Public Gaming Magazine July/August 2020

19 PUBLIC GAMING INTERNATIONAL • JULY/AUGUST 2020 Is iLottery the Key for States Needing to Fill Budget Shortfalls? I n 2014, the Michigan Lottery became the envy of the lottery industry when it launched its iLottery e-instant platform. Lotteries watched, inquired and strategized about how they could add a similar platform in their states. Since then, other states have come on board, o ering either eScratch tick- ets or single day draw game sales - Georgia, Kentucky, Pennsylvania, New Hampshire, Illinois, North Carolina and North Dakota. On July 1, Virginia launched eScratch and single ticket/same- day draw game sales. But what happens now? Will states continue to slow-walk iLottery, even as they fast-track the process of licensing sports-betting operators? Will lotteries be handcu ed as they look to modernize their operations, broaden their customer base and increase revenues? Or now, after months of vary- ing degrees of “stay-at-home” orders to help stop the spread of coronavirus, have we arrived at the tipping point where states realize that retail habits were already changing such that lotteries must o er alternative purchase options that no longer require an in-person retail experience? As state budget chiefs and lottery directors have nervously monitored there week-over-week sales, there is one critical point – iLottery sales, where available, never faltered. In fact, they skyrocketed in most metrics, including new customer sign-ups and overall sales. Will it take ongoing sales challenges, pro t goal stresses, and continuing revenue gaps across state budgets to nally push more states to expand lot- tery o erings? If you consider where many states nd themselves as the country steps forward and back with economic re-opening, this certainly looks like the nal straw: - New York state is forecasting a $15 billion rev- enue decline across the state - West Virginia has been losing $9 million/week from its closed casinos alone - New Jersey, Pennsylvania and Ohio announced limited spending and hiring freezes - Virtually unheard of in the past, a number of states laid o workers, including from the ranks of lottery employees, including 60 at the Oregon Lot- tery alone (13% of the lotteries workforce) In a radio interview in April, NY Governor said that the state might have to cut education funding to address the state's budget shortfalls. "I said kiddingly to a legislator, ' is is the easiest budget we've done. ere's no option. e num- ber is zero," Cuomo said. “We have no money." When we look at iLottery during these di cult times, we might just be seeing the future of the lottery put on hyper-speed. GEORGIA, KENTUCKY iLOTTERY SALES SOAR; RHODE ISLAND LAUNCHES FULL iLOTTERY For both the Georgia Lottery Corporation and Kentucky Lottery, the stay-at-home orders associ- ated with the COVID-19 outbreak has been a fur- ther opportunity to leverage their digital o erings. Both lotteries enjoyed an excellent year for digital sales in 2019 but by mid-May 2020, respectively were performing year-to-date +62% and +57% in digital sales vs. the prior scal year. is growth had accelerated through the end of 2019, when both lotteries invested more on digital advertising and focused on player acquisition. Both Georgia and Kentucky lotteries excel with draw-based-game digital o erings, particularly Keno, for which the digital channel represents 23% of total sales in Georgia and 15% of total sales in Kentucky. O ering the same Keno game at retail and digitally, rather than having a Keno-style e-Instant game at a signi cantly higher payout, allows those lotteries to bene t from the higher pro t margin with a prize payout of 65%, and to promote more cross-selling opportunities between core players. Given all that has happened since the start of the COVID-19 pandemic, with many peo- ple not leaving their homes, the long-term strategic planning of both lotteries and their well-timed choice to focus more on the digital channel at the beginning of 2020 resulted in positive momentum and a strong rst half of 2020.