Public Gaming International May/June 2020

55 PUBLIC GAMING INTERNATIONAL • MAY/JUNE 2020 weeks) and a 200% uptick in rst time players. While Pennsylvania’s program is relatively new, current sales are tracking to over $1 billion dollars annually. e state’s iLottery sales hit a record $4.2 million in online/mobile sales in a single day and is currently averaging over $3 million per day. Consumers are ready, and it’s been proven that online sales lift brick and mortar retail sales. How severely will the economic repercussions of coronavirus impact Lottery? at depends on how lotteries and their stakeholders react to the situation, and whether the industry can successfully advocate for growth investment over cost cutting. Cost cutting will pull value and pro ts out of each Lottery’s business. Investment will lead to more funding for bene ciary programs. We’ve proven this after every previous economic downturn when bene ciaries were facing funding shortfalls. We are very fortunate to be in a resilient industry that has some resistance to economic downturns. Overall, during the Great Recession of the late 2000s our industry went from hot to at. e growth slowed but did not decline massively. With that said, when you get into the details, there were some states hit very hard by the housing crisis during this recession that resulted in bigger lottery industry hits. e coronavirus situation is somewhat similar, except for a more aggressive and quicker pullback due to the nature of the COVID event, which more resembles a natural disaster. e initial sales declines were particularly alarming, and we are thankfully experiencing some stabilization. e rate of declines has slowed, and in some categories like instant products, we are now seeing signs of substantial improvement and even cases of strong recent year-over-year growth. And we can’t ignore that having a well-established iLottery program would have helped any lottery generate signi cant sales during the crisis. We remain cautiously optimistic because it is unclear whether this growth will be lasting or if it is being propped up by temporary events. But on average in the U.S., for instant game retail sales, the average lottery is down only 1% pre/post COVID impact, and the overall instant game impact is down by closer to 9%. e overall impact is more due to several states with large populations that have experienced greater rates of decline. Unlike the Great Recession, coronavirus has sheltered people in place and outright closed certain sectors of the economy, such as bars and restaurants. is in turn has substantially damaged lottery products like Keno and other monitor games. On average in the U.S., for monitor game sales, the average lottery is down by 40% pre/post COVID. For other categories, bloc lotto is down 9% on average pre/ post COVID, and other draw products are down an average of 7%. e situation is very dynamic and there are still many unknowns. Again, we are cautiously optimistic that things will continue to improve, but we are appreciative and cognizant of the many complex factors and challenges at work. e lottery industry’s broad appeal and diverse retail distribution network is an asset. Augmenting with a strong digital channel adds even more value. Our COVID consumer panel research tells us that signi cantly more American lottery players will buy instant games in a new location, buy online, play instants outside of the store, plan instant game purchases ahead of time, and utilize instant ticket self-service machines after the pandemic ends. Gaming will go through many changes. Online gaming of all types will grow quickly in jurisdictions that have been holding o . Casinos will still be in business, but only the strong will survive. Slot machines and table games may utilize antimicrobial materials for touch surfaces. Games might be separated by shields ere will likely be fallout from the government’s use of mobile location data to track whether people are respecting social distancing and shelter in place restrictions. It’s very important for the industry to recognize the value of our retail partners. Although COVID has caused signi cant health and economic challenges throughout the world, through it all retailers have stayed the course. In the U.S., essential retailers¬—grocery stores, convenience stores and drug stores – remained open and their sta s continue to weather the storm. It’s natural that lotteries will, and should, focus on digital sales channels post-COVID. However, this should be done with a strategy that compliments each lottery’s retail strength and doesn’t compete against it. We need to demonstrate that our industry is also willing to invest in retail innovation. roughout the pandemic, retailers are seeing fewer customers coming through their doors and driving up to the gas pump. ey have had to adjust product o erings in di erent areas and put new procedures in place to ensure both sta and customers are safe. e pandemic has also hastened the launch of new services such as home delivery, and in some cases store pickup. ese new services and new procedures to ensure stores are clean and sanitized require the retailer to add more sta . And these additional in-store operations can occupy store associates’ time and reduce engagement with and management of the lottery category. When we reach the other side of this, retailers will look to make up ground on lost revenues and how to adjust to the “new normal.” To maintain a symbiotic relationship with the retailers of today it’s critical to understand the challenges they face. As corporate chains continue to grow and independents continue to lose ground, lotteries must address the operational, security, and pain points retailers have selling lottery products. Raising retail commissions to a level acceptable to retailers will forever be an unmet goal. However, focusing on instant products and modernizing how they are sold, merchandised and managed at retail is of paramount importance to furthering the lottery/retailer relationship. Our SCiQ® system accomplishes this—and we captured great analytical insights from consumer habits during COVID that would not have been visible without this technology. Regarding regulatory issues: Yes, commercial operators will advocate for their business. And it’s not simply opportunistic, it’s survival. With such a global economic crisis, any commercial business needs to adapt to changing conditions—our industry included. As you said, we will face increased competition for our consumers’ entertainment choices. During COVID, we even saw sports betting suppliers expanding to take wagers on lottery drawings. We can’t sit still. Continued to page 81