PGIJANFEBMAGAZINE2021a

20 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2021 PGRI INTERVIEWS Paul Jason: Instant scratch off sales continue to increase for most U.S. lotteries. What can be done to keep the momentum and get new players to keep playing and preserve the activity level of core players who are playing more during the pandemic? Pat McHugh: The lottery industry has demonstrated incredible resiliency in our products and ingenuity in adjusting to the circumstances to make sure the games continued to be available to players. I am so thankful and proud of the way our Scientific Games team and our lottery customers collaborated on creative solutions to keep our employees, customers, and retailers safe while maintaining the retail supply chain. Through COVID, consumers’ demand for great games never waned, particularly for the entertainment of faster playstyle games, and economic impact increased the need for funding to support good causes. Coming out of COVID, the industry has a great oppor- tunity to accelerate investment in their game portfolio to retain these new players. Instant scratch game success during the pandemic starts with the same fundamentals we always adhere to, portfolio management. It’s the foundation of our Scientific Games Enhanced Partnership programs, or SGEP. The way to bring in new consumer groups and optimize the overall performance of the product category is to have a wide variety of games that appeals to the widest variety of playstyles and preferences. While that sounds obvious, the analytics and strategy to execute that is not easy. It requires significant history of game data attributes to pull from, plus expertise to analyze the full game portfolio, then develop a real plan to optimize as a portfolio over time – as opposed to looking solely at attributes of individual games. The top 10 performing lotteries, as measured by weekly per capita instant game sales, operate with Scientific Games as the primary partner, providing all or almost all the games. This partnership enables us and our lottery customer to properly balance the entire instant game portfolio for maximum consumer reach. This is always at the forefront of our primary relationships. Where most adjustments have been needed during the pandemic is ramping up our manufactur- ing and game distribution services so that we can meet our customers’ needs. Our scale and resources become especially important when there is sudden, unanticipated spike in demand as there was back in March and April of last year. The demand never subsided, and we have adjusted manufacturing to this new normal of increased instant game sales. Additionally, we manage the supply-chain logistics to ensure that inventories are tracked on a daily basis and the games are delivered so retailers are always properly stocked. Of course, demand has continued to be strong. So Scientific Games continues to keep our manufacturing working over-time with employee safety measures in place and applying our R & D and portfolio manage- ment approach to maximize game choices for the players and sales for our lottery customers. Thirty-four of our U.S. customers had record instant sales in FY2019-20, and 12 of those were SGEP customers where we provide analytics and insights, logistics and other services to manage the instant product category. What were you thinking when the pandemic first hit back in March? Did you anticipate that demand for instant games would increase dramatically and so begin immediately to increase production? PEDAL TO THE METAL LOTTERY’S DRIVE TO SERVE GOOD CAUSES RACES TOWARD MODERNIZATION IN 2021 Pat McHugh, EVP and Lottery Group Chief Executive, Scientific Games PGRI INTRODUCTION: 2020 was a challenging year that taught us all a great deal on many fronts. More than ever before, good causes will rely on the financial support generated by government lotteries. And the role of instant games to help protect lottery profits and ensure future sustainability is more vital than ever. The most important aspect of recapping the story of instant games over the last 11 months is to understand the picture going forward into 2021.