INTRALOT’s Lotteries Group Director, Nick Papadoglou walks Gambling Insider through the driving forces behind the company’s recent success, and what it has planned for the future to maintain its momentum on this path
Can you please start by giving us some insight into your career and why you chose to work in the lottery sector?
Since my childhood I have been fascinated with numbers and innovation, in the sense that I always wanted to create and build something. This inclination followed me all the way through school and university where I studied engineering. Following graduation I remained on the path of innovation by obtaining a PhD in telecommunications and IT. Concurrently with my studies, I was working in the City of London in an IT role dealing with tools and software around “number crunching” and stock markets.
This led me to take up a consultancy job in the telecommunications industry, working initially in the area of internet-over-cellular performance optimisation.
After serving that industry for almost 15 years over numerous senior positions across several functions (technology, strategy, product marketing and sales), I moved to the gaming industry merely because of its blend of numbers with entertainment. It is by definition a very exciting industry, and nowadays even more demanding as it is going through a period of transformation, with a variety of new concepts, channels and competitors entering and challenging the landscape.
INTRALOT reported year-on-year revenue growth of 17.9% for the first six months of 2017, describing it as a “turning point” for the company. What were the main driving forces behind these results and how do you plan on maintaining these encouraging figures?
Our growth was driven by incorporating new revenues as a result of our M&A strategy for the lottery market in Eastern Europe, primarily Bulgaria, and by improving sales in both emerging and developed markets. The growth trend will continue by introducing new INTRALOT state-of-the-art products in mature markets. We also have plans involving several states in the US already in the pipeline within the fiscal year.
The strong figures leading the way in 2017 were boosted by sales specifically in Bulgaria, Poland, Jamaica, and Chile. Why do you think this was the case for these geographic locations?
Following the trend of improvement, acceleration and enhanced structure in respect to regulatory frameworks of the markets you mentioned, as well as parts of Latin America and Eastern Europe regions’ market maturity and official lotteries gaining market shares from “grey” zones. The 4G network’s establishment has also contributed to this growth, and along with the introduction and quick uptake of new game categories, the enhancements of current game verticals, and the launching of new ones; they all represent high level factors of the respective regional growth.
INTRALOT places a great deal of emphasis on its M&A and partnership strategies. Can you give us any insight into any upcoming M&A activity?
Growing the business through partnerships is a key pillar of our corporate strategy, along with product innovations around understanding player needs and promoting lottery modernisation through digital transformation portfolios. There are a number of opportunities around the globe that we would not be able to address alone. Partnering with strong local actors helps us diversify our portfolio, maintain an asset-light structure and take advantage of the partners’ better understanding of local markets. Being a responsible actor is also a key pillar in our strategy and promoting transparency and integrity in our sector is an important criterion in selecting partnerships.
Evidence suggests that younger players are taking more of an interest in lottery, what steps are INTRALOT taking to attract the next generation of players?
In the past few years, the younger segments have come into the industry’s spotlight. Every company has been focusing efforts on finding ways to attract and retain them with relevant, intriguing and engaging content and games. Understanding their needs in an in-depth way requires a sophisticated effort, but it’s the only way to address the market gaps.
Within this context, gamification, mobile play and online standardisation are a couple of areas that INTRALOT has exploited with lotteries. Jackpots, extended play, social and innovative game concepts, even eSports are some of the areas in which the younger generation is showing interest. However, a very exciting and widely accepted characteristic of this segment is its sensitivity on community contribution, something that lotteries have already been focusing on for years now.
What new innovative products have you released in order to stay ahead of the game in the constantly evolving lottery industry? How important do you think the social element is when creating new lottery products?
As the lottery environment evolves, social features, increased interactivity and new game plays have become essential ingredients for success. INTRALOT is constantly building game concepts that mainly require little game knowledge, skills combined with chance, extended play and enhanced second-chance schemes for the lottery sector.
At the same time, we are also working on bridging the gap between traditional lottery and the online era, and one of the most exciting aspects about this idea is finding ways to combine online shopping with game entertainment. So what we do is make lottery products where players buy chances of winning prizes and simultaneously get plenty of enjoyment out of the process.
This has generated stunning results; not only do new player segments find lottery offers appealing, but current land-based players constantly witness the benefits of online and mobile lottery.
What verticals do you see as the most profitable in terms of lottery, and how do you think this will change in the future?
Traditional terminal games and traditional instants I believe are the two basic verticals expected to lead the growth of lotteries on an international high.
Terminal games, mainly all traditional lotto, double matrix and multijurisdictional games, show a constant and growing popularity that is reflected by higher prizes and jackpots, where draw schedules build up player anticipation. This vertical currently claims the largest market portion, taking up over 50% of the global pie. What’s more, as the introduction of the online channel will enable the “play anywhere, anytime”, the vertical is expected to remain on top with growth rates of almost 10% for the next ten years.
On the other hand, traditional scratch games have achieved a robust growth rate of over 12%, and are also expected to maintain this uptrend. The variance of prices regarding scratch games -from low to premium tickets - as well as the instant win factor, are identified as the driving factors behind this growth. Furthermore, the digitisation of the brick and mortar channel paired with an omnichannel strategy will take this vertical even further.
What excites you most about the lottery industry today? And where do you see this sector in the next ten years?
Technology being injected in the traditional land-based lottery playground. This excites me because it introduces new attributes, new elements and new facilities. It enables concept ideas to spawn, it triggers new ways of playing traditional lottery, it renders convenience to trade and pay through alternative channels, and this way it contributes to real gaming innovation.
Focusing on overcoming the industry’s aging profile challenge is another thrilling part of this business. In many cases, old-fashioned retail and poor online presence prevail to such an extent that obverting to new lottery products with more attractive prizes, gameplay, gamified content and beneficial loyalty schemes, become a challenging fight.
Putting it all together, this transformation from a pure retail to a true multi-channel, multi-product industry is what will keep excitement levels high for years to come.
Over the last ten years, the instants market has increased by a staggering $26bn, and is by far the largest contributor to lottery operations worldwide. How is Intralot capitalising on this?
It has indeed been an exciting decade for the instant win market. At INTRALOT we develop end-to-end instant win solutions; they include portfolio formulation, inventory and retail management, warehousing, tickets ordering, suggestive ordering distribution and tracking, plus reporting.
Apart from that, taking into consideration the industry’s rise in online, we have dedicated teams focusing on instants, not only for the expansion of our portfolio, but also for the creation of real, modern and augmented player experiences while safeguarding responsible gaming. We optimise our games and strategy based on sales, player behaviour and analytics so as to ensure that the game mix efficiently reaches targeted player segments.
Do you have any concerns regarding the “loose” online legislation framework when ensuring a responsible gaming environment?
INTRALOT ensures that all its new products - from platforms to games and from retail to online channels - are in total harmony with the WLA Responsible Gaming Framework.
Our systems can be fully parameterised, and include features that support responsible gaming for both anonymous and registered players by setting the appropriate limits.
Online participation is regarded as part of the evolution and responsible gaming, security and fraud prevention issues towards the systemic protection of players represent vital pillars for official lotteries to build on. Responsible gaming is about giving players the choice of well-designed games in a secure and supportive environment. It’s about preventing underage, illegal and problem gambling, and minimising any potential harm to society.