Public Gaming International January/February 2022

LETTER FROM THE CEO To our valued clients and partners, $s Ze EeJin tKe neZ \ear, ,ÜP overcoPe ZitK a sense oI optiPisP and Jratitude $Ũer nearl\ tZo \ears of having our personal and professional worlds shaken, it appears we are turning a corner. I can’t tell you how happy it’s made me to see so many of you this year at G2E, SBC Latin America, IAGR, PGRI and LeFleur’s. I look forward to seeing even more of you at ICE, the National Indian Gaming Association show, and our own Regulators Roundtable. Nothing is quite as powerful as collaborating face-to-face. We’ve had the privilege of working with so many jurisdictions globally in their quest to start new forms of gaming and digiti]e their oƯerings, whether it was regulated skill-based gaming, sports betting, iGaming, iLottery or eSports. We’ve also seen a resurgence in traditional gaming equipment from suppliers submitting new products for testing. Personally, I feel fortunate that GLI has had a chance to help our clients lead that change. In my last open letter, I told you about how we’ve been reshaping our leadership team and reinvigorating our compliance and testing road map to better accommodate your non-testing needs. Our GLI Assured Integrated Compliance service has been overwhelmingly welcomed as clients know that failure today is not an option. With time and execution critical to survival, you’ve invited us to become an even more integral partner, assisting you with trusted end-to-end solutions and thought leadership that goes beyond testing. New opportunities also bring fresh challenges, with cybersecurity topping the list for many companies. Together with our integrated cybersecurity company, Bulletproof, we’ve ensured the safety and integrity of our clients’ systems by combining our world-class testing with world-class cybersecurity services. It’s crucial in today’s climate to have a partner who knows both security and gaming; thanks to our combined background, not a single gaming client who used Bulletproof during the pandemic has reported a security breach—something we’re immensely proud of. If 2021 was about diligence and strategic preparation, 2022 is about momentum and execution. We’ve hired nearly 150 new delivery personnel over the past 12 months to make sure we’re ready to help you bring new products to market. Our people are the heart and soul of GLI. Their talent and dedication make everything we do possible and, as we look to the future, their health and safety will remain a top priority. We’ve also continued to innovate in test automation, oƯering quicker, more accurate tests for a wider range of scenarios. New opportunities, new forms of gaming and new jurisdictions are emerging every day, and we stand ready, as always, to help you reach your goals for 2022. I look forward to seeing each of you somewhere on the globe. Sincerely, James Maida ILLUMINATING YOUR PATH TO GREATNESS

FEATURED ARTICLES CONT. 22 Re-imagining Online Games: Innovation abounds with elnstants, online draw Mark Michalko, Executive Director, North Carolina Education Lottery Brad Cummings, Founder and CEO, EQL Games Stephanie Weyant Fidler, DeputyExecutive Director, Marketing and Product, Pennsylvania Lottery Merv Huber, Senior Director, Digital Growth, Scientific Games Scott Kenyon, Digital Games Manager, Virginia Lottery Derek Levesque, Director, Digital Content Product Management, /GT Mike Lightman, Chief Commercial Officer, Instant Win Gaming (IWG) 26 New research into player motivations and behaviors forecasts an exciting year ahead for the lottery industry Michelle Carney, Vice President Global LotteryMarketing, /GT 30 How 2020-21 Changed Lotteries Forever Alistair Boston-Smith, Chief StrategyOfficer, Bede Gaming 32 Beyond elnstants: Exploring Digital Draw Games, /GT 36 Improving the Performance of Families of Games Hazen Paper Company 37 EQL Games: Reimagined and Ready for the Future Brad Cummings, Founder & CEO, EQL Games 38 Get Ready for the Next Wave of Player Experiences, /GT DEPARTMENTS 8 From the Publisher Paul Jason 20 Powerball® kicks off the New Year on #1 entertainment telecast, achieves top 10 jackpot MUSL NEWS(Mu/ti-State LotteryAssociation) 44 Pulse of the Industry: Synopsis of Recent Gaming Industry News 52 Next-generation RFP's designed to accelerate growth, progress, and innovation in the African Lottery & Sport Betting Market Philippe Vlaemminck, Managing Partner, pharumtega/ 6 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 Visit Our Family Of Websites GAMING �PUBLIC industry news & information videos of conference presentations PGRI conference information magazine archive of past issues listing of lotteries and vendors 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 Hargrove Mentorship Award Collaboration Award DAILY NEWS DIGEST ld� il PUBLIC GAMING 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: with "add to Daily Digest list" in the subject line. 1.J.1 WOMEN'S INITIATIVE in LOTTEI\Y LEADERSHIP =ri;,mi=

