La Fleur’s Magazine surveyed North American lottery directors on what was their biggest concern in FY23. There were primary themes: Gaming competition, grey machines, illegal gaming websites, retail theft, flat marketing budgets, economic erosion, inflation, gas prices, changes in administration, complacency and lack of innovation, and time constraints.
“The Pennsylvania Lottery continues to face aggressive competition with expanded gaming and illegal games that are marketed as ‘games of skill.’ Pennsylvania is the most competitive gaming jurisdiction in the U.S. More non-lottery gaming dollars occur in Pennsylvania than anywhere else. No other lottery is facing the amount of competition that we face. It’s estimated that more than $650 million in Pennsylvania Lottery Scratch-Off sales have been lost due to unregulated games of skill since 2017. This loss of sales directly affects the funds supporting those vital state-sponsored programs for older Pennsylvanians.” —Drew Svitko, Executive Director, Pennsylvania Lottery
“Casinos will be opening at horse racing tracks around the state in the coming year or two, and while research indicates our players already visit casinos in other states the evolving entertainment landscape will require us to be as innovative as possible.” —Brian Rockey, Director, Nebraska Lottery
“We want to continue to build on our success despite the challenges of . . . non-lottery legalized gambling, and other entertainment opportunities amid consumers’ economic constraints.” —Pat MacDonald, Executive Director, Ohio Lottery
“Like many states, we’re dealing with rapidly-expanding legal and illegal gambling devices, including grey market machines. We’re already seeing sales flatten in areas with large concentrations of the devices . . . To combat this, we’re going to redouble our efforts to keep retailers aware of the many benefits of selling our games. This includes the proceeds they generate going to fund college scholarships and grants.” — Mary Harville, President & CEO, Kentucky Lottery Corp.
Illegal Gaming Websites
“We have all seen a huge increase in advertising for illegal gaming websites and there are more options than ever when considering gambling online. However, Atlantic Lottery is the only 100% legal online gaming operator in our region, providing those adults who choose to play with a responsible and regulated alternative for iGaming and betting. As a provincially owned public corporation, we have a much higher standard of care than our illegal competitors, offering industry leading tools to promote healthy play and a strong commitment to transparency. We are highly focused on successfully implementing initiatives to help protect against these competitors and strengthen our relationship with players.”—Patrick Daigle, President & CEO, Atlantic Lottery Corporation
“Theft of lottery products at retail. There isn’t a silver bullet solution, so we are working on this from many different angles: education, better security of scratch tickets, minimizing financial exposure, and technology. Some are obviously easier and faster than others, but it is something we are working on daily.” — Marcus Glasper, Director, Washington’s Lottery
Flat Marketing Budget
“With media costs on the rise, and marketing budgets remaining flat, we have to stay especially nimble in our media and marketing approaches to ensure we maintain sufficient reach and frequency levels to support our sales goals.” —John Davis, Secretary, Florida Lottery
“Continued economic erosion is the greatest threat to the lottery sector. We compete for consumer discretionary spend in an open market that offers a multitude of options. As consumer budgets constrict, consumer behavior will adjust. A higher ring at the till for staples and fuel will serve as a drag on consumer retail items.” —Eric Hagler, Director, Arkansas Scholarship Lottery.
“General market price inflation and economic recession and their impact on our citizens, our communities, our players, and our business partners.” —Jeff Anderson, Director, Idaho Lottery
“Inflation sits at a 40-year high. Fleet and gas costs are up 60% from a year ago. Labor market and supply chain challenges make it difficult to acquire employees, vehicles and other materials needed for business. Ticket shipping costs and employee healthcare have also increased. All the while, the cost of a lottery ticket has stayed relatively the same.” —Rose Hudson, President, Louisiana Lottery Corp.
“It’s the things we can’t control, like inflation, gas prices and the ongoing pandemic, that are my biggest concerns.” —Adam Prock, Executive Director, Minnesota Lottery
“I believe the uncertainty in the economy and inflation are my top concerns.” —Jeff Hewitt, President, Mississippi Lottery Corp.
