By Patrick Bentley, IGT Senior Director of Marketing and Sales Development, North America
In the past few years, several lotteries have explored the potential to grow overall returns for good causes by adjusting their price-point mix. A few have significantly reduced the number of $1 games launched and the number of instant-game dispenser bins dedicated to this price point. Since bin space is limited, the available sets are a resource that must be optimized, so they don’t become a bottleneck for placing the mix of games that players most want to buy. This optimization can significantly drive lottery returns.
In fact, limiting the $1 price point makes sense from the perspective of three important lottery-stakeholders:
- Players have responded to the improved winning experience of progressively higher instant price points for many years. They have asked for higher price points, and lotteries are meeting this demand. This price progression has also extended to several other types of lottery games. Powerball and Mega Millions moved to $2, for example. Several in-state Lotto games now cost $2, and many lotteries that offer the Fast Play instant win category do not carry $1 Fast Play games anymore.
- Retailers face rising labor costs and focus intently on store revenue by product line. If consumers are gravitating toward higher price points with oftentimes more meaningful prizes, then offering those also supports retailers in earning a meaningful dollar commission. Making room for more of these games makes the category more attractive to retailers.
- Increased printing costs due to inflation are making $1 games less profitable for lotteries as sales continue to dwindle, further reducing the space reserved for $1 games at retail.
It’s interesting to note that, for digital eInstant game portfolios, the role of price points is different. Best practices in this channel dictate the importance of offering multi-priced games, and the average transaction is trending around $1.50. The lower price-point preference in this channel allows longer entertainment sessions for players at a responsible cost.
With all of this in mind, IGT believes there is further room to reduce the number of $1 instant games in a lottery portfolio. Because each lottery jurisdiction is different, the timing to reduce lower-price-point games from a market should be carefully adjusted to local market conditions and needs.