NOVEMBER/DECEMBER 2022 www.PublicGaming.com ON SHAPING THE FUTURE OF LOTTERY IN AUSTRALIA Sue van der Merwe Managing Director and Chief Executive Officer, The Lottery Corporation
© IGT. All things Lottery. All through one integrated solution. To learn more, visit: IGT.com/OMNIA When you digitize the retail experience via OMNIA’s Connected Play features, you gain unprecedented visibility into retail player behavior. These valuable insights can be used to optimize your product oerings and personalize player communications. This is the future of Lottery. © IGT. All things Lottery. All through one integrated solution. Visit us at WLS in booth #543 to learn more. With the channel vers tility to transform any lottery, the visibi it into player dat that allows you to unlock the potential of curr nt players, the playability by design to attract your future players, and the proven reliability that comes with four decades of leadership. This is the future of Lottery.
4 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 Publisher & Chief Executive Officer Paul Jason pjason@publicgaming.com President Susan Jason sjason@publicgaming.com Brand and Design Dan Eggers Design Lottery Industry Consultant Jim Acton Honored Founders Doris & Duane Burke Subscriptions United States: $145 USD Canada & Mexico: $160 USD All other countries: $225 USD For email address changes, subscription requests and requests to be placed on our e-Newsletter distribution list, e-mail Susan Jason at sjason@publicgaming.com Contact Information PGRI, Inc. 1769 Flagstone Terrace, The Villages, FL 32162 PublicGaming.com T: +425.449.3000 F: +206.374.2600 Public Gaming International Magazine Published six times a year and distributed to readers all around the world. Electronic version is e-mailed and is also available on our news website: PublicGaming.com November/December 2022 Volume 51, Issue 6 ©2022 all rights reserved. Public Gaming Research Institute cISSN: 1042-1912 10 Shaping the Future of Lottery in Australia: Sue van der Merwe Managing Director and Chief Executive Officer, The Lottery Corporation 14 Creating Alignment of Mission, Purpose, and Action Moderator: Rebecca Paul, President and Chief Executive Officer, Tennessee Education Lottery Corporation; President of the World Lottery Association (WLA) Panelists: Jay Gendron, Chief Operating Officer Global Lottery, IGT John Schulz, President, Americas and Global Instant Products, Scientific Games Matt Strawn, President and Chief Executive Officer, Iowa Lottery Lorne Weil, Executive Chairman, Inspired Entertainment Jennifer Westbury, Executive Vice President, Sales & Customer Development, Pollard Banknote CONTENTS N O V E M B E R / D E C E M B E R 2 0 2 2 F E A T U R E D I N T E R V I E W P A N E L D I S C U S S I O N S
When it comes to testing and compliance, GLI’s expertise and unparalleled range of comprehensive lottery services do more than keep your projects moving ahead of pace. Our experience in global certification, regulatory consulting, and cybersecurity takes things to the next level of success, every step of the way. gaminglabs.com
6 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 Visit Our Family Of Websites PublicGaming.com industry news & information PGRITalks.com videos of conference presentations PublicGaming.org PGRI conference information PGRIDigitalLibrary.com magazine archive of past issues PGRIDirectory.com listing of lotteries and vendors PGRIAwards.com Showcase of industry honorees recognized by the Lottery Industry Hall of Fame PGRI Lifetime Achievement Award Sharp Award for Good Causes Lottery Industry Statesman and Stateswoman Award Rebecca Paul Mentorship Award Collaboration Award Subscribe To Our Free Digital Newsletters Receive our daily newsletters at no charge, published 5 times a week to bring you the latest breaking news in the global lottery industry. Send an e-mail to: sjason@PublicGaming.com with “add to Daily Digest list” in the subject line. D E P A R T M E N T S F E A T U R E D A R T I C L E S 20 Ready, Set, Plan: Jumpstart your 2023 product portfolio with innovative ways to invest and drive maximum revenues, Scientific Games 22 After 4-year absence, the World Lottery Summit returns to Vancouver, and to rave reviews 22 Lynne Roiter honored with the Guy Simonis Lifetime Achievement Award 23 Remembering Guy Simonis ... Michelle Carinci, CEO of Lottotech, the operator of the National Lottery of Mauritius, former CEO of the Atlantic Lottery in Canada 26 State-of-the art learning management systems: 7 Reasons to Embrace E-training of lottery retailers and lottery staff Danielle Davis, IGT Director Product Management, Retailer Management & Optimization and Mariana Tzitzouris, IGT Product Marketing Specialist, Retailer Management & Optimization 30 Mary Harville, President and CEO, Kentucky Lottery Corp, selected as one of the 2022 Most Admired CEOs in Louisville, describes the KYC’s 2026 Odyssey Project 31 It’s back...The in-person EL/WLA Marketing Seminar 2023! 33 What’s in a name? For almost 50 years, Scientific Games has lived up to its iconic name 40 Empowering Lotteries with Player-Focused Solutions IGT OMNIA™ integrates retail and digital channels to deliver the industry’s first truly player-centric, omnichannel solution 8 From the Publisher Paul Jason 18 Lotto America Reaches New Heights: $1 draw game achieves record jackpot after introducing additional draw night MUSL NEWS (Multi-State Lottery Association) 42 Spotlight on the Leaders of the GovernmentGaming Industry Corporate Profiles of Sponsors for Lottery Expo NYC 2022 48 Pulse of the Industry: Synopsis of Recent Gaming Industry News Qualitative Science Not all of the science inside the company’s innovations are driven by hard, quantitative data. Scientific Games’ Consumer Insights Team has a long history of collecting meaningful qualitative information on players. That information is equally rich in its ability to provide insights that can be used to create products and services that enable lotteries to realize their vision and achieve their objectives. At the foundation of Scientific Games’ player research is its ONE Segmentation. ONE looks beyond the who and the what of player behavior to get to the why – the motivations behind the behavior. Knowing that a certain consumer type buys a certain product (the who and the what) is helpful, but knowing why they purchase that product can be transformative in how a lottery designs and builds future products. Originally launched in 2014, the company recently completed the next generation of its ONE Segmentation. Tim Menzia, Scientific Games’ Director of Consumer Insights: “Consumer motivations remain fairly stable over time, but there are countless other factors like technical advancements, changes in government policy, and, most recently COVID, that can significantly affect consumer behavior. So it’s important that we look at our ONE Segmentation periodically to ensure that it reflects what is actually happening in the marketplace.” An excellent example of how Scientific Games applies both behavioral and motivational player insights to its product design process is the company’s SCiQ retail ecosystem. Both SCiQ Vista and SCiQ SlimLine clearly display the number of the next ticket in the instant scratch game pack so that players can easily see what ticket number they are buying. Jeff Martineck, Scientific Games SVP of Product Innovation: “Years of consumer research and retailer interviews made it clear that knowing the ticket number was a buying strat gy for core players, but a pain point for retailers. Once we understood that, we were sure to ‘bake’ that learning into our design of SCiQ. By clearly displaying the number of the next ticket, SCiQ enables players to get the information they want without being a burden to the retailer. It’s a win-win. But we had to understand that nuance to make it happen.” The Science is Here to Stay Scientific Games has been integrating science into everything it does for almost five decades – it is a part of their DNA. The company was built and named on the premise that science should be at the core of every product it delivers – every ticket, every game, every terminal, every digital solution, every back office system. There is an inherent integrity in designing and building products based on science, an integrity that Scientific Games’ lottery partners have come to expect. Creating innovative new products that players want is only a part of the equation. It is also vital that those products be delivered, purchased, and played safely and securely. And that balance – creating safe and secure products that players want to play – requires real, data-based science. There is no doubt that Scientific Games’ heritage of creating solutions grounded in science has delivered results. The company’s lottery partners are some of the highestperforming lotteries in the world and continue, year after year, to deliver increased revenues to the good causes they support. As Scientific Games ent rs its 50th year in 2023, lotteries will hear more about why those five decades of the science inside its products and services strikes the right balance between the wisdom of the past and the innovation of the future. MAP™, Infuse™, OrderCast™, GameChoice™, ONE™, and SCiQ®, are trademarks of Scientific Games, LLC. © 2022. All rights reserved. Optimove® is a registered trademark of Mobius Solutions, LTD, © 2022 36 18 42 23 33 30 26
8 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 From the Publisher The World Lottery Summit Vancouver was quite the reunion of lottery leaders from all over the world. We will include in-depth reviews of the keynote speeches in the January issue of PGRI Magazine. For now, we want to congratulate Rebecca Paul for her re-election to president of the World Lottery Association; and Lynne Roiter for her being honored with the Guy Simonis Lifetime Achievement award; and Teams WLA, NASPL, and BCLC for producing a fabulous event. While the biannual WLS event is the big kahuna of the industry, the associations produce a whole host of educational seminars throughout the year. Visit their websites to learn more about them and hopefully plan to attend the ones most relevant to you. world-lotteries.org naspl.org european-lotteries.org asiapacific-lotteries.com cibelae.net www.africanlotteries.com Sadly, Guy Simonis passed away on October 6, less than two weeks prior to the WLS Vancouver. One of his very closest friends over the past 45 years is Michelle Carinci. I asked Michelle to share some of her Guy-experiences and she graciously agreed. His is indeed a very storied past and Michelle captures not just the events and anecdotes that inform our appreciation for what makes him so special – she conveys the sense of genuine love for this man with the outsized personality whose mere presence as well as bold leadership reshaped this industry. I was introduced to Guy in 2006 by my father-in-law Duane Burke. (Duane started PGRI in 1973 and his relationship with Guy went almost as far back as Michelle’s.) Guy became a close friend and confidante. We shared a world-view and approach to business that was disinclined to “play-it-safe” and avoid controversy. Susan and I wanted to make a difference, to be a positive and proactive advocate for the government-lottery industry. Guy helped us avoid miss-steps in those early stages when you “don’t know what you don’t know”. One minor example: I was so pleased and proud when talk-show host Dr. Phil McGraw invited me to join him for a segment on lottery. That was very shortly after Susan and I took the reins of PGRI in 2006. Guy was adamant that I not do it, explaining that Dr. Phil was not interested in promoting good-will towards lottery, but about creating sensationalism, and that would come at the expense of myself and the industry. Thankfully, my time to crashand-burn was postponed for the time being. But still, Guy was all about addressing the issues in a bold, straightforward way. And as you’ll see in the articles about Guy, he was quite instrumental in much of the recent history of lotteries in general, and especially in forging a global community of operators and technology partners with a shared interest in the success of government lottery and gaming to support good causes. On the subject of tackling tricky issues in a bold, straightforward way – I want to thank Rebecca Paul and panelists for what many have commented was a most interesting discussion. The goal of building the most productive and effective RFP and creating alignment of purpose and execution between lottery operator and technology partner is rich with headroom to improve. Some of the obstacles are systemic and resistant to change (state procurement policy, for example). Others can be difficult to discuss in general, and even more so in a public forum as they involve the application of financial levers and incentives to drive action. I respectfully submit that in spite of these concerns, it is important not only to talk about these issues, but to do so in a public forum, to engage everyone in the process of thinking about how to work together for optimal impact, productivity, and outcomes. We can all be a part of the solution, part of the process of forging pathways towards even better collaboration. Key to that, though, is understanding why things happen the way they do, why people behave the way they behave, what drives private enterprise to invest in innovation, what constraints govern the decisions and actions of state lotteries, etc. Of course, there are many obstacles, some of which can’t be overcome. But as this panel discussion reveals, there are in fact things that can be done to improve the effectiveness of the collaboration between state lottery operators and their technology partners. We just need to clarify our shared interests, and focus on creating mutually agreeable pathways towards achieving those. Next up is the EL/WLA Marketing Seminar and ICE Gaming Show in London February 7-10 (see article on page 31) and then PGRI Smart-Tech Florida March 28-30. Specific venue TBD. And a special thanks to all of our editorial contributors and advertisers! I appreciate our partnership, the leadership you provide this industry, and the brain-trust you share with our readership. Paul Jason, Publisher Public Gaming International Magazine Guy Simonis and Paul Jason
10 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 PGRI INTERVIEWS Paul Jason: Thanks very much for joining us in what must be a crazy busy time for you, Sue. Sue van der Merwe: It’s a pleasure Paul, always happy to speak with you and to share insights with the lotteries community. It’s an exciting time for us at The Lottery Corporation having only begun life as a standalone ASX-listed company on June 1, albeit we’ve been operating lotteries in Australia in one form or another for more than 100 years. Your business was previously part of the Tabcorp Group? Sue van der Merwe: Yes, that’s right. Before that, the lotteries business that we run was part of the Tatts Group. A Tabcorp-Tatts Group merger in late 2017 brought together six complimentary businesses to create three businesses under the Tabcorp brand – Lotteries and Keno was the largest business contributing 56% of FY21 revenues. I was Managing Director of the Lotteries and Keno business, which we’ve now demerged from Tabcorp. What was the rationale behind the demerger? Sue van der Merwe: The decision to pursue the demerger followed a strategic review by the Board which considered a number of potential alternatives to maximize shareholder value. From a leadership point of view, it’s allowed us to solely focus on lotteries and Keno, whereas within the Tabcorp Group the focus was shared with the wagering and gaming businesses. I’m excited to have assembled an experienced, passionate and talented leadership team to drive our performance. PGRI INTRODUCTION: As the driving force behind Australia’s leading lottery and Keno games and one of the best-performing lottery businesses in the world, The Lottery Corporation operates a diversified and balanced portfolio of high-profile brands under exclusive and/or long-term licenses and approvals, bringing Australia’s largest lottery games to more than 8 million active customers. The successful demerger of the Lotteries and Keno business from the Tabcorp Group on 1 June 2022 enabled the creation of The Lottery Corporation as a standalone entity listed on the Australian Securities Exchange. It was a watershed moment for a business that dates back to 1881 when George Adams organized the first Tattersall’s public sweep on horse racing’s Sydney Cup. The Lottery Corporation’s story spans more than 140 years, with brands that are entrenched in the hearts and minds of Australians and today is one of the highest performing lotteries globally and the leader in the Australian lotteries and keno market. It’s business is one of significant scale and reach with the equivalent of 46% of the Australian adult population purchasing a lottery ticket in the past year, an extensive retail footprint of more than 7,200 outlets comprising one of Australia’s largest retail franchise networks, 4.1 million active registered lottery customers and high performing digital channels. The Lottery Corporation has a proud history of delivering life-changing wins to its customers and making a meaningful difference in Australian communities. We are very pleased to bring to you this discussion with Sue van der Merwe, CEO of The Lottery Corporation. Sue, who also chairs the Asia Pacific Lottery Association, shares her views on the industry, The Lottery Corporation’s future, the role that lotteries play in the community, and balancing the needs of The Lottery Corporation’s stakeholders. Shaping the Future of Lottery in Australia Sue van der Merwe Managing Director and Chief Executive Officer, The Lottery Corporation
11 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 Digital Partner for Lotteries www.bedegaming.com Platform & Full Service Provider of the Year Having access to new and different investor categories was another element of the rationale. There are some investors, for example, that don’t want to own shares in a gaming business but were comfortable with investing in lotteries and Keno. It’s also allowed shareholders to value our lotteries and Keno business on a standalone basis. How did the demerger process go? I would think there are lots of challenging operational, distributional and logistical issues that a large-scale de-coupling like this must entail. Sue van der Merwe: The plan to demerge was first announced in July 2021. Within roughly 11 months, we obtained all the necessary approvals and shareholder support, along with conducting the extensive preparation for separation. It was complex and there was a lot of heavy lifting by our people. It’s a credit to all involved that we were able to meet the June 1 timetable while dealing with the impact of the pandemic and maintaining momentum in the business. Tell us about the scale of the business now. Sue van der Merwe: We’re now an ASX50 company with a market capitalisation of more than A$9.5bn at the current share price. We