Preparing for a
Steve Saferin, Managing Director of Entertainment and Sports Gaming Network (“ESGN”)
Founder of MDI, formerly President of SG Properties Group
I don’t think we will ever “come out of this crisis”. The world is going to be a different place from a human behavior standpoint. While we may develop a vaccine that will rid us of this virus my guess is the next one is not that far away and the behaviors we have adopted to combat this virus will be muscle memory. The lottery industry, retail and consumer shopping will be forever changed. While retail and consumer shopping have steadily been moving on-line, it is now imperative that the US lottery industry does the same or risk drastic reductions in the funding of good causes. My guess is sales at C-Store/gas stations will suffer as less people will enter the store and just pay at the pump. As to recreation I keep thinking what happens to spectator sports in arenas and stadium. While we can see games without fans for the short term that is probably not a sustainable model long term. Do masks and gloves become an integral part of our wardrobes? Its just unclear at this time. But hopefully our medical and scientific community will give tool to adopt to the new normal.
Like they say for property values; location, location, location. For lottery operators its digital, digital digital. It is my understanding that digital sales for lottery and gaming operators are booming. States will rue the day that they failed to pull the trigger on digital sales and need to do all they can as soon as possible to offer products in the digital channel.
Yes lottery sales have performed much better than other segments in times of recession. But we have never seen unemployment at these levels in lottery history so it’s a bit of a blank slate as to how this recession/depression will impact sales. With that said, what has hurt lottery sales in the past has been higher gas prices. Why? Because players had less money to buy tickets at their C-store/gas station. Well imagine a world where the individual gas purchases are halved. Gas prices may be lower but many less consumers will be purchasing gas. Not to sound like a broken record but the way to offset that is by selling lottery products on-line.
I don’t think less travel will impact home-grown lottery or gaming sales. Many people travel to go to a casino now. Lottery tickets are available at virtually any street corner or C-Store. I don’t believe very many players play a certain state’s lottery vs another state. After all that is why we have multi-state games. I do think human will return to a more social form of contact but I doubt it will be the same as pre-corona. But again, the medical and scientific communities hold the key to how far and how fast.
There are a few ways to accomplish this is you accept the premise that on-line sales must happen. The first is to convince them that record shows that on-line sales lift brick and mortar sales—at least that was the case in the pre-corona world. A second is figure out a way that retailers can share in on-line sales. Perhaps they can sell tickets thru their proprietary websites. Or players need to open and account register at a brick and mortar retailer and they share in the commission. Remember the history. C-Stores used to always complain about having to sell lottery tickets until there seemed to be movement to on-line sales. Then they couldn’t survive without lottery sales.
I believe that when the dust clears and states see the massive hit they take in lottery profits for good causes combined with the introduction of widespread sports betting, on-line lottery sales will finally be authorized in nearly every state even if it requires a change in legislation. Lotteries should be working on this now. I kind of worry about self-serve anything. Who is going to keep the kiosks clean? Will there be wipes at every kiosk? While this virus may turn out to be not that much deadlier than the seasonal flu it is so much more contagious than the flu that everyone is at risk until we build herd immunity assuming that will in fact work.
Social distancing in some way shape or form seems to be in all of our futures. How can we get a lottery ticket into the hands of a player at retail without the clerk touching it or the player having to touch buttons. Can a dispenser by customer facing and the clerk presses the button and the tickets dispenses into the players’ hands?
It’s a challenging time and future. But as you say, necessity is the mother of invention.