10 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 PGRI INTERVIEWS Paul Jason: How has the world of lotterygaming been changed by the disruption of COVID over the past two years? Hansjörg Höltkemeier: First, it does seem that at least for the lottery sector, the pandemic has been downgraded from crisis to disruption. A rather severe disruption to be sure, but the lottery sector has managed it the best possible way and now we are thinking about the future. Second, we may be approaching the end of another COVID-wave, it looks as if various forms of pandemic will continue to be with us for the foreseeable future. Overall, the lottery sector appears to have adjusted to these new circumstances and the players have responded positively to our approach and our offer as well as our role in this pandemic. How have the “Lotteries approach” and offer changed? H. Höltkemeier: At first glance, it is not a dramatic change, as consumer still love to play the lottery, even during a crisis and times of uncertainty. Customers expect stability and serious operations more than “fireworks” from us. During this pandemic, we could observe that more and more customers have moved toward online channels and called for contactless services. So behind the scenes, there was a significant and rapid change in operations for the benefit of the players, regulators and good causes. The pandemic has speeded the adoption of new technologies, a digitization of the in-store shopping experience took place towards new formats that enable digital customer interactions. We do see also new approaches to player protection, e.g. with artificial intelligence used for player behavior screening, and a new perspective on operational cost reductions through automated processes. In the end, this also changes the competitive landscape. By the way: to deliver stable and secure services, the importance not only of new offers and appropriate technologies but also of cybersecurity has become a much bigger priority. It sounds like the dominant role of Retail is coming to an end? H. Höltkemeier: Though more customers have chosen the online channel during the pandemic, the discussion is not about Online versus Retail, not even Online beside Retail (Multi-channel/ crosschannel). The future is an integrated offer of all relevant channels (Omni-channel). This will continue to leave lots of room for the ongoing growth of Retail-sales. First of all, the majority of our players, we estimate close to 70%, still play regularly at retail stores. Many behavioral patterns – like going into the store on a special week-day before the draw to buy $5 or $10 of lottery tickets – have not changed and perhaps will not change for a very long Regarding the Covid-Pandemic, a German historian observed: “The experience that the unthinkable has become conceivable - this will change our lives.” Hansjörg Höltkemeier Co-CEO of the Deutsche Klassenlotterie Berlin President, European Lotteries (EL) “I think over the course of the next year we will see much more granular analyses and insights into how the world is changing and how lottery might continue to adapt to deliver ongoing improvements to its games and the playing experience – not just in the online space but in every aspect of business operations, distribution, and brand management.”

11 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 (ǣǕǣɎƏǼ ¨ƏȸɎȇƺȸ ǔȒȸ nȒɎɎƺȸǣƺɀ ZZZ EHGHJDPLQJ FRP time, in spite of the disruption of COVID. It is the overall player-experience, including the playing environment and also the different offers like anonymous play and the real experience of scratching a ticket, that is included in every ticket-sale. For retail players, Online is just a back-up to be chosen if they are not able to follow their routine. A very important second argument for retail is its role as a point of contact, of personal interaction between players and others in the store, including the retail clerk. Online and mobile offers always require an active role and involvement of the player in navigating to the online-offer, registering, payment-procedure etc. But nearly every potential player has several contact-points in real-life and Retail is at least one of the most important and most regularly used contact-points. On the other hand, players who had rewarding experiences with digital platforms over the last twenty months, especially those who are new to lottery, will likely concentrate more of their play in those channels. But even they represent an opportunity for lotteries to promote the omni-channel play-style with the new players, and for our retail partners to acquire new customers. All channels will drive together to create an individualized player-experience, and Retail will have its important role in this. Does this mean that the same products, same games as before will now simply be offered on multiple channels? H. Höltkemeier: Until recently, online lottery games have tended to resemble the games that we have been offering in retail stores for decades. Games, services, and the player experience provided on digital channels were not effectively differentiated from the off-line player experience and so offered little added value. That is changing. Everyone sees the incredible potential to re-imagine the entire online playing experience and I think we will see lots of progress and development of exciting new ways to add value to the online player experience. Those aspects of the playerexperience that do not translate well to the online-channels will be replaced by new added-values through modernized games and new services. In the past years, we’ve seen exciting innovations in the Lottery Industry. Still, we have recognized the need to inject a higher level of entertainment into lottery games, especially to appeal to young adults. Now, though, the need for alternatives to traditional sources of entertainment that involve gathering together in groups at concerts, theatre, bars, and other recreational venues is more acute than ever. This represents an opportunity for Lottery to fulfil a void in the marketplace, a human need for diversion and recreation. We need to respond to consumer interests through offering more variety and more enjoyment, by enhancing the player experience at retail, maybe with things like animated scratchers and games that promote social group plays. There is lots of potential for connecting shop-oriented players in the online world, for promoting social interaction in the virtual world, and for making online games more fun. I think over the course of the next year we will see much more granular analyses and insights into how the world is changing and how lottery might continue to adapt

12 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 to deliver ongoing improvements to its games and the playing experience – not just in the online space but in every aspect of business operations, distribution, and brand management. What have we learned so far – what are some insights that we can begin to act on now? H. Höltkemeier: We have learned that in future we will not focus on just one main aspect: It’s not just about iLottery, channels of distribution, or even the “omni-channel” relationship to the players. The digital transformation offers our business tremendous opportunities to innovate and gain competitive advantage, to mature in our ability to engage customers and to answer their needs. Like other businesses, we’ve recognized the technology’s strategic importance as a critical component of our business, but the way we integrate our products, services, brands, sales channels, etc. is also crucial for us to add value to our relationship with our customers. This is true for all businesses, not just lottery. Apple and Tesla are a couple examples of how the relationship between customer and merchant has been turned into a community of like-minded people whose connection to each other is as important to the consumers as their connection to the product. The brand represents something bigger than the product or service. It represents an eco-system which delivers a sense of purpose, belonging, and affiliation that the consumer values as much as the material product or service. We need to tell our story and nurture the development of a lottery eco-system that engages all stakeholders, including political constituents, beneficiaries of lottery funds, the general media, the general public, and of course the players. Are there any attributes or values of traditional lottery that we should hold onto? H. Höltkemeier: Of course. Funding for good causes, responsible gaming, service to society, and a sustainable approach towards evolving the lottery eco-system and market-place will continue to be the core pillars of the Brand Lottery. Public awareness of the value of lotteries seems to be increasing again, as we are facing uncertainty over the pandemic. Lottery’s contribution to funding of good causes isn´t taken for granted anymore and is getting more attention. The broader range of stakeholders that include the general public, the media, and our political constituents are looking more positively at the role of lottery in society. While social distancing disrupted sports betting, casinos, movies, and other forms of recreation, and tax revenues declined – lotteries remained as a reliable source of good-causes-money as well as entertainment. The future ecosystem for lotteries will continue to be based on the traditional values of service to society, protection of players, and the most popular games that consumers love to play – perhaps now more than ever. Coming back to Retail: How might we reinforce the symbiotic relationship that Lottery has always had with its retail partners? H. Höltkemeier: This is a very important question! Lottery operators depend not just on the shops to stay open and have an active customer base. As said before, the shops play an important role as touch-point and as part of the player-experience. This leads to two vital initiatives: Driving traffic to Retail-partners and supporting them in delivering a unique player-experience. I personally believe that our obligation to support our retailers is not fulfilled just by paying the commission and having sales reps call on them twice a month. We want to work more intimately with them to help them achieve their goal of bringing more customers into the store, increase the dwelltime in the store, and help them to increase the basket size at check-out. Of course, those goals are somewhat aligned with lottery’s own goals anyway so the ROI on increased effort to support our retailers is very positive. That is how we will increase the sales of lottery products. I think there is lots of potential for the lottery product, and the lottery playing experience, to enhance the overall in-store shopping experience. That benefits the retailer and players as well as the lottery operator. It looks like competition increased over the last two years. There are more legal offers like in the US and in Germany now but also illegal operators that seem to ILULÄ[ MYVT [OL YLZ[YPJ[PVUZ [OH[ SLNHS operators faced over the last period. How does this affect the lottery-business? H. Höltkemeier: Private operators like sports betting companies and casinos are impacted much more than lotteries by the governmental restrictions due to the pandemic. And that is causing them to push even harder for regulatory changes that will help them recover economically. They may ask for direct government aid, fewer and more lenient regulations, and lower taxes. And of course, regulatory and taxation changes can have significant impact on the competitive landscape within which lottery operates. The pandemic also brings to light the threats that unlicensed online gambling operators represent. Some countries, like Spain for instance, closed even the lottery shops and this opened the doors for unlicensed online operators to meet the demand for recreational gaming, including lottery. While governments are starting to apply stricter constraints on the amounts and kinds of advertising of online gambling, they need to take a more aggressive stand against illegal and unlicensed online gambling. I do not know whether governments will increase support for lottery going forward. But I have cautious hope that they will recognize the importance of lottery funding for good causes, the need for a stable and sustainable approach towards expansion of recreational gaming, and that this recognition will cause them to increase their support for their own government-licensed lotteries. And how might current events re-shape our approach to Responsible Gaming? H. Höltkemeier: Responsible Gaming and creating a safe user experience that protects players from developing unhealthy behaviors was and is always on top of our minds. The more we re-shape our products, the more “The future eco-system for lotteries will continue to be based on the traditional values of service to society, protection of players, and the most popular games that consumers love to play – perhaps now more than ever.”

14 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 In the mid-15th century, Philip the Good, Duke of Burgundy, imposed a hefty fine on the city of Bruges as punishment for a violent revolt by the local craft guilds. This action inadvertently set the stage for the development of the modern lottery. The fine was so huge that it depleted the city treasury. The restive population was hostile to higher taxes, so the city authorities needed to innovate to create a new source of revenues. City authorities then realized that their control over licenses to do business could be monetized. Specifically, the wine porters or schroders of medieval Bruges (now part of Flanders in Belgium) had the monopoly on unloading barrels of wine in the city’s port. The barrels of wine were then dragged to customers’ homes and lowered into their cellars. It was a lucrative business, because the porters were allowed to levy taxes on the imported barrels and keep the money for themselves in lieu of wages. The office was a privilege granted for life and awarded by the city for a fee. It occurred to the city leaders that, in addition to the fee that was collected on a regular basis, and in addition to raffling off the position of schroder and the economic rent that went with it, they could create additional raffles, or lotteries, to raise more money for other purposes as well. As time went on, these lotteries came to be held for other prizes, such as allocating prime positions of market stalls, with the proceeds earmarked to fund public works like strengthening the city walls and ramparts. These first documented lotteries, which also bore the name “Lottery” and had the characteristics of a present-day lottery, took place in Bruges, Belgium, in 1441. The lottery model invented in Bruges was quickly replicated in cities across Europe. The lottery goes public In 1441, when the schroder’s craft of a man named Pieter Den Hondt was due to be raffled off, the city authorities made an important decision. In addition to the first The Belgium Lottery, EL, and WLA Celebrate the 580th Anniversary of the world’s first lottery To commemorate the anniversary of the pioneering 1441 lottery in Bruges, the Belgian National Lottery organized a 4-day festival and exhibition. Lottery players, industry leaders and lottery fans from Belgium and across the world gathered in Bruges to relive the draw of 1441 during a historical evocation at the Christmas market, complete with tombola and a chance to win great prizes. Between December 1 and 4 of 2021, an exception was made to bring the special Extra Lotto and EuroMillions draws to Bruges. Guests were also treated to a festive open-air performance of Carmina Burana, and enjoyed city walks to experience the atmosphere of the first-ever draw in virtual reality, as well as an exhibition about the origins of the game in medieval Flanders, with an accompanying book being published. This article is excerpted, with permission, from the websites of the Belgium Lottery (, the WLA (, and the EL ( Necessity is the mother of invention: The story behind the world’s first Lottery

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16 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 prize of the municipal office of schroder, additional cash prizes of varying amounts would be offered. As a result, large numbers of people wanted to take part, even if they had no intention of becoming a schroder, resulting in a lot more money ending up in the coffers of the Bruges city administration. This “brand extension” of lottery was a welcome development, helping the city fund additional projects. Instead of placing the burden on its citizens by raising taxes, the city decided to offer cash prizes in the lottery to coax them into buying a ticket voluntarily. The idea quickly took root. Other cities in the region sent envoys to ask for advice and soon copied the Bruges example. Over the next few decades, at least 82 lotteries were created across Belgium and the Burgundian Netherlands before spreading to Germany, Rome, Genoa, and Venice. By the sixteenth century, lotteries existed all over Europe. Even the name given to the 1441 event in Bruges, lotinghe – which is based on the Middle Dutch word “lot”, meaning “fate” – would be adopted by many other languages: lotteria, loterie, lottery, lotereya, etc. “We are proud to be celebrating the anniversary of the world’s first cash lottery in 1441. A lot of things have changed in 580 years, but the Bruges aldermen’s ability to innovate, inspire the populace, and share their experience with other cities undoubtedly helped to lay the foundations for the vibrant worldwide lottery community we know today.” – Jannie Haek, CEO, Belgian National Lottery Collective fun, collective benefit These very early lotteries had all the essential characteristics of the games we know today: They were public events ¬– anyone could take part, and everyone had the same chance of winning. The additional cash prizes persuaded large numbers of people to play, and although the tickets were not cheap – the equivalent of several days’ wages – they were affordable by any burgher or merchant in medieval times. Players would not run the risk of financial ruin in a reckless game of chance, but would just try their luck for a bit of fun. Of course, players hoped to win a prize, but the collective aspect of taking part and attending the draw together was just as important. The medieval lotteries turned into community festivals. A stand would be erected in the marketplace so the citizenry could gather for the draw. As trumpets blared, an “innocent hand”, the drawperson, would solemnly pull the names of participants from a basket, and a reader would announce who had won a prize. The habit of writing a saying or poem (often salacious) on the lottery ticket instead of one’s own name soon developed, causing hilarity when it was read aloud from the stage. Nearly 600 years later, this underlying objective of having fun together while collecting funds for good causes still inspires lottery players all over the world and will continue to drive the lottery industry forward. By finding innovative solutions to its own challenges, and sharing the secrets of its success with other jurisdictions, the burgemeesters of medieval Bruges laid the foundations for the worldwide lottery community we know and love today! The organiser’s aim, usually a city but sometimes also sometimes a private organisation, was obviously to make a profit. But the attribute that makes the modern lottery, as invented in Bruges, so special is its service to society for its ability to finance collective needs: strengthening the city walls, building a hospital or a church, or paying off debts, as in the case of that first draw in 1441. Lotteries were the first form of “Crowdfunding” – long before the word was even invented. “Good causes around the world today owe a debt of gratitude to Bruges’ city leaders during medieval times for their foresight and pragmatism. Lottery players everywhere have embraced the same sense of collective responsibility and upheld the underlying principle of having fun together for the greater public good.” – Rebecca Paul Hargrove, WLA President