operate a complex multijurisdictional business across seven of the eight Australian jurisdictions, under varying forms of legal arrangements. To that end we have multiple stakeholders across the various state governments, retailer bodies, responsible gambling groups and the like. On the Lotteries side we operate a balanced portfolio of 10 popular games sold through retail and digital channels. Our lottery retail model is a franchise and accordingly we operate one of Australia’s largest franchise networks. On the Keno side, the game is distributed via licensed venues (pubs and clubs) and online in those jurisdictions where this is permitted. To give you an idea of the prominence of our brands and products, the equivalent of 46% of the adult population bought one of our products in the past 12 months. That’s 8.3 million customers, and just under half of those are registered to our database. We have around 750 employees, including a large technology team as we operate our own technology system. How is the new company going? Sue van der Merwe: We have started with momentum and we’ve just delivered a strong result in the past financial year, coming off strong performance in 2020 and 2021 when we saw increased purchase of lottery products during the onset of COVID. Our revenues grew more than 9%, and we had an increase of almost 12% in EBITDA on a comparable basis in FY22 – by comparable, we mean the reported results, which were affected by the demerger, have been “The equivalent of 46% of the adult population bought one of our products in the past 12 months. That’s 8.3 million customers, and just under half of those are registered to our database.”
12 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 “We are very focused on data-driven, personalized marketing so we can offer the right products to our customers at the right time without serving offers that don’t align with their preferences.” adjusted to allow for a more representative view of performance. Our team is engaged and passionate about the future of our business. We put a lot of effort into “Day 1”, personally welcoming the team and signifying a new beginning, changing the branding through our offices, creating an energy and drive. Since then, we’ve been collaborating with the team to define our culture and ways of working. What were some other highlights of the past 12 months? Sue van der Merwe: One of the aspects of our performance I was really pleased with was to see the strength across our game portfolio. We actively manage our overall portfolio for growth by having games that appeal to different player motivations. In FY22, Powerball returned to a higher level of jackpot activity. At the same time our Saturday Lotto game and Set for Life held up well, demonstrating the success of previous changes we’d made to those games. We also continued to innovate and optimize the portfolio introducing a game change to Oz Lotto, which, along with Powerball, forms our jackpot games segment.[ The change to the game matrix, launched in May, was designed to deliver bigger jackpots and reinforce Oz Lotto’s strategic position in the jackpot segment of the game portfolio. It’s been well received by players. Oz Lotto is our third-biggest contributor to digital sales and one of the main acquisition games in our portfolio. Our focus on digital, both from a marketing point of view and as a distribution channel, continues to deliver benefits. Digital sales grew 26% in FY22 and our active registered customer number grew by 330,000 customers. Pleasingly our retail channel was resilient, with retail revenue also growing. And on Keno, we secured a new 20-year license in the state of Victoria on a nonexclusive basis, and that runs through to 2042 and now allows for digital sales. What’s ahead? Sue van der Merwe: Significant themes for us this year will include embedding our own company culture, enhancing our commitment to community and continuing to innovate with our product portfolio and optimize our distribution channels. Taking retailer store syndicates online is an exciting initiative which delivers another element to our omni-channel strategy to align the retail and digital experience. Store syndicates, where we bring a group of people to purchase game entries together, are important to our retailers. This will make it easier for customers to discover and join syndicates wherever they are playing. With Keno, we’ll seek to leverage the digital element to the new Victorian license, and offer enhanced features and offers on the app for customers playing in venues. We’ll continue to evolve our diverse retail network and work with our retailers to drive growth in their stores. How does de-coupling lottery from the other gaming sectors add value to your players? Sue van der Merwe: We’ve always been customer-led and had a deeply ingrained customer focus in our business. As an example, we are very focused on data-driven, personalized marketing so we can offer the right products to our customers at the right time without serving offers that don’t align with their preferences. Being a separate company now, we are able
13 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 to fully control how we prioritize initiatives and allocate our resources, which is a benefit. How does the demerger enhance your relationship with political stakeholders and the beneficiaries of lottery funding? Sue van der Merwe: Again, I think it is about focus. Both these areas are highly important to the future of our business in different ways. As I mentioned earlier, we’re licensed in seven jurisdictions in Australia (all states and territories excluding Western Australia) and it’s important that we work effectively with all governments. The demerger helps simplify working with government as the range of licenses, products and issues is narrower than when we were part of a bigger group, and of course retaining strong and productive relationships with governments that license us is very important to us. What is the scale of the funds generated by the Lottery Corporation that go to the governments? Sue van der Merwe: In FY22, our operations generated A$1.7bn for communities through taxes paid to governments. We also generated more than A$500m in commissions for our retail partners, many of which are small businesses. We also paid out more than A$4.9bn in prizes to customers. How does the demerger