50 PUBLIC GAMING INTERNATIONAL • SEPTEMBER/OCTOBER 2024 Our lottery environment is evolving rapidly. While it has adapted to advancing technology, it now faces the transformative impact of AI. AI is becoming a major force in shaping the lotteries, betting, and gambling sectors, with games evolving and deregulation challenging various communities. Lotteries must navigate these shifts to stay relevant. But how can we effectively manage this transformation? A crucial question is whether a country's current RFP process can identify operators who can leverage AI technology effectively. With outdated legal frameworks, this is unlikely. RFPs urgently need revision to align with new technologies and changing customer behavior. The WLA RFP Template is outdated, and jurisdictions that have successfully modernized their RFPs have done so by addressing specific contemporary needs. Modern RFPs should emphasize business development, innovation, and integration with the local economy rather than focusing solely on costs. The preparation, drafting, and evaluation of RFPs need to be more transparent, structured, and rule-based to ensure objective assessments, with a strong focus on risk management, responsible gaming within the ESG framework, and integrity and sustainability. A forward-thinking approach might involve issuing an RFI or co-designing solutions before finalizing the RFP. This would enable lotteries to capitalize on innovative opportunities, provided the process is open-minded and inclusive in selecting potential suppliers and future contractors. However, updating the RFP alone is not enough. It must be accompanied by a revised legal framework that aligns with modern regulations and licensing agreements. Many current regulations were established long ago and fail to adapt quickly to technological advancements. While these outdated regulations aim to maintain a robust legal gambling environment, they can also hinder innovation and development. To truly foster innovation, lotteries need a more flexible regulatory procurement environment. Strict, unadapted, regulations create opportunities for illegal operators and other competitors to enter the lottery market. These illegal operators can swiftly exploit new technologies to capture significant market shares. Although lotteries can understand and analyze these innovative strategies, they often struggle to respond effectively due to regulatory constraints that delay approvals and implementation. Governments need to recognize their role in creating regulatory frameworks that actively support innovation. The EU has implemented a useful model by granting "delegated competences" to the EU Commission, with post-factum oversight by the European Parliament. This model ensures democratic control while enabling quicker responses to technological, economic, and societal changes. Operating models are also undergoing significant changes. While lotteries often collaborate to advance a modern gaming environment, they can also be competitors, as highlighted by a European-based Lottery CEO. Deregulation and advancements in other sectors of the gambling industry are blurring the lines between lottery activities and betting or gambling. This shift has enabled private, primarily online, operators to capture substantial market share. Despite the distinct appearance and structure of lottery games, online operators are increasingly targeting the lucrative lottery market by leveraging new technologies. Regulators and politicians often lack the expertise needed to address these evolving challenges, leading to player confusion and affecting the role of lotteries in the gambling landscape. By competing with lotteries, betting operators introduce complications through their economic efficiency (often contributing little or nothing to good causes), the convergence of gaming activities, and greater regulatory freedom. While competition can help lotteries expand and diversify their activities, ensuring a level playing field is crucial—something that outdated legal frameworks fail to provide. An outdated regulatory framework hinders regulators and politicians in safeguarding their key contributor to good causes, the lottery. Competition can sometimes be beneficial, but lotteries should not merely aim to become another gambling operator. The Unique Selling Proposition (USP) of lotteries extends beyond economic considerations and competition for new players. Efficiency, innovation, and competitive products are crucial in today’s economic context, but lotteries must maintain a focus on responsible gaming and dedication to good causes and social upliftment. These aspects are central to the mission of any lottery and underscore its societal role. The USP of lotteries lies in their dual commitment to economic and societal goals. Lotteries are tasked with upholding a value-driven approach to gaming, which needs protection within our constitutional frameworks to ensure continued relevance in an increasingly competitive market. However, even this societal role must be reassessed in the face of new challenges. We Protecting the societal role of Lotteries in a transforming world By Philippe Vlaemminck and Dawid Muller Continued on page 49
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