“Economic challenges: inflation and potential recession’s impact on high margin games.” —Mark Michalko, Executive Director, North Carolina Education Lottery
“The economy is the biggest barrier for growth right now given its impact on discretionary income.” —Jay Finks, Executive Director, Oklahoma Lottery
Rising Gas Prices
“Record fuel prices and larger inflationary pressures are impacting household budgets in Iowa and across the country. Rising fuel prices historically have the most direct impact on the sale of instant scratch games among the Iowa Lottery’s product base and continue to do so at this time. Scratch games account for about two-thirds of Iowa Lottery total sales. And while the Iowa Lottery will continue to be creative and thoughtful in its game development and sales efforts, it also recognizes that economic realities will dictate consumers’ choices as they make responsible decisions for themselves and their families.” —Matt Strawn, CEO, Iowa Lottery
“High gas prices and record inflation. We continue to measure the impact these have on our players and their discretionary/entertainment dollars.” —Norm Lingle, Executive Director, South Dakota Lottery
Instant Ticket Performance
“It will be interesting to see how the instant ticket category performs. After a record-setting FY2021, instant ticket sales decreased 3% in FY2022, but were more than 7% ahead of FY2020, which was adversely impacted by the pandemic.” —Mark William Bracken, Interim Executive Director, Massachusetts Lottery
“We keep a close eye on the variability of the multi-state jackpot games and look forward to continuous care given those products to ensure their long time sustainability. As we know, the pace of ‘change’ has accelerated these past couple of years and we need to be extremely focused on consumer behavior and meeting them how and where they like.” —Sarah Taylor, Director, Hoosier Lottery
Digital Sales Moratorium
“Staying relevant to players digitally while policymakers frown on digital sales is also a major concern that shapes our business objectives for FY23.” —Barry Pack, Director, Oregon Lottery
“Renewing our customer base is a challenge we have been focusing on for several years. Products are being developed that begin with a retail purchase and continue online, offering a richer and more exciting customer experience.” —Isabelle Jean, EVP, Chief of Lottery Operations, Loto-Québec
“Just like many lottery organizations, we’re constantly trying to balance meeting the needs of our current players with innovating the business to grow and reach new players.” —Paul Erickson, President & CEO, Western Canada Lottery Corp.
Change in Administration
“Arizona will be going through a change of administration. Any transition comes with trepidation on how a new Governor will guide the efforts of Lottery, but with the gains Arizona Lottery has made during the current administration, we are hopeful that we will be able to continue to be innovative and forward thinking in how we serve our beneficiaries.” —Gregg Edgar, Executive Director, Arizona Lottery
“As counties and cities have transitioned away from a period of strict COVID restrictions, people are getting out more and rediscovering other ways to spend their entertainment dollar, creating a lot more competition for Lottery. We could also see a shift in spending due to inflation. There is the ever-lingering concern over emerging new coronavirus variants which command consistent attention to worker and workplace safety, both internally and in the field. The challenge is upon us to identify ways to remain top-of-mind and retain a hold of any purchasing gains we experienced during the last two fiscal years. That is where the creative talents of our marketing and sales teams will come into play by way of developing stimulating game concepts and designs as well as exploring distinct new ways to reach both new and existing customers.” —Alva Johnson, Director, California Lottery.
“Finding enough time and bandwidth to do all we have planned.” —Gregory Smith, President & CEO, Connecticut Lottery Corp.
“Build out and preparation for launch of iLottery in Q1 FY24.” —John Myers, Director, West Virginia Lottery
It’s Not Inflation . . .
“. . . it’s innovation. Players will make room for you in their discretionary spending if you give them a strong enough reason. Jobs are already ahead of pre-pandemic levels, and the energy price gouging will not last forever. We need to be bringing creative, fun games to market with strong marketing in preparation for the coming recovery. Sounds bullish, I know. But you should always plan for growth, or you won’t get it.” —Tom Seaver, Director, Colorado Lottery
Sluggish Retail Sales
“Though we expect to see a year-over-year total sales increase, that will be largely driven by iLottery/eInstants. Current sales trends for most retail products are down and there are a lot of contributing factors, including an expanded gaming landscape, in-store competition, and economic fluctuations to name a few. We will look to continuously make improvements by supporting an agile business style capped with an innovative mindset. We need to acknowledge those challenges ahead of us, and then come together as one team to stay focused on the things that we can control so that we can execute our strategic priorities to the best of our ability.” —Kelly T. Gee, Executive Director, Virginia Lottery
“There are a lot of challenges for Texas and the industry as we exit the COVID-driven peaks of 2021 and 2022. Becoming complacent is always a concern, so staying focused on innovation and excellence is crucial. The impact of inflation, both on vendor pricing and on our players’ wallets, is something I’m monitoring as well.” —Gary Grief, Executive Director, Texas Lottery