enhance your ability to serve and support your channel partners, mainly retailers? Sue van der Merwe: We did a lot of very valuable work with our retailers when we were part of the Tabcorp Group. This included working with retail stakeholders to develop a model that saw them share in revenue from digital sales, and benefit from this transition to digital that we see occurring across a range of areas. We’re very conscious of the importance of the retail channel. It gives us prominence and visibility and helps promote our products. And it remains our largest channel. The omni-channel model we’ve developed is very much about allowing customers to buy entries when, how and where they like. In many cases a customer will buy across a range of channels depending on their activities. I think that as a separately listed company, it gives us an even greater ability to retain that focus on our more than 7,000 retail outlets. As an example, we now have a Chief Channel Officer (Antony Moore) on our Executive Leadership Team. That’s important in terms of ensuring we support our channel partners and manage our network effectively. What will The Lottery Corporation do going forward that would likely not have been done before? Sue van der Merwe: We have much work to do in terms of bedding in the demerger and standing up our own operations in those areas where we are still on shared systems operating under transition service agreements. We’ve just launched our strategy, vision and purpose. Our vision is to be the world’s best lottery operator, and our purpose is to create positive impacts. In terms of new opportunities, we’ve said that we are interested in opportunities relating to new licenses, or enhancements to our existing licenses, but they have to stack up against our criteria. How are consumers in Australia responding to the new environment of higher inflation and interest rates? Automated Campaign Management Omni-Channel Lottery Tools Real Time Data & Extensive APIs Lottery • Casino Sports • Bingo Poker Personalized Experience for Retail Web & Mobile Digital Partner for Lotteries www.bedegaming.com Management 360o Player Account Continued on page 37
14 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 The effective collaboration between Lottery Operator and its commercial/ technology partners is essential to successful long-term growth and service to good causes. How can Lottery Operator and technology partners forge the kind of relationship that drives short-term focus and results but is also flexible to support ongoing investment in innovation and integration of new technologies, and positions the Lottery for long-term success? What are progressive lotteries and their commercial/technology partners doing on an ongoing basis to promote alignment of purpose, maximize the productivity and effectiveness of their collaboration, and facilitate the integration of third-party suppliers? Moderator: Rebecca Paul, President and Chief Executive Officer, Tennessee Education Lottery Corporation; President of the World Lottery Association (WLA) Panelists: Jay Gendron, Chief Operating Officer Global Lottery, IGT John Schulz, President, Americas and Global Instant Products, Scientific Games Matt Strawn, President and Chief Executive Officer, Iowa Lottery Lorne Weil, Executive Chairman, Inspired Entertainment Jennifer Westbury, Executive Vice President, Sales & Customer Development, Pollard Banknote Rebecca Paul: I am a big believer in building a mutually supportive partnership with the people I do business with because that is the more productive and effective way to optimize performance and results. I stretch to forge win-win solutions because that is the best long-term strategy to maximize the funds we transfer to good causes. We think of vendors as true partners in the mission to accomplish ambitious goals for the benefit of all lottery stakeholders. When Paul first talked to me about doing this panel, he thought the discussion should be about RFP’s, and how RFP’s might be constructed to drive the most collaborative partnership. I explained that my experience is that partnerships are driven by the right attitude, not by what is stipulated in the contract. The spirit of trust and ongoing communication needed for effective partnership can’t be effectively dictated by an RFP. Without the right attitude, you will never ever have a productive partnership regardless of what the RFP says. Those are a few of my thoughts. Let’s ask our panelists what they think. Since John and I started in the same year, 1985, and John was mentored by one of my mentors, Dave Bausch, and he happens to be sitting next to me here, let’s start with John. You launched Scientific Games’ first Cooperative Services Partnership in New York in 1985. Take us back to the brainstorming sessions of the time. How did you come up with that plan? John Schulz: Wow. A lot has happened since then. Back in 1985 it was called Shared Risk before the name changed to Cooperative Services. And that name aptly described the program. As extraordinary as it may sound now, the New York Lottery was going to end their instant game program. Sales were about $57 million a year. They said that draw-based games drove a majority of the sales and paper tickets had low sales and were very time intensive to administer So they called Scientific Games and advised us that they want to cancel their orders and not sell any more scratch games. Our CEOs at the time, Dan Bower and John Koza knew we had to come up with a solution quickly. The solution was to create a shared-risk arrangement that would essentially enable the New York Lottery to offload some of the cost of managing certain components of the instant game program. At the time, pay out was 40%, and they had 19 different distributors that got paid a commission for every book of tickets that they sold. Tickets were Cash On Delivery and took about three or four weeks to get to retailers. We hired mathematicians, who are called data scientists today, logistics experts and others to help us re-assess business practices and processes, pricing and product management strategy, order fulfilment and retail support methods. We looked at this as an opportunity to redesign our whole approach to partnership. At the same time, we terminated the contracts with 19 local distributors and installed a nationwide courier service. We built an inside sales operation, which was a staff comprised of small teams dedicated to handling almost all aspects of the product from design and promotion to fulfillment to Creating Alignment of Mission, Purpose, and Action P A N E L D I S C U S S I O N E X E CU T I V E SUMMARY O F PANE L D I SCUS S I ON F ROM PGR I L OT T E RY E XPO 2 0 2 2 NYC CON F E R ENC E
