25 PUBLIC GAMING INTERNATIONAL • JULY/AUGUST 2022 “At Loto Quebec, we have worked hard at underscoring that we are the only legal operation for all of our player’s betting needs, with the hopes of showing players that we offer a secure location for their bets,” she said. “I believe our message has been heard and has helped reduce the spending through illegal operations. Once they join us, we want to focus on retention and, if possible, growing their spend in a responsible manner. Since in Canada the lottery oversees all forms of gambling, it’s easier for us to provide cross-market programs. If U.S. lotteries are able to work with casinos and sports betting operations, they should explore possible opportunities to partner with these entities.” Having seen many gaming trends come and go during his many decades in the lottery and gambling industries, Lorne has a “big picture” view towards how the lottery is impacted by outside factors such as sports gaming. “Let’s look at the poker boom of 15-20 years ago,” he said. “Just like we’re seeing with sports betting, everyone was talking about poker as the number of poker players was growing quickly. But then the majority of players realized that 95% of the money was won by five percent of the players, and the money started drying up. Same thing happened with fantasy sports with that same 95%-5% imbalance. And this will eventually happen with sports betting. One key message for the lottery industry is that in addition to having easy access to our products via the extensive retail network, our players are not susceptible to five percent of players winning 95% of the money. That is a critical message and I believe it will outlive what is taking place in sports betting, just like it outlived poker and fantasy sports.” Matt concurred and added, “It’s important for us to make sure we maintain a level of relevancy with sports bettors as they’re kicking the lottery tires and realizing that perhaps sports betting isn’t a long-term place for their entertainment dollars. So do we build a moat around our players and hope no one poaches them or do we drop the bridge and take a more offensive posture? In Iowa, the lottery is partnering with our sports outlets to provide unique opportunities that may attract sports fans to lottery. At the same time, we have other threats, particularly on the budget front. Because of the marketing spend from sports betting operators, our costs have risen dramatically, not just in our sponsorships but with our sports talk radio stations and our traditional television advertising. Year-over-year, we’re about 16% ahead on costs and I think a lot of that is attributable to tighter inventory because of all the sports betting ads. It's just another issue that we must navigate.” SHAPING PUBLIC OPINION Aside from the retailer network, lottery has additional advantages over other forms of gambling, including its role as service to society and providing funds for good causes. Messaging these advantages is key to taking on the competition. “While the lottery prize-payout is lower than iGaming, which often offers payouts of more than 90%, lotteries have strong margins,” said Lorne. “You have to wonder about the sustainability of a business that has operating costs on top of payouts over 90%. Where are your profits coming from? iGaming is closer to lottery than sports betting, and iGaming is where the better money is for operators. For lotteries, the best bet is to tell our players that we have fun games and good payouts and make sure that policymakers know that our profits, and therefore the funding for good causes, are far greater than sports betting.” Drew agreed and said that the Pennsylvania Lottery is fortunate to have a very popular beneficiary. “We have the benefit of having a really solid well-known brand and a beneficiary that most people support,” he said. “The Pennsylvania Lottery funds benefits for older Pennsylvanians, and I always remind our team and our stakeholders that our mission is critical. ‘Benefiting Older Pennsylvanians Every Day’ isn’t just a tagline, it’s why we do what we do. And so, the more we reinforce our beneficiary I find the more support we get. It also doesn’t hurt that older Pennsylvanians happen to be an active, engaged voting bloc. We know policymakers listen when they speak.” Lynne built on Drew’s point. “We know our competition employs some of the best lobbyists, and lotteries can’t have lobbyists, at least not paid lobbyists,” she said. “But we all have the beneficiaries who are voters and that means they have power to advocate for lotteries. If you can get the groups of people that you’re helping out to be more outspoken in their advocacy to underscore the importance of the lottery, it’s much better than us saying it. And in that sense, I don’t know that we engage the support of our beneficiaries as well as we should. As Drew noted, politicians everywhere in the world listen to or take heed of the voter. Politicians also listen to constituents like the beneficiaries supported by lottery.” Matt pointed out that driving home the local angle is key. “I like to tell my team that we are not The Lottery, we are the IOWA Lottery,” he said. “That means something to every single Iowan across the state. It means something to the Iowa Veteran’s Trust Fund and those other causes that we support. In March, we returned $8 million to the state compared to $1 million from sports wagers. Those are the types of details that help our cause among our constituents and policymakers. They all can see the amount of money returned to the state and good causes from the various gaming entities, and those returns are led by the lottery.” FIGHTING FOR MARKET SHARE Drew pointed out that between states not having iLottery and other states fighting illegal game machines, lotteries have a lot on their plates. “I hear from my colleagues all across the country who are having the conversation with their policy makers about iLottery that retailers continue to be concerned about the potential impact on their business,” he said. “However, all the states with iLottery know that iLottery only helps retail. And many states, including Pennsylvania, are battling illegal gaming machines that are proliferating throughout the state. There are a lot of battles on many fronts.” Derek said vendors like IGT are trying the best they can to help lotteries through some of these headwinds. “It can be frustrating,” he said. “There are 18 states that allow online sports betting, but only about half that many states with iLottery. I’m hopeful that sports betting will now open the door for iLottery in a lot of states. There’s a much bigger opportunity for states to generate income from launching iLottery than sports betting. Both sports betting and iLottery utilize similar payment methods and feature some crossover between customers. I do see hope that iLottery growth will now benefit from sports betting being legalized in so many jurisdictions.” Continued on page 39
RkJQdWJsaXNoZXIy NTg4MTM=