39 PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2022 industry organizations. Scott Gunn has an extensive government relations infrastructure in the United States, and he makes that available to our customers. The general nature of a facilities management contract is typically structured such that we can work together to advance our collective interests. Going forward, lotteries should consider whether there is an opportunity to shift more of the focus of the RFP on technology and results that will drive investment and peak performance. J. Westbury: Our belief at Pollard Banknote is that you should expect us to deliver our best products and performance every day regardless of how much work we do with you. I think that when lotteries go to RFP, they should not be thinking about the percentage of work that they’re going to award but about the value of the partnership that they’re going to get. And so, what does that really mean? We believe that every game should do really well for you and that we should be measured on the performance of the games or the solutions that we produce for you. I understand and appreciate the lineage of the shared services model and getting paid on a percentage of sales. But that percentage of sales model has some interesting complexities to it. For instance, the printer of the ticket on a percentage of sales model makes more money if there’s a big advertising campaign behind it. They also make more money if the ticket is smaller and doesn’t have special print features on it. There are different ramifications, pros and cons to different approaches. We try to work with lotteries on whatever basis they think is best for them. We just recommend exploring the benefits of other models, like paying on a price-per-thousand basis. We believe that each game should stand on its own performance, and we appreciate the opportunity to prove to lotteries that Pollard Banknote is a great partner. J. Schulz: I hope we might follow up on Jay’s point about RFP’s. The goal is to create an effective commercial alignment, right? Some of the RFP structures have not been updated – they’re the same as we saw 25 years ago. A lot has changed since then. For one thing, digital technology has changed the whole complexion of the industry, and the impacts will be even more exciting going forward. So we proposed that lotteries develop an approach to RFPs that enable flexibility for your commercial partners to help you adapt to changing technology and business processes. Digital is transforming the way every aspect of how the lottery business is conducted. The first panel of this conference talked about the power of Customer Relationship Management which is being unlocked by data analytics and tools that did not exist even a few years ago. RFPs should be designed to support a future that includes technological tools and solutions that may not even be available now. Invite your vendors to propose solutions and tools that will help lotteries meet the needs of a consumer marketplace that is changing as we speak. That is the pathway to sustainable growth, increased revenues, and net funds transferred to good causes. Instant games are a $105 billion business globally. Collectively, lotteries pay their vendors around $1 billion. Where else in the world does a consumer product yield $105 billion in top-line sales for a cost of $1 billion? Think about that. Look at the top 10 per-capita-sales lotteries – all 10 have a primary vendor relationship. They’re not all with Scientific Games, but it is the strong collaboration of the primary relationship that has proven to make more money for good causes. I share this as a challenge and to spur more discussion. J. Westbury: Inflation has not been a big factor for most of the last few decades. That appears to be changing. Inclusion of a clause that allows prices to adjust based on changes in Consumer Price Index (CPI) and the Producer Price Index (PPI) would enable vendors to bid based on current prices as opposed to factoring in an allowance for the possibility of cost increases. Basing the bid prices on current prices and allowing for increases in the event of changes to PPI would keep bid prices down. This consideration is being done in many jurisdictions outside the U.S. and we hope it may be applied here as well. M. Strawn: I agree with Lorne on the need for a common API to be built into everyone’s central gaming system. A frustration on the part of some of my colleagues, though, is the lack of consistency of pricing for third-party integrations. Especially with the long runways we see in these ten, fifteen, and twenty year contracts – we need to leave room for innovation that comes from third-party providers, and logical pricing that enables lotteries to explore the benefits of all varieties of options and solutions available from multiple suppliers. Speaking for myself, I would welcome ideas for how lottery and vendor might find more flexible ways to invest in new tools and solutions. The contracts we have spell out terms, conditions, timelines, etc. for everything that is done. But what if we want something that is not explicitly addressed in the contract? I would be open to suggestions for how we might grow the business in ways that require some capital outlays in exchange for growth opportunities that promise to deliver an exponential ROI for my State. R. Paul: What else could we do in an RFP to build the kind of partnership that I think we’d all like to see? J. Westbury: RFPs are hard for lotteries to execute and there may be no easy answer to some of the issues we have been discussing. But in our view, one of the best ways to try and build an RFP that works is to try and engage with all of the vendors equally in advance, allowing us to see the draft RFP document and comment on it. To ask us to submit questions to a purchasing department which then forwards it to a person they think may be able to speak to it is just a clunky process. The back-and-forth can go on for weeks without ever getting clarity on the issue in question. Even in those lotteries which do not have purchasing departments, it would still be helpful to clarify the issues ahead of time. Just inviting feedback from vendors might inform the way lotteries construct the RFP, and articulate what they are trying to accomplish. Or perhaps have an open discussion with the bidders ahead of putting out the final RFP. Once the RFP is let, some lotteries invite us in to ask questions about it. We then leave the room while they discuss it; and then return and they give us the answers. There are probably lots of different ways to do this. And I don’t presume to say what the best way is, or even if there is a best way. I am just proposing that the process be a little more interactive to enable the vendors thoughts to be heard, and for vendor questions to be addressed in an efficient way. R. Paul: This conversation started with me commenting that I believed it is all based on attitude; that you can write anything into RFP’s and contracts, but without the right attitude you’ll never have a partnership. I hope this conversation today sets a good tone, a good attitude, for all of us to continue the dialogue that leads to the kind of collaborative partnership that maximizes proceeds for good causes and positive outcomes for all lottery stakeholders. n
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