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16 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 retailer recruitment and support functions. And that was the first Shared Risk program. During the first stage of this program, the New York Lottery’s instant game sales grew from $57 million to almost $500 million in an eight-year period. The instants category was producing about $225 million of profit for the New York Lottery. I look at this successful collaboration between the New York Lottery and Scientific Games as formative for us, shaping our instant game management approach in the Scientific Games Enhanced Partnership and our culture in ways that continue today. R. Paul: Lorne, when you took the reins at Scientific Games in 2002, Shared-Risk had evolved into Cooperative Services and became a big part of the portfolio. How did you make it better? What would you do differently? L.Weil: At that point, it was evolving incrementally. The foundation had been laid. The method of working hand-in-glove with the lottery was running smoothly. I encouraged the teams to continue to evolve it, to enhance the effectiveness and productivity of what was being done, and to find new and better ways to nurture collaboration. Jim Kennedy always had his five-most-important-things we needed to do or improve upon. It was a matter of identifying those things and executing the plans to make them happen. One top-of-mind initiative, for instance, was to steadily increase the price-points of the games. Of course, objectives like this need to be developed in collaboration with the lottery. And what may seem to be obvious to us years later, like that increasing price-points is a predictable way to increase revenues and profits, is rarely so obvious in the beginning. We may propose strategies and initiatives, but it is up to the lottery to decide how, or even whether, we proceed. As you point out, Rebecca, the relationship depends on trust and mutual support. The technology partner needs to earn the trust of the client, the lottery. The lottery does expect us to provide the data and evidence to support our recommendations; and then to test new ideas before investing resources. Over time, we learn to pool our brain-trusts and work together to produce the outcomes that are best for all lottery stakeholders. R. Paul: And you bought MDI a couple years later, in 2005? L. Weil: We wanted ways to add value to the product to justify the increase in price. Licensed properties became a very effective tool to do that. Branding lottery products with their favorite sports team, or cartoon character, or popular consumer brand, added that value, attracting players to pay a little more to play the games that captured their imagination. While what we did was not revolutionary, I would say it could not have been done without the mutual respect and trust we constantly worked hard to earn from the lottery leadership of Georgia, where Rebecca was CEO, and progressive lotteries like Florida, Pennsylvania and others to lead the way. R. Paul: Over to you, Jay. We have been discussing some of the growth-drivers for the instants products category. What can we do to increase the growth of the drawbased games category? Jay Gendron: Enabling both Mega Millions and Powerball to be sold in all states was a big step. Increasing the price of the Powerball ticket to $2 was another big boost to the sales of draw-based games. The next step may be to continue the price-point evolution just as was done in the instants product space. For example, we know that the Mega Millions group has been exploring the option of increasing the price to $5. Based on historical precedent and market research, we believe that gaining consensus and approval on a $5 game would further increase sales and revenue in the draw game category. It would have the added benefit of further differentiating the two big national games. I do think it benefits all of us if we have Powerball and Mega Millions complement each other. But this is another case where lotteries have to work with each other and work with vendors in a spirit of trust to implement strategies where the outcome is not certain. We can trot out the data, the facts, and evidence to support a proposition that increasing the price will increase sales and transfers to lottery beneficiaries. But in the end, we need to trust that we are all pulling in the same direction and have each other’s interests at heart. Keno and CashPop have also been very successful in the jurisdictions where they are implemented. So there is a lot of potential for more product expansion, differentiation, and optimization to drive incremental increases in sales and, ultimately, revenue for lottery beneficiaries. R. Paul: Jennifer, what do you think makes a good partnership? Jennifer Westbury: At Pollard Banknote, we take an expansive view towards partnerships and how they can be nurtured and developed to drive performance and results. Each lottery has its own unique sets of sales and marketing agendas, political and regulatory environments, organizational structures and cultures, and overall business objectives. We think creatively when designing an approach that optimizes the ability of all the component parts of the relationship to work together effectively. We have lots of different kinds of partnerships, and in the end, each one is special in its own way. Sitting next to me is Matt Strawn. Our partnership with the Iowa Lottery goes back to when we first started printing instant games in Iowa. Two major production facilities in the state of Iowa create significant employment for Iowans. Our partnership with the Iowa Lottery is considerably different from the partnership we have with the Texas Lottery where Gary (Grief ) and Ryan (Mindell) have long espoused a philosophy of working with multiple vendors. Their latest RFP is a great example of how lotteries are thinking outof-the-box and challenging their partners to create new kinds of solutions and partnership models. And Gregg Edgar in Arizona has a different view of what he wants the partnership with Pollard Banknote to accomplish. We not only provide instant tickets, Pollard Banknote provides the Arizona Lottery’s Players Club player engagement solution. We implemented warehousing and distribution three years ago and managed the process with performance improvements through the disruptions of COVID. And of course, in addition to the longstanding instant ticket work and the manufacturing facility we operate in Michigan, we partnered with the Michigan Lottery on their journey in digital, beginning with some Space Between products like their Crossword apps, through to the launch of iLottery. What started as a partnership based on technology, products, and marketing evolved into assisting with governmental and regulatory affairs. Pollard Banknote then participated with the New Hampshire Lottery in challenging the U.S. Department of Justice to clarify its position on iLottery. The US DoJ proceeded to overturn their unfavorable ruling to acknowledge that authority to decide regulatory policy relating to online gambling and iLottery resides with the states, just as it always had with traditional casino gambling and lottery. So, we think of ourselves not just as technology partners. Pollard Banknote is dedicated to using our skill-sets and resources in whatever ways can serve the interests of our clients, the industry in general, and the mission to generate funds for good causes. Continued on page 38
18 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 A smaller multi-jurisdictional draw game created quite the buzz this past fall when its advertised jackpot eclipsed the starting jackpots for both Powerball® and Mega Millions®. Lotto America® surpassed its previous jackpot record of $22.82 million last September, before closing out the month of October with a jackpot above $29 million. Product Group leaders credit the addition of a third weekly drawing for taking the game’s jackpot growth to new heights. Lotto America first launched in 2017 with 13 participating lotteries: Delaware, Idaho, Iowa, Kansas, Maine, Minnesota, Montana, New Mexico, North Dakota, Oklahoma, South Dakota, Tennessee, and West Virginia. Initially, drawings were performed every Wednesday and Saturday after the winning Powerball numbers were drawn. The game has a simple premise – players pick five red ball numbers from 1 to 52 and one blue Star Ball number from 1 to 10. Players win a prize by matching one of the 9 ways to win. The $1 draw game quickly filled a niche in product portfolios as its debut happened just weeks after Mega Millions increased its base ticket price from $1 to $2. Since then, Lotto America has gained a loyal player base with its $1 ticket price and improved jackpot odds (1 in 25.9 million), compared to the larger national games (Powerball 1 in 292.2 million, Mega Millions 1 in 302.5 million). “Lotto America really does have a loyal following, especially in Minnesota,” said Adam Prock, Lotto America Product Group Chair and Minnesota Lottery Executive Director. “But like other rolling jackpot games, Lotto America faced jackpot stagnation challenges. With a $2 million starting jackpot, it could be weeks before the jackpot reached an enticing level that attracted occasional players off the sidelines.” Following the demonstrated benefits of adding a Monday drawing to the Powerball game, the Lotto America Product Group moved to expand the number of drawings to three nights a week: Monday, Wednesday, and Saturday, with the first Monday drawing taking effect on July 18, 2022. The result has been dynamic, week-over-week jackpot growth that has sent the grand prize into record territory. Weekly sales for the 52 weeks preceding the change averaged approximately $920,000. For the thirteen weeks immediately following the introduction of the Monday drawing, weekly sales averaged $1,521,000 – a 65% increase. The average advertised jackpot for the period after the addition of the Monday draw has been larger than the period preceding the change, likely accounting for some portion of the sales increase. To isolate the impact of the additional drawing, weeks with similar advertised jackpot amounts were compared. The period since the launch of the Monday draw (7/18/22 – 10/8/22) was compared to similar jackpot cycles. The first cycle being right after the game was introduced in 2017 (Cycle A, 12/27/17 – 3/10/18) and a second cycle from 2019 (Cycle B, 3/23/19 – 7/10/19). Weekly sales including the Monday drawing averaged 17.6% greater than Cycle A and 19.2% greater than Cycle B. “There is no doubt that Lotto America is reaping the same benefits as Powerball from increasing the numbers of drawings from bi-weekly to tri-weekly,” said J. Bret Toyne, MUSL Executive Director. “Similarly, we are not seeing any evidence that the additional drawing is cannibalizing Lotto America’s multiplier feature.” MUSLNEWS MULTI -STATE LOTTERY ASSOCIATION LOTTO AMERICA REACHES NEW HEIGHTS $1 draw game achieves record jackpot after introducing additional draw night Continued on page 37 Bret Toyne, MUSL Executive Director Adam Prock, Lotto America Product Group Chair and Minnesota Lottery Executive Director
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22 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 VANCOUVER WELCOMES THE LOTTERY WORLD TO CANADA AFTER FOUR-YEAR ABSENCE, WORLD LOTTERY SUMMIT RETURNS TO RAVE REVIEWS As World Lottery Association President Rebecca Paul closed the festivities at October’s World Lottery Seminar in Vancouver, you could almost hear a collective exhale from the hundreds of attendees gathered at the final dinner. It had been an exhilarating four days of meetings, educational sessions, trade show, and a bit of fun in the city. And by all accounts, the event was a rousing success. Attendees converged on Vancouver from all over the world for the first World Lottery Authority (WLA) meeting since before the COVID-19 pandemic. This was a joint meeting of WLS and NASPL, which resulted in a fabulous attendance and exchange of ideas and lottery content plans. The conference was held at the Convention Center on the Vancouver waterfront, providing a beautiful vista for the week’s gathering. The program included a series of memorable keynote speeches and breakout sessions which focused on important lottery issues. (Executive Summaries to be in the January/February issue of this magazine). One of the highlights of the event was the trade show which featured more than two dozen companies displaying their products and services to attendees. Hospitality events and lunch buffets took place each day as well. Leading the business agenda was determining the leadership of the World Lottery Association for the next two years. Rebecca Paul has ably steered the group since 2018 and helped the WLA navigate the uncertainty of the COVID-19 pandemic. Acknowledging the importance of Rebecca’s leadership, the membership of the WLA voted to re-elect Rebecca as WLA President for another 2-year term. Other officers elected were: Senior Vice President: Andreas Kötter, Westdeutsche Lotterie GmbH & Co. OHG, Germany Vice President: Younes El Mechrafi, La Marocaine des Jeux et des Sports, Morocco Committee members: Jannie Haek, Loterie Nationale, Belgium Francesco Parola, IGT, Italy Nigel Railton, Camelot Group PLC, United Kingdom Stéphane Pallez, Française des Jeux, France Dato’ Lawrence Lim Swee Lin, Magnum Corporation, Malaysia Silvio Vivas, Instituto Ayuda Financiera Accion Social, Argentina Stéphane Pallez took the stage to welcome us to Paris for the next World Lottery Summit in 2024. Other Lottery industry association annual trade-show cum conference events to be held in 2023 include: June 4 to7: EL Congress 2023 in Šibenik (Croatia) Oct. 30 to Nov. 2: NASPL’s Annual Conference in Milwaukee, Wisconsin Lynne Roiter honored with the Guy Simonis Lifetime Achievement Award The WLA introduced the Guy Simonis Lifetime Achievement Award in 2000 to recognize outstanding service and commitment to the lottery industry by an individual. The first recipient of the award was Guy Simonis himself. Guy was a major force in the industry and its spokesman as president of AILE, then Intertoto, and finally of the WLA. As a 36-year industry veteran, Lynne Roiter helped shape the lottery sector as we know it today. Her career, her achievements, and her dedication to the world lottery community have set a high standard for lottery professionals across the globe. Lynne Roiter joined Loto-Québec in 1985 as Director of Legal Affairs. With each step in Loto-Québec’s evolution, the legal needs of the company increased accordingly. In November 1996, Lynne was named Corporate Secretary and Vice President of Legal Affairs, heading a staff of 13 lawyers. By this time LotoQuébec had grown from a company of 400 people to over 5,000. Lynne Roiter was appointed President and CEO of Loto-Québec and member of the board in May 2017. With that, Lynne became the first woman to head one of Québec's three main provincial crown corporations. In fact, diversity has played an important role in the
23 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 growth of Loto-Québec. When Lynne started with LotoQuébec in 1985, there were only around ten professional women out of the then-400 employees. When she joined the senior management team in 1996 she was the only woman. Today women play an important role in the leadership of the company, with nine out of twelve members of the Board of Directors being women. More importantly, a significant percentage of Loto-Québec’s managerial and professional positions are today held by women. The conscious effort to diversify Loto-Québec will be among Lynne Roiter’s lasting legacies. On May 31, 2021, Lynne Roiter stepped down from her position as President and CEO of Loto-Québec. Lynne continues to serve as the Secretary General of the World Lottery Association. n PGRI Introduction: Michelle Carinci has served as the CEO of Lottotech, the operator of the National Lottery of Mauritius, since 2011; and CEO of the Atlantic Lottery in Canada between 2001 and 2011. Michelle started her career almost fifty years ago as one of Guy Simonis’ first hires. Guy and Michelle worked together for 25 years and remained close until his passing. I asked Michelle to share with us her memories of Guy as friend, mentor, and industry icon. Michelle Carinci: Remembering Guy Simonis ... Guy and Michelle My story with this Guy, evolved over 47 years as an employee, student, mentee, collaborator, colleague and friend. Guy’s achievements and contributions are documented and recognized by the Lottery Industry to which he dedicated his life. When Guy passed, I began to look beyond what he had accomplished and focused on what motivated him. I believe Guy became passionate at a very early stage in his lottery career to create an international lottery community, a global network that connected us all. An incredibly intelligent man, Guy was the consummate innovator, facilitator, entertainer, teacher and team builder. He stood on the shoulders of the European lottery experts when he began to develop the lottery business in Manitoba leading to the first multi-jurisdictional lottery in North America, the Western Canada Lottery Foundation. I was one among many who was fortunate to be able to stand on his shoulders throughout my lottery and gaming journey. The Team Builder… In 1975, crammed into a small studio apartment that we called our office in downtown Winnipeg, Guy’s four young students, including yours truly, began our journey learning about games of chance, skill and perceived skill. During this period I was exposed to Guy’s natural ability and desire to build and bond high performance teams. He created regular weekend social events – car rallies in the middle of summer, foot rallies in the middle of winter, annual Jeu de Boules (Bocci) tournaments hosted by the Simonis family at their summer cottage and competitive interdepartmental sporting competitions. These fun filled social and competitive events included our key service providers and respective families. Over the years the lottery team grew as Guy extended invitations to our Interprovincial Lottery Corporation (ILC) colleagues and our NASPL neighbors to the south. Bringing the lottery community together regularly on a social level provided us with the opportunity to become as passionate about playing together as we were working together, ultimately creating a deeper connection and understanding of each other. Guy expanded his team building and inclusion efforts onto the world stage in 1987 as the first North American lottery to host the international Intertoto conference which was held in Vancouver. He knew Canada facilitated easier
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