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// Public Gaming International // March/April 2015
less than 6% play instant games only, and
33% play both instant and draw games.
So the data shows that there is a strong
cross-over, particularly in the U.S. I would
suspect that the cross-over is even higher
in Canada where the government gaming
operators also manage the slot and casino
gaming sector.
Diversifying the range of product offer-
ings and channels of distribution does yield
a competitive advantage in a marketplace
where consumers migrate from one catego-
ry and channel to another. There are lots of
different ways to succeed in this business.
Look at New York. In the U.S. the New
York Lottery has the highest sales of tradi-
tional lottery products and this success is
happening right alongside their ranking for
the highest sales in the VLT space. And they
are operated by two different agencies. It’s
all about delivering great products that ap-
peal to the consumer, connecting with the
consumer, and excelling at execution. That
can be done just as well with a focus on
your core competencies and key products.
Of course, the land-based retail network is a
tremendously powerful and proprietary as-
set to government lotteries. Lotteries have
the products and the retail network that
other gaming operators don’t have. Frank-
ly, this forms the basis for a most enviable
business model. Lottery does need to evolve
with its customer base and the potential to
do this is rich with opportunity.
There is another form of migration that ben-
efits government lotteries. The scale of Sci-
entific Games now enables the company to
migrate content from one category to another.
G. Isaacs:
Of course, this is huge. We
are already leveraging the consolidation of a
greatly expanded portfolio of brand licenses
to add value to lottery products. And we
are taking games and brand licenses that
outperform in the VLT space and applying
them to instant games and other content.
The scale of Scientific Games also enables
the transfer of technology from our other di-
visions over to lottery. Now that we operate
as one company that has unfettered access
to all the best technology and talent that
exists in Bally, WMS and SHFL as well as
Scientific Games, we can bring the very best
technologies to our lottery customers. The
specific applications of technology will vary,
but the breadth of Scientific Games’ fun-
damental brain trust will inform and drive
a rapid improvement in the technological
infrastructure that supports our lottery op-
erations. Perhaps most importantly, the size
and scale of Scientific Games will drive an
increase in R&D that will keep our custom-
ers on the leading edge of technology.
Insofar as this industry has passed a tipping
point at which the rate of change is no longer
evolutionary but is now revolutionary, how
will Lottery keep up with the marketplace?
G. Isaacs:
I don’t entirely agree that we
have passed any tipping point. Of course,
we all need to challenge ourselves to move
faster, to develop the products and player
experiences that will engage the modern
consumer. The tastes and preferences of
the modern consumer are changing and
we need to accelerate the rate at which the
industry changes in order to continue to
deliver a player experience that engages and
delights the consumers. Even so, I believe
the changes are evolutionary and not revo-
lutionary. It is an important distinction that
you make and I think it is important that
we be clear on the precise nature of our mis-
sion. For instance, just because Powerball
is not growing at the rate it once was does
not mean that we need to brace ourselves
for revolutionary change. We may need to
introduce new products and perhaps push
into the mobile and internet space. I would
submit, though, that we have not passed
any tipping point that thrusts us into a new
world of hyper-change. Change never hap-
pens as quickly as we expect. And we need to
shepherd the revenue-generating life-cycles
of all our products in a prudent fashion that
maximizes their performance for as long as
possible. The life-cycles of lottery products
have proven to be incredibly resilient.
But revenues are flat in all gaming sectors except
sports-betting and online gaming. And new
gaming options, and potentially new entrants
like Facebook and Google, are proliferating.
G. Isaacs:
Combine this with the slug-
gish economy of the last seven years that cut
into the discretionary income the consumer
has available to spend on gaming and lot-
tery. I would observe that, in light of all these
factors, lottery has performed very well over
the last seven years. I agree that we can’t be
sanguine about the challenges we face. And
we do need to make our products available
in the channels where the consumer resides,
which include the internet and especially
mobile. And we need to constantly refresh
our products to appeal to consumers who
are being presented with new and engaging
gaming options. Market-driven businesses
like lottery all need to keep pace with the
consumer. We need to appreciate and con-
tinue to leverage the strengths of the prod-
ucts we sell, the business models we operate,
and the assets that the business is built upon.
We don’t need to start a revolution. We just
need to deliver great games and make them
accessible to the consumer.
Well, I’m glad I asked the question! It’s impor-
tant to temper the impulse of journalists like
me to radicalize everything with a more nu-
anced and thoughtful approach to managing
multi-billion dollar businesses.
G. Isaacs:
It’s a useful role you play.
Radicalizing the interpretation of trend
lines generates productive debate and a
sense of urgency which is certainly a good
thing. Yes, the management of multi-billion
dollar businesses does require stewardship
over the assets that built the business, and
a respect for the fundamentals that drive
the marketplace. People love to play games.
Our business has been based upon and will
continue to be based upon creating and de-
livering the best gaming experiences. In the
end, that’s what it’s always been about and
we need to be clear on our mission to fulfill
our commitment to making this happen.
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Gavin Isaacs Interview …
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