What does the future look like for lottery - both retail and online?

By Gambling Insider
We spoke with Will Whitehead, Commercial Director, mkodo; Julin Shaw, Senior Director of Brand Marketing and Business Development, NeoPollard Interactive; and Wayne Pickup, Chief Executive of Camelot North America

Will Whitehead, Commercial Director, mkodo

Advances of the 21st century have significantly improved how consumers integrate digital elements into their every day lives. In the gaming, betting and lottery sectors, operators make considerable effort to create an easy-to-use and engaging customer experience that rivals other enhancements technology has provided the entertainment industry. And while the Covid-19 outbreak dealt a heavy blow to retail and provided a significant shift in the way we shop, lotteries and retailers alike have recognised the key to success is making the customer experience the top priority.

The death of retail is not as imminent as was once thought. For lotteries in particular, retailers are still at the core of their ecosystem. Impulse purchases and the footfall of players looking to buy lottery tickets in a retail environment cannot be underestimated. That being said, today’s consumers will shop online or in-person, based on their preference, convenience and maybe even the weather. Integrating a digital strategy is vital to engaging a new generation of players, as well as revitalising the excitement for core and infrequent players.

When we look to the future, the demand for convenience will be imminent and innovative products that provide a better user experience will be at the forefront. For example, checking winning numbers accessed via an app or web app, “Ticket Scanners,” provides players with instant results and can quickly move them to second-chance games if available. This functionality can evolve further into “Mobile Cashing,” allowing players to digitally collect winnings on their device from a ticket purchased at retail. Moreover, if regulation allows for customers to buy a lottery ticket or place a wager on a mobile device outside of retail, a digital offering is an essential tool to give power to a customer to decide when and where they play. This is an excellent example of how retail and digital can work together as the industry, and  consumer behaviours continue to evolve over the next five to 10+years.

A better user experience also means customisation. Best-in-class design featuring enhanced navigation and an intuitive user interface is expected among all leading apps, and players are looking for convenience based on their interests. One way to do this is to build a digital fingerprint of the player from their activity and usage of the digital platform to retail cross-promotions. All of these small digital touchpoints allow lotteries to better understand the preferences of each specific player and enable them to provide customised promotional campaigns, and push notifications for a player’s favourite games and activities. “Known play” opens a whole new world for retail-only operators who have historically had limited access to information about their player base.

Wherever a lottery is on its digital journey, there are ways to begin integrating digital touchpoints to allow for a more streamlined transition; as they introduce innovative digital products to their players. For example, a first chance digital lottery game offers players a traditional lottery experience that begins and ends at retail. The ticket is purchased at a brick-and-mortar retailer and is scratched to reveal a QR code and URL, which players can scan on a mobile device or enter into a desktop computer to play a digital game. The player must return to retail to redeem the winning ticket, creating a full-circle transaction.

As lotteries develop and launch new products and services, they need to place their players at the centre of the brand experience. This means considering when, where and how customers want to play, and ensuring they have products in place to meet them wherever they are - including, for example, in-lane at grocery stores, in social establishments, and on their phones, making it easy for them to interact with the lottery brand. Traditional brick-and-mortar retail and digital lottery are not competing. Whether players prefer to purchase or play online or offline, it’s all about creating the best customer experience at that moment in that channel. 

Will has been at mkodo for close to 10 years and acts as the Commercial Director, heading up the New Business, Account Management and Marketing departments. Will has developed deep experience of apps and the iGaming industry throughout his years at mkodo. mkodo partners with iGaming operators, operators such as Ontario Lottery Group, British Columbia Lottery Corporation, Danske Spil and Mecca Bingo, driving engagement and increasing revenues, by creating best-in-class apps, websites and digital user experiences as well as Geolocation solutions.

Julin Shaw, Senior Director of Brand Marketing and Business Development, NeoPollard Interactive

Technology advancements and the ongoing migration of consumers to digital interactions and online purchases underscore the need for continued modernisation in the lottery industry.

Significant progress has been made as lotteries build a digital presence through social, digital marketing strategies and engagement tactics supported by convenience apps and player loyalty programs. This foundation, now influenced by the expansion of iGaming and sports betting, puts lotteries squarely in line to match the pace of other forms of gaming that have already moved to online and mobile channels.

To date, only seven US lotteries have introduced full iLottery programs by complementing their retail portfolios with eInstant games and draw games online. Varying regulatory limitations affect each lottery’s ability to introduce online wagering, but many have accelerated non-wagering programs like virtual cashing and loyalty, providing a foundation for the necessary evolution to online sales. 

For lotteries to continue returning significant funding to state budgets, below we list the top trends that will influence the future of lottery.

Digital Expansion

Since 2011, only seven states have introduced full iLottery programs where both eInstant and draw games are sold online. In stark contrast, sports betting has been legalised in 34 states plus Washington DC in the short four years since the repeal of PASPA opened the door to the expansion of this market.

The acceleration of iLottery is an essential component to the growth and sustainability of the $95bn US lottery industry. Adoption of iLottery programs has proven to increase awareness and broaden playership to new audiences that expect digital purchase and engagement. The average age of the mobile eInstant player is 47, signaling that iLottery helps draw in a different audience than traditional retail lottery, while appealing across age segments based on rising ecommerce trends. 

 True Omnichannel

With a decade of US-based performance data, iLottery is proven to complement traditional retail lottery sales. In fact, states within NPi’s partner network saw an average of 32% growth in total retail sales in FY21, as compared to the US average growth rate of 23% over FY20. The parallel growth of retail sales has been spurred on through innovative strategies that drive convergence between retail and online channels.

Through the pandemic, consumers have been trained to engage with brands in a different way that is heavily reliant on technology; so the expectation is already set in terms of how brands will need to connect retail and digital experiences.

Player Experience

The improved connectivity afforded through digital expansion ultimately serves the player. As lottery becomes more accessible, convenient and relevant, acquisition and retention efforts benefit.

Spurred by the acceleration of iGaming and sports betting, personalisation and real-time marketing are trends that are affecting both retail and online channels, as brands compete to meet the expectations of a digital gaming consumer.

Investing in solutions that allow lotteries to design ultra-personalised player journeys directly improves iLottery KPIs in terms of reducing friction in the path to player acquisition, conversion and retention. As sophistication continues to improve in data collection along the lottery player journey, across channels, opportunities to predict player personas and provide custom-created journeys that align to a player’s end goal when visiting an iLottery website is quickly becoming the expectation. Consumers expect to be able to reach content or complete a desired action quickly. The right data capture and improved predictive capabilities will allow lotteries to maximise this trend that additionally enable real-time marketing strategies to steer desired player actions.

Finally, increased reliance on digital wallets that reduce friction at the point of purchase – whether physical or digital – supports the evolution of lottery to true omnichannel experiences revolving around the player. Enabling the purchase of lottery products through a single digital wallet supports ongoing data collection, feeds the ability to deliver personalised, relevant engagement strategies and also strengthens responsible gaming programs, through greater program efficiency afforded by registered play and real-time data collection across channels. 

Wayne Pickup, Chief Executive of Camelot North America

To continue generating essential state income, lotteries need a modern playbook that seizes opportunities for responsible growth. However, some things will remain crucial for ongoing lottery success:

  • Differentiation from other forms of gaming, with powerful brands that are strongly linked to good causes and built on responsible gaming principles
  • A wide variety of game content and a well-executed roadmap to keep players engaged
  • An expansive retail network to provide the sales muscle
  • Data and insights underpