Public Gaming International Gaming July/August 2021

43 PUBLIC GAMING INTERNATIONAL • JULY/AUGUST 2021 HOWDID MICHIGANDO IT? A few years on from the 2008 recession, when the state’s scratch ticket sales remained flat, the Lottery initiated a conversation with IGT that laid the foundations for growth. Michigan’s Club Keno program and daily draw games were performing well, but, among other factors, the state’s ratio of draw to instants games was about 70/30 when the rest of the country was closer to the reverse, or to an even 50/50. There was no doubt that more could be done to drive the state’s instant ticket sales. “The Lottery invited us to present ideas, given that instant average growth between 2010 and 2012 had been only 0.8%. We took a bottom-up analytical approach and left no stones unturned in identifying opportunities for growth,” says Stefano Monterosso, IGT Senior Vice President Lottery Product & Sales Development. “They gave us a quantitative deep- dive into all the data sets,” says Glenn Strong, Michigan Lottery Deputy Commissioner of Games & Marketing. “The analysis was compelling and different from others we had seen. We didn’t agree on every single recommendation, but the IGT team’s presentation confirmed the growth potential and suggested some very sophisticated services that could complement some of our other initiatives.” Following that market review, the Lottery and IGT drew up a preliminary plan in 2012 and an initial set of recommendations. The relationship has continued to strengthen and evolve along with ongoing changes to Michigan’s instants program. By 2015, when the initial changes began to bear fruit, the Lottery achieved double- digit growth, which has continued over every calendar and fiscal year since. Among the large-scale improvements implemented by the Michigan Lottery: PLANNING n Planning from a Portfolio View The Lottery and IGT teams work together defining each component of the portfolio along with a plan to maintain and refresh it. This paradigm streamlines and gives direction to the planning process. Each time the teams meet, they reassess the portfolio to ensure that all components are captured and decide if any need to be added or removed, based on performance. n Launch Cadence Rather than launching new games every three weeks, the Lottery began introducing three to four new games on the first Tuesday of each month. The schedule allows retailers to better anticipate and focus on game releases, and it gives the Lottery more time to educate retailers and place POS materials. The emphasis shifted from selling novelty to developing strong games that would sell well at a steady rate over time. n Move from “Space-to-Sales” to “Space-to-Product” Product placement at retail is key to attracting player attention, given the impulse nature of instant game purchases. IGT worked with the Lottery to optimize the in-store product mix, so that instead of reflecting the existing price- point sales mix, it reflected the target product mix that had been identified as achievable. This was probably the most critical factor in shifting in the average price point purchased. PRODUCT PORTFOLIO n Prize Structure Design IGT advised on sweeping changes to the Lottery’s prize structures. “When you move from launching 75 or 80 games per year to something closer to half CHANGES THAT PRODUCED DRAMATIC & STEADY INSTANTS GROWTH IN MICHIGAN WAREHOUSING AND DIS- TRIBUTION • Changed bi-weekly launches to monthly, reducing annual games launched from around 72 to 38 • Encouraged retailers to face more new games • Optimized distribution with refined algorithmic ordering protocol PORTFOLIOOPTIMIZA- TION • Prize structure optimization, especially at higher price points, focused on mid-tier prizes • Planogram development for all retailers • Strengthened core game offering with line extensions to higher price points • Launch and continued expansion of $30 price point RETAIL EXECUTION • Bin expansion at the highest performing retailers • New game activation and planogram compliance • Introduced IGT Merchandiser Program to support the Lottery’s sales team