Public Gaming International May/June 2020

22 PUBLIC GAMING INTERNATIONAL • MAY/JUNE 2020 Hansjörg Höltkemeier, President, European Lotteries (EL) Member of the Managing Board of the Deutsche Klassenlotterie Berlin How will the world be different, when we come out of crisis? And how do we – as lotteries – have to react? First: It is still di cult to predict the sustainable changes. Whereas certain segments of the gambling industry are expected to be a ected, the lottery market might not be hit that hard, as people tend to fall back to their former behavior. Second: Nevertheless, we learned a lot and we as lotteries shouldn´t just fall back into former behavior. Undoubtedly, the pandemic will keep us busy for some time to come, as Covid-19 is hitting the economies of almost every country in the world. Our way of personal interaction will change, and very probably the changes will extend even after the virus has been contained – fewer personal meetings, less business travel, no more handshakes. And I believe there will be fewer large gathering events such as spec-tator sports events and there will be strict conditions to minimize the risks of spreading germs. It is easy to predict that these circumstances will further drive the trend towards digitalisation and new formats that enable digitized “virtual” interaction. Players, that made good experiences with digital platforms in the phase of lockdown and social distancing might not come back to the shops again and we will meet higher expectations in the digital channel. A more granular look at the precise e ects that these changes will have on the way that society functions reveals that our lottery industry may not be impacted as directly or dramatically as I originally thought it would. Lotteries are a service that is less dependent on physical value chains. And to play the lottery or, more precisely, to buy a lottery ticket, is in most cases a single transaction with a single player. Even in those jurisdictions where online-sales are still not allowed, this shouldn´t be a problem, as long as there is a strong subscrip-tion-business and the shops are allowed to stay open and to sell under conditions that guard against contagion. Some lotteries have been severely impacted by closed shops or even closed opera-tions, as in Italy or Spain. is is dramatic, but even then, it should be easier to re-open and re-start an existing infrastructure than to restart a physical production-inventory- delivery process. e same applies to sports betting and casino opera-tions, both land- based and online. Operators which already had a robust business of connecting players via their shops or via digital channels are surviving the pan-demic. I am optimistic that the lottery industry will overcome the direct impacts of the crisis with little disruption or damage. As many states and jurisdictions start to reopen shops and facilities, it may feel like “the worst is over” and that we will slowly go back to normal. But many are predicting that the virus will stay for a long time or even return, which means the longer-term economic e ects might be the next challenge. Lotteries are played from a person´s “entertainment-budget” and this depends on the player having an actual income and being able to budget for the future. Now, with millions of unemployed, entire sectors of the economy shut down, are-ups in countries that thought they had eradicated the virus like Singapore, Korea, and maybe China, and no timeline for vaccine and no clear vision for how to contain the virus – it is hard to know what the long-term economic e ect will be. As the play-ers face economic uncertainty, discretionary income for lottery will likely decline. And responsible operators will be expected to not push consumers to spend more of their limited budget on lottery. My fear is that even re-opened economies will operate at a lower level of activity and a lower level of spending in the stores. At the same time, my hope is that we will pass through this stage of return to normalcy faster than expected because we all have short memories when it comes to reasons not to do the things we want to do – like socialize and play the lottery! ere is no vetted “best-practices” template yet and certainly no speci c one-size- ts-all recipe. Each lottery and each jurisdiction has its own unique set of external-ities that shape the most appropriate response and strategic planning. But some of the impacts and best-practice responses would seem to be universal. Investing in player loyalty while minimizing the spread of germs and thereby enable a con-tinuation of social distancing in the land-based space should for sure be done by all of us. Likewise, we should all be investing more to strengthen the digital channels in parallel, not as substitution but as complementary way to strengthen the con-tact between operator, shop and player. On the content-side, I see then two new opportunities to enable lottery operators to be successful in future. One is to position lotteries and our brand as the stable anchor in di cult times, the game of the people which is owned by the people’s government and serving the interests of society and good causes which need fund-ing now more than ever. e other opportunity is to o er more entertainment-oriented products and to make the games and the overall playing experience more fun. ere are already lots of o ers in the digital channels. Are there enough and are they good enough? It is not a matter of quantity or quality of a single o er. Virtual o ers are based more and more on “eco-systems”, in which a user or player becomes part of a company and community of consumers just by using the product. Being part of it is bringing added value and higher loyalty. Examples outside our industry are APPLE or TESLA. In contrast to this, online lottery games have tended to resemble the games that we have already been o ering in retail stores. Services delivered through digital channels often have too little added value. I think we could re-imagine the whole way we think about the online playing experience. ink about the evolution of the electric car. Why did Tesla produce a break- through product? ey built not just a car with a new engine, they built up an eco-system with a brand-new car (from scratch), online-updates for the car- electronics, a supercharger-infrastructure and new ways for maintenance being organized automatically through digital interaction between car and manufactur- er. Tesla used the bene t of starting from scratch as opposed to guring out how to electrify existing models. VISION OF THE POST-CORONAVIRUS WORLD Continued on page 39