17 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 Paul Jason: What a fabulous way to celebrate the modern lottery which does so much to help society and good causes all around the world. Has the history of the lottery’s origins in Bruges always been a big part of the cultural heritage of Belgium, or did something inspire you to bring everyone’s attention to it at this particular time? Jannie Haek: Honestly, we even surprised most Belgians with this news. The ‘rediscovery’ of the seemingly uninspiring content of the common ledger of 1441 formed the foundation for our further investigations and ultimately the celebration of the origins of Lotteries in medieval Bruges. The factual mention of a considerable city revenue thanks to a lottery, but more importantly the mention of the ‘expenses’ being the secondary prizes which could be won, revealed the innovative medieval idea of ‘crowdfunding’. Making it attractive for the ‘crowd’ to participate in a lottery by giving more prizes than just one main prize, significantly changed the concept and turned it into a very lucrative one. The people appreciated the equal chances for every-one, the transparency of the draw, the fact that it was affordable but also the excitement and eager anticipation the draw brought. This historical context reminds me of the philosophical context you highlighted a couple years ago with the theme “Success of Chance” at the EL Congress in Antwerp. Why is it important to think of our mission in these broader contexts? Like, how does it help us ell more tickets? J. Haek: Going back to the origins of something helps one reflect on where you stand now and distill what is important for the future. Tracing lotteries back to their origins showed that the concept of Lotteries was born out of a willingness to improve the collective wellbeing of people. This noble reason of existence is still the core assignment of modern lotteries. The more the broader audience is aware of this essence the deeper the connection with our organization. Even though people play for the possible individual reward, the benefit for society is increasingly important in the lives of consumers. Lotteries have a unique business model based on a lot of people contributing for a modest stake in a game of chance. By doing so they hope to win, but they are aware that chances are small and are prepared to lose their stake. The individual desire finances the collective need. We know we benefit from players who are aware of the unique way of redistribution of Lottery income. They are more loyal, feel more content about spending money on a game and have an overall stronger engagement toward Lotteries and their brands. I am thinking we don’t need to wait another 580 years to celebrate the role of Lottery in Society. What do you think we’ll be able to commemorate in ten years, in 2032? J. Haek: The basics of a game such as a lottery will without a doubt remain the long-lasting elements of its success. The way we run, operate, and govern our companies might be completely different. In volatile times like ours, with quick changing consumer behavior, regulatory changes, exponential innovation in technology, predicting 2032 is like predicting 2021 in the year 1441. I would personally like to plead for more diversity and tolerance for divergence. More diversity in technology, more open architecture, less procedures and less compliance, more channels, and a broader portfolio of brands. If we really mean what we say about agile companies and “out of the box” innovation or even disruptive changes, we ought to avoid losing time trying to predict our evolution or listening to modern prophets. Maybe we can toss a coin from time to time ? Diversity and innovation often come by giving chance a chance. Q Bruges, 1441: Lottery emerges from Bruges to conquer the world An Interview with host Jannie Haek, Chief Executive Officer, Belgium Lottery PGRI INTERVIEWS

he highlight of each year's North American Association of State and Provincial Lotteries (NASPL) in-person annual conference, and each bi-annual World Lottery Summit, is when Tennessee Lottery President and CEO, and World Lottery Association president, Rebecca Paul sits down with the leaders of lotteries' commercial partners to discuss the pressing issues facing the industry. The pandemic has interfered with so many in-person events over the last couple of years and so we were very pleased to reconvene this important leadership meeting at PGRI Lottery Expo Nashville. Further to that - We are all looking forward to the triumphant return of the joint WLA/NASPL conference and trade-show in Vancouver, Canada on October 16-22! Fortunately, the wait ended in Nashville in October as Rebecca Paul reprised the lottery industry leader panel. She was joined by: REBECCA PAUL Richard Bateson, Chief Commercial Officer, JUMBO Interactive Byron Boothe, Chief Executive Officer, lntralot, Inc. JayGendron, Chief Operating Officer, Lottery, IGT 18 PUBLIC GAMING INTERNATIONAL• JANUARY/FEBRUARY 2022 Pat McHugh, Group Chief Executive, Scientific Games Lottery Doug Pollard, Co-Chief Executive Officer, Pollard Banknote As Rebecca noted in kicking offthe session, there has been no shortage of opportunities for people to talk over the past almost two years. "One of the things that happened during COV ID was that the number of Teams and Zoom meetings increased dramatically, so we've talked a whole lot more frequently than when we had to wait until we were in person," she said. "We've had a lot of opportunities to discuss many issues. But now, let's ask our panel - what one topic are we not discussing that we really need to be discussing because of its importance to the industry?" Richard Bateson kicked things off. "Creating initiatives that protect our players is how we will keep a sustainable industry going into the future," he RICHARD BATESON said. "It's not just about having popular and relevant games. As the number of channels increases, we need to ensure that we are marketing through the correct channels and protecting players along the way. Managing the player experience through all the changes in the lottery industry will be critical." Pat McHugh's view is that the industry needs to concentrate on advocacy. "Our industry, although highly successful, continues to face headwinds that will PAT McHUGH challenge our ability to move forward and keep beneficiary funding growing. In other parts of the world, we've seen lottery lumped in with other forms of gaming and we end up being reactive to the challenges. Lottery is different than casino, and we must make sure that is understood by the stakeholders who influence the future of lottery. I think we need to be very deliberative as leaders of this industry, and proactively get our stakeholders to talk about why we exist. We fund college scholarships, programs for senior citizens, funding for municipalities. It is vital that we get these important messages out there. We need to proactively shape the message so our constituents appreciate the difference between lottery and commercial gambling." Byron Boothe thinks we need to focus on our customers. "A critical issue is the future of customer acquisition," he said. "Today, BYRON BOOTHE

19 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 we have been able to utilize and leverage our retail partners’ ability to bring customers to the purchase location in a relatively inexpensive manner. But as we move further into the digitization of our products, there will be an adjustment to the cost of acquisition and retention. We must be ready for this eventuality.” Jay Gendron said the industry has to focus on future technology. “As an industry, I’d like to see us address the technological advancement of Cloud computing,” he said. “The federal government and many U.S. states are moving critical applications to the Cloud. Currently, the way that U.S. lotteries are set up under their facilities management contracts prevents them from utilizing this technological advancement. I think it would be in our collective best interests, as the industry presses forward to modernize, that we make sure lotteries can include these types of advancements in RFPs. IGT is prepared to help lottery customers take advantage of all the benefits of moving to the Cloud and pass these benefits on to players.” Doug Pollard brought our attention to one of the newer entries into the games-of-chance sector. Sports betting may not be a direct competitor to lottery, but it is definitely competing for the discretionary spend of the consumer on recreational gaming. “We’ve done a terrific job over the past few years of bringing players into our business and driving more proceeds for good causes,” he said. “But there has been an enormous spread of sports betting over the past few years and that has changed the gaming landscape. We still have lotteries that can’t accept debit cards, yet sports betting has entered our jurisdictions with enticing offers, a bombardment of television ads, and multiple payment options. I am concerned that lottery may get swept into the same bucket as other games-of-chance like sports betting. Sports betting provides far less revenue to good causes compared to lottery. And sports betting does not have the history of integrity and security that lottery has. We’ve got to be more proactive in communicating the difference because when there’s a backlash against gaming expansion, we don’t want lottery to get lumped in with other sectors like sports betting. That would negatively impact iLottery, lottery, and our retail partners as well.” On Doug’s point about sports betting entering more and more states, Rebecca said lotteries are feeling the impact of the influx of advertising that promotes the sports betting websites. “The cost for the lottery to advertise has gone up dramatically because there are only so many 30 second commercials,” she said, “and they’ve taken up so much of the available ad time that it has driven up the costs to advertise. So our advertising costs have gone up substantially because of the competition for ad time. Those states without sports betting (yet) need to keep that in mind going forward.” Changes Needed to the RFP Process? All five business partner representatives have much experience working with lotteries and most of that activity is achieved through the successful response to lottery Request For Proposals (RFPs). While this is the avenue that most government agencies use to secure vendors for larger projects, it can be a challenging process for those who operate in the lottery industry. With that in mind, Rebecca asked “If you had a magic wand and you could change one thing about how we all do RFPs, what would you change?” Up first was Scientific Games’ Pat McHugh. “I would recommend that RFP evaluations are profit-driven,” he said. “On the lottery side, you’re running a hugely successful consumer goods business. But how do you work with stakeholders and vendors to think of this business as an investment? The profits on the lottery side of the business are directly impacted by the investments made by vendors and lotteries. The ROI of those investments are very high, which means the resources invested by lotteries will lead to exponentially higher funds generated for the benefit of good causes. The same can’t be said for other government agencies which do not generate income or a financial return. So I suggest changing how lottery stakeholders view costs impacts to growth over time, and RFPs are perceived to be ROI-driven instead of cost-driven.” Doug Pollard focused on price. “I don’t think you should buy an important revenue generating product on price alone,” he said. “Decisions should not be just cost-based. You’re going to pay pennies for most of the services you sell and make quarters in terms of margin. There’s a lot more at stake. Lotteries need to look at the entire picture, assess a wide variety of value-adding capabilities, and determine what are the most important factors to choosing your vendors.” Given the fact that investing in lottery infrastructure also enables investment and innovation for players and retailers, Jay Gendron at IGT said, “All companies and lotteries want to innovate, and innovation costs money. We spend a lot of money in research and development each year. And there is nothing more disheartening than seeing an RFP released that covers 10 years with a technical-to-price ratio of 50/50 and which essentially places little emphasis on R&D and technology – the things that differentiate vendors and make their offers unique from one another. My one wish would be that more states follow the path of those jurisdictions that have made the technical-to-price ratio much closer to an 80/20 ratio. With that, you are incenting the vendors to invest in your infrastructure not only on Day One but for the entire length of the contract.” For Intralot, Byron Boothe said working with different parts of the RFP process is critical. “I think one of the main issues with procurement is policy,” he said. “And policy requires education, and education requires familiarity with the legislative and executive branches in the states. You need those allies because the lotteries that want to modernize the process will be changing 15-20 years or more of procurement rules and procurement cut-and-paste templates. So, going in a direction that changes technical versus price scoring methods requires engaging lottery partners throughout government. I think that’s how we can get the outcomes we’re looking for.” Richard Bateson at JUMBO said, “I firmly believe in aligned incentives that drive behavior. I think as an industry we are probably at risk of having long contracts that are 10, 15, 20 years in length and the vendors aren’t incentivized to invest in ongoing technologies. There are industries out there that are much more agile than ours because they are driven to constantly invent and innovate. Lotteries need to work with the vendors to Continued on page 35 JAY GENDRON DOUG POLLARD

MUS MULTI-STATE LOTTERY ASSOCI ATION MUSL Multi-S1a1c LoncryAssociation POWERBALL CELEBRATES POWERFUL START TO 2022 Powerba/1 kicks offNew Year on #1 entertainment telecast, achieves top 10jackpot f it seemed like Powerball® got off to a powerful start in 2022, you're right! Shortly after the iconic ball dropped in Times Square, Powerball held a $1 million drawing on Dick Clark's New Year's Rockin' Eve with Ryan Seacrest 2022. Five days later, Powerball achieved its 7th largest jackpot ever - a $632.6 million grand prize won by two tickets in California and Wisconsin. The $632.6 million jackpot was the second grand prize won since the game introduced a third weekly drawing on Monday nights, with the back-to-back jackpots ranking among Powerball's largest. The previous jackpot, hit on Oct. 4, 2021, was the game's 5th largest at $699.8 million. MUSL and game leaders point to the latest jackpot cycle as further evidence that a third weekly drawing is producing bigger and faster-growing jackpots. PAY�� POWERBALL First Millionaire of the Year ONE MILLION ---- NEWYEAR'S ROCKIN'EVE POWERBALL "The addition of a third weekly drawing has been wildly successful," said May Scheve Reardon, Powerball Product Group Chair and Missouri Wisconsin Retailers with winningticket Powerba/1 Millionaire Brian Mineweaser Lottery Executive Director. "Powerball sales are up in every U.S. lottery jurisdiction, and as a result, we're seeing more dynamic jackpot growth on a weekly basis." Powerball launched Monday night drawings alongside Double Play®, a new add-on feature offered by 13 lotteries, on Aug. 23, 2021. Since then, all 48 participating lotteries have recorded increased game sales. Year-to-date Fiscal Year 2022 sales of Powerball and Power Play® are up 77% compared 20 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 to Fiscal Year 2021. As for jackpot growth, MUSL recently analyzed two jackpot cycles, nearly a year apart, for its Board of Directors: Draw Cycle 38 and Draw Cycle 44. • Draw Cycle 38 - Produced $731.1 million jackpot in the Jan. 20, 2021 drawing (2 drawings per week) • Draw Cycle 44 - Produced $632.6 million jackpot in the Jan. 5, 2022 drawing (3 drawings per week) Continued onpage 34

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W hile the lottery industry awaits the anticipated and expected addition of more iLottery programs across the country, the 13 lotteries which offer some version of online sales are providing a wealth of information for their lottery colleagues. In the time since the current longest-tenured iLottery program launched in Michigan in 2014, the delivery of lottery games and content to players has undergone a seismic shift along with how lottery is played. It's not enough to simply digitize a paper-based scratch ticket and provide a virtual quarter. Players expect innovation and variety, especially chose new to lottery, and iLottery is changing the entire player experience. A handful of lotteries and vendors are working on how to energize chis genre of games - both iLottery MARK MICHALKO and online draw games. North Carolina Lottery Director Mark Michalko, whose lottery has featured an iLottery platform for almost 10 years, led a panel of iLottery veterans on both sides of the table: Brad Cummings, Founder and CEO, EQL Games Stephanie Weyant Fidler, Deputy Executive Director, Marketing and Product, Pennsylvania Lottery 22 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 Scott Kenyon, Digital Games Manager, Virginia Lottery Derek Levesque, Director, Digital Content Product Management, IGT Mike Lightman, Chief Commercial Officer, Instant Win Gaming (IWG) Merv Huber, Senior Director, Digital Growth, Scientific Games Mark started offthe discussion asking for some thoughts on the performance of current iLottery games, and how they are performing relative to retail games. With two of the strongest iLottery programs represented - Pennsylvania and Virginia - information came straight from the source. Stephanie Weyant, who oversees Pennsylvania's iLottery program, kicked things off. STEPHANIE WEYANT "iLoccery is definitely a growth category for both us and the ocher lotteries offering the products online," she said. "Our stats show chat iLottery is attracting new, younger players. By 'younger' I don't necessarily mean millennials but younger compared to the traditional lottery players who tend to skew a little older. It's also about six percent of our overall profits so it's having an impact on our bottom as well as top lines. iLottery is still small compared to retail but it's incremental and chat's the important part right now." Virginia touts one of the newest iLottery programs and the results have been incredible, with over $807 million in total iLottery sales during its first fiscal year from July 2020 to June 2021. Scott Kenyon said, "Our focus is on growth - bringing in new players, expanding our player SCOTT KENYON base, registering as many players as possible. Our month-over-month sales are quite strong. We continue to add new products and chat helps keep sales high. We have great vendor partners who work with us to make sure we offer the most innovative games chat will appeal to current players and attract new players. And we continue to refine the process through which they register and play their first games. It is important to keep it as simple as possible to sign on as many players as possible." Mark segued to the difference in player experience online and at retail. "We've enjoyed great success in selling in a retail setting as we've really honed our offer and how it is presented," he said. "But online iLottery play is a newer platform. And the online player - both einstants and draw - has a different experience than at retail. What's that experience like and what's different about it?" Continued onpage42

©Scientific Games, Inc. 2022. All rights reserved. The Price Is Right® is a registered trademark of © 2022 All Rights Reserved. Licensed by Fremantle. Give your players the most exciting Linked Game experience yet. THE PRICE IS RIGHT COME ON DOWN! Challenge is here and is sure to set your sales spinning! &RQWDFW \RXU 6FLHQWLÞF *DPHV UHSUHVHQWDWLYH WRGD\ IRU PRUH GHWDLOV

26 At the most recent PGRI Lottery Expo, I shared some new trend and player research in a talk called “2022 Forecast: Blue Skies and Bright Clouds.” That optimistic title reflects the historic growth that lotteries experienced during a challenging time, as the industry adapted to better serve players – and players found new fun in engaging with lottery, fueling a global resurgence. Optimism also seems right as we look ahead to the new year, which promises further acceleration of industry modernization. For one thing, “bright clouds” are literally going to be part of lottery’s future, in the form of Cloud Computing. During a special online event in December, IGT explored Cloud technology with customers as part of our Players Project series, with independent experts on Cloud deployment sharing how other state and private organizations are taking advantage of this exciting area of technology. You can find the highlights from that discussion elsewhere in this issue of PGRI. But that’s just one part of the blue-sky picture. What about the players themselves? We all saw during the pandemic how external events drove consumer behavioral changes, with more people ordering online, using self-service at retail, and adopting digital solutions. As an industry, we’ve been talking about this phenomenon for some time. The questions now: • How will these behavioral shifts impact lottery play and purchase expectations going forward? • How do lottery technology and retail modernization need to coalesce to support those changes? New research into player motivations and behaviors forecasts an exciting year ahead for the lottery industry. “Onward and Upward” should be our mantra. MICHELLE CARNEY, IGT VICE PRESIDENT GLOBAL LOTTERY MARKETING

27 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2022 A Closer Look at Motivations & Behaviors To know what’s really driving current player behavior, IGT dove into the performance data and talked to players. This past summer, we commissioned a survey of over 4,500 U.S. lottery instants players to learn how, where, and why they were playing and whether they planned to continue. We followed up with a qualitative survey among a subset of this group, to probe the underlying behaviors and discover why shifts in play may occur. And we evaluated these player responses together with insights from trendspotting agency Foresight Factory to understand what big-picture trends may be impacting behaviors and what might stick moving into 2022. As partners who provide a single integrated retail and digital solution for lotteries and their players, IGT values and uses these insights to inform every aspect of how we serve customers – from product and game development to developing best-in-class, retail-to-digital solutions and roadmaps. While we can't predict the future, we can share what we know to assist customers in anticipating how trends and changing lifestyles might affect their business. To get much more detail on the trends likely to shape consumer demand and behavior in the year ahead, you can download IGT’s annual 2022 Trend Report, available at Following are some highlights: TREND: 1 PERSONAL PACE A reassessment of priorities, often in favor of a slower approach to life How could “personal pace” impact the player routines we just referenced? After the pandemic forced a slower pace of life on many of us, consumers are now rethinking their lives and looking to shift the balance toward leisure and family. Digital technologies contributed to the declining importance of physical location, one of the most recognizable effects being that some workers now have the option to work from anywhere. We’re seeing the rise of what trend forecasters call a “new essentialism,” where, increasingly, consumers are reassessing and focusing on what really matters to them, with a desire to cut down on non-essential expenditures and possessions. Interestingly, lottery players are more likely to gravitate toward a slower Personal Pace lifestyle. When asked by Foresight Factory if they were overwhelmed by the prospect of a busier social calendar, lottery players were more likely to be neutral or agree with this statement. We heard this in our player research as well. In fact, 60% of weekly players agree that they would like to maintain a slower pace of life once COVID restrictions are removed. What does this mean for lotteries? It’s an opportunity to demonstrate products that appeal to different pace-preferences – for example, fast play or extended play. We heard one player talk about how much he enjoys taking the time to scratch each letter on his ticket, a vivid reminder that lottery has a broad portfolio of products that can appeal to different paces of life. Secondly, it’s an opportunity to highlight the fact that lottery is a form of home entertainment. As we heard clearly in our research, people are enjoying lottery play – and it doesn’t require pre-arranging a specific place, date, and time for entertainment. They can engage at their leisure and create a fun experience within or outside of their own household whenever they choose.