18 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2025 Do you now think of yourself as a DigitalFirst company? R. Spielman: Well, of course, we think of ourselves as a customer-first company. Like other retailers, we believe we can be successful at retail and successful online, and the two can complement each other. But to your point, it was back in 2019 that we converted to our current iLottery platform and that is when Mark (Michalko, director of the N.C. Education Lottery) recognized the direction everything was going in and shifted our mentality to see online as being mission-critical to building the direct interactive relationship with the players that is so key to long-term growth and sustainability, and he established a department focused on optimizing the full potential of digital channels and gaming. Online iLottery is no longer just about convenience for the players, an additional way for them to interact with Lottery. It is a true growthdriver that adds tremendous value to the overall player experience and to our ability to continually enhance that experience. Digital platforms provide an incredibly rich canvass to innovate, modernize, create new gaming experiences, and otherwise enhance value to the players. What percentage of the Noth Carolina Lottery sales come from digital channels? R. Spielman: In the first twelve months of Digital Instant program, we did a little over $2 billion in sales. And it continues to increase as Digital Instants have exceeded scratch-off sales in the last three months. Total online sales including draw games now comprise approximately 40 percent of total North Carolina Lottery sales. And retail sales continue to increase as well? Online sales aren’t cannibalizing retail sales? R. Spielman: I think some of the player activity may have migrated from retail over to online. But the net effect of our online connection is absolutely positive for retail. Digital enables a CRM (Customer Relationship Management) approach that is nothing short of transformative. It enables us to reach consumer groups who weren’t even playing lottery and bring in new players who proceed to also play at retail because we apply promotions that incentivize the players to interact with us on all channels. It enables us to connect with core players better with promotions and messaging that appeal to their play styles and preferences. Digital enables the omni-channel relationship that is based on seamless interaction with the consumer and that is what drives sales across all channels, including retail. Digitally-driven CRM helps us tailor promotions and messaging that appeals to the specific interests and preferences of the players. And the players appreciate that, so in turn they pay more attention to our messaging. As we get to know which players prefer to only play Instants, which players only prefer draw games, which players try new products, which play the same games again and again, which players are more likely to respond to promotions that are redeemed at retail and which players never play at retail, etc. ... our promotional response and conversion rates go up because the players appreciate that the messaging and promotions are more relevant to their individual interests. And once we have these insights, we can drive players to retail as well as create a better experience for them wherever they choose to play. This type of relationship and understanding of our players’ behaviors wasn’t possible prior to the expansion of our digital channels. The digital platform brings in players who didn't play or regularly engage with lottery previously. Now, with our focus on KYC and CRM, we are able to nurture that player base and provide incentives that drive players to retail which benefits everyone including the players. How relevant would the digital connection be if you did not sell lottery tickets online? R. Spielman: Super relevant. Digital Lottery is all about the online connection with your players, completely apart from where they play the lottery. The future of any consumer-facing industry is CRM and KYC and those are based on digital channels. You have to Know Your Customer to nurture and sustain the long-term relationship that is key to success. Digital lottery is about loyalty programs, second-chance programs, digital messaging, providing informational resources to the players, and the dynamic interaction that does not happen at retail. Amazon has shown how Customer Relationship Management is the decisive competitive differentiator. This will be even more true going forward. Look at how casinos have built tremendous loyalty programs even though their goal is to get the customers to come into the casino, not play online. Commercial operators in the games-of-chance space, like Jackpocketnow-DraftKings as well as casinos, other sports betting operators, and online casino operators are all highly focused on CRM as the pathway to building loyalty which is the basis for long-term sustainable growth. We all need to invest more in Digital Lottery regardless of whether we are currently selling tickets online. Lotteries have limited budgets. But there are many ways to engage the players online that fall within whatever budgetary constraints apply. The ROI is absolutely there even though it can be hard to quantify. The data shows us that the value of players who are active on the loyalty program is easily twice that of players who are not engaged with the loyalty program. And that is just over a short-term, like six months. The lifetime value of the engaged loyalty program player is exponentially higher. And to be sure, other gaming operators without an effective CRM program will be very vulnerable going forward. CRM is also important as a defensive measure with the ongoing expansion of gaming across the country. “DIGITAL LOTTERY HAS TRANSFORMED OUR UNDERSTANDING OF DATA AND ANALYTICS AND HOW TO TURN DATA INTO ACTION-PLANS.” continued on page 33
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