spire Gove. “Micro influencers have 10,000 to 90,000 followers. They are real people. They don’t aren’t celebrities or anything like that. And if you go into the music or food bloggers, those are the ones that are attracting millennials and engaging with them and they could get them to talk about the lottery brand.”
Frank Farricker, Interim President & CEO, Connecticut Lottery Corp., talked about Keno. (Farricker has since resigned.)
When Keno was introduced to Connecticut, the lottery learned a few things. First, 50% of sales come from traditional retailers. That was a huge surprise. The lottery wanted these retailers to sell instant products too but they didn’t want to. There was a big fight. Retailers were telling us, “Keno is a completely different animal,” Farricker said. “I realized that they wanted our product but we were trying to sell them too much. Lets ease them into the game.”
Gordon Medenica, Director, Maryland Lottery & Gaming, presented “The Evolution of Gaming in the Northeast (1978-Present).”
The MGM National Harbor Casino—a $1.4 billion casino—opened on December 8, 2016 in Maryland.
“The key to MGM is that Virginia does not have casinos. The casino market is… about putting your casinos in places where you can attract people,” Medenica said.
There were 300,000+ total visitors during the first month, with an average of 30,000 daily visitors. The hotel is apparently full all the time with about 234 rooms and 74 suites.
The Draw Game Innovation panel looked at what’s new for lotteries.
Missouri Lottery has experimented with one-day promotions. “With our partners at IGT, we did something on the Fourth of July, and it just went through the roof. It was fantastic. We did ‘Do Something Nice For Somebody Day’ on October 5th . . . And for Powerball 25th Anniversary, we did a one-day promotion. It’s low POS, it’s really low-maintenance with the clerks, and it’s low-maintenance with our LSRs,” said May Scheve Reardon, Executive Director, Missouri Lottery.
Wyoming Lottery wants to put Keno in the market. “We want to sell it in our existing stores; we think we have about 150 new locations, so that would take us from 450 to about 600 locations. And the problem there was the legislature at the time largely viewed that as an instant game, no matter what we said, or what comparisons we drew. The legislature’s changed a bit; we’re getting a bit warmer reception to it,” said Jon Clontz, CEO, Wyoming Lottery Corp.
Connecticut Lottery is allocating funds for sales training. “We have a very mature lottery. We have 3,000 retailers in the state; we have one retailer for every 1,000 people. We’re deeply entrenched. We’re looking to get back to basics,” said Farricker.
Maryland Lottery needs to grow its instant sales. “Historically, Maryland has always been very strong in daily numbers games. Keno is extremely strong, but also very mature. And some of the softness we’ve seen in Keno has been more than made up for by the racetracks product.Where we really fall down is on the instant category,” said Medenica.
The final day of La Fleur’s Symposium featured the BakeOff interactive workshop. Speakers gave a 5-minute presentation on an “half baked” idea. The audience helped identify solutions and solve problems.
Stephen Cooke, Product Manager, D.C. Lottery presented “Customized Instant Ticket.”
Kristen Knape, Group Strategy Director, David & Goliath, discussed “Set For Life Foundation.”
Shelly Gerteisen, Draw Product Manager, Florida Lottery, focused on Florida Lottery’s 30th anniversary.
Jamie Anderson, Executive Director, Strategy, ICF Olson, asked attendees to blue sky how their agency would launch online sales if they could sell online.
Anne-Marie Voyer, Department Manager, Product Management & Development, Loto-Quebec, discussed its “Montreal Canadien Ticket.”
Maura McCann, Marketing Director, New Hampshire Lottery, examined “$2 Bourbon & Bucks Scratch ‘N Sniff.”
Jennifer Spire Gove, President, Preston Kelly, focused on “Experimental loT Platform” using RFID technology.
Terri Rose, Director, Advertising & Gaming, Virginia Lottery presented “Mega Monday.”