Public Gaming International May/June 2020

47 PUBLIC GAMING INTERNATIONAL • MAY/JUNE 2020 TECHNOLOGY PARTNERS COMMENTARIES Lorne Weil, Chairman and CEO, Inspired Entertainment, Inc. Brooks Pierce, President and COO, Inspired Entertainment, Inc. Lorne Weil: Lotteries are known to perform better than other sectors in an economic recession for three reasons. (1) Lotteries are localized. (2) Lottery in general is characterized by a huge number of regular lottery players who spend a moderate amount on lottery that they can build into their daily life. It’s not a major part of their budget and they don’t feel the need to give it up even if it’s a recession. (3) It’s a part of the person’s routine. Someone goes to the tobacco shop on the way to the bus and buys lottery tickets and plays them on the bus. We’re not talking about a person that lives in Ohio making a trip out to Las Vegas, which costs major money and takes planning. ey’ll just stop that in a recession. is crisis is di erent. In this situation, the player’s entire routine has been disrupted. He’s not stopping at the tobacco shop. He’s not running in to get gas and buying tickets. Now is not the same matter of people playing the lottery in the recession, it’s the matter of disruption in the people’s living style. Lotteries have always done well in a recession but in this scenario it’s not physically possible to get a lottery ticket. It’s also a question of statistics. In the great recession of 2008, the unemployment rate hit 10%. Right now in some places its 30%. is will be a bigger hit to lotteries. People are becoming much more used to doing everything online because they can’t physically go anywhere. When this crisis is over, it’s reasonable to expect that they will continue to be much more dependent on doing things online and, in all likelihood, if the lottery industry wants to retain its share of people’s spending, they’re going to have to get more aggressive selling online or they’re going to fall behind. Inspired has seen just astonishing growth in our worldwide online business since the COVID-19 crisis - virtual sports, in particular, given the lack of live sporting events. As the pioneer of Virtual Sports, Inspired has recreated the action of the world’s most popular sports for more than 15 years. is year the Virtual Grand National was held in place of the Grand National, which was cancelled due to ongoing COVID-19 concerns, proving Virtual Sports are realistic enough to take center stage. For the rst time ever, Inspired teamed up with Churchill Downs and NBC to broadcast a virtual Kentucky Derby this year. But it’s more than just a replication of the scheduled race. is year, Derby fans witnessed the most exciting two minutes in virtual sports featuring the 13 horses that have won the Triple Crown over the last 100 years. is idea of using our award-winning visual e ects and the latest in motion-capture technology to bring legends back to life creates many opportunities for Inspired. Every sports fan would love to know if Babe Ruth would have been better than Mickey Mantle? Or if Michael Jordan would have been better than LeBron James? Could the 1973 Dolphins defeat the 2019 Patriots? It’s unfortunate that it took something like the coronavirus to create this opportunity and possibly a whole new category. e one country where we’re not really seeing as much online growth is in the U.S. simply because online distribution is so limited compared to other countries, especially in online sports betting. I would expect that to grow coming out of this crisis. Brooks Pierce: Lorne’s analysis and thesis is right on the money. e transformation all of us are adapting to in our everyday life is driving behavior to the online experience and lottery will be no di erent. What we are seeing at Inspired is not only signi cantly increased play in our online businesses, but clearly our digital reach is getting to players that we may never have seen in a retail world. Let me give you a real-life example. We have a customer in NJ that has launched our virtual sports products on their platform and they are o ering up to 14 di erent sports for people to play. When we had a chance to see the results, we were astonished in that 2 of the most popular virtual sports in NJ were soccer and cricket. Even more popular than football, so its’ clear to me that this product was appealing to some folks who would likely have never participated if their only exposure was via retail. We have also seen that the majority of the play is coming through mobile, both in the states and worldwide. We think it is vital for lottery and sports betting operators to have a diverse product o ering with the consumer having the ability to choose how and when they interact without having to go anywhere. Lorne Weil: In the post-coronavirus world, things like social distancing are going to continue to be important issues. is environment will favor local. It’s going to favor entertainment venues that are small and attract relatively few people as compared to large casinos that, in order to be economically viable, need to have several thousand slot machines. It will favor local over destinations but it will also favor small bars/pubs versus mega resorts and casinos. Brooks Pierce: I agree with Lorne’s point on this as well, but I think the experience we are seeing in Pennsylvania with our Virtual Sports Product through the Pennsylvania Lottery is that there is a market for lottery products, and speci cally Virtual Sports products, in both the bars and taverns market as well as classic lottery retail venues. When the state of Pennsylvania locked down and closed bars and restaurants, we assumed that our virtual sports products, and in particular our Derby Cash horse racing themed product, would have its sales drop precipitously. What we have found out is that there is still a demand for our product in the lottery retail channel and we continue to have strong results, even with bars and taverns closed. We believe that the best solution is to take advantage of all channels (traditional lottery retailers, bars and taverns, and online) to allow the consumer to make the choice on how they consume the product that best suits their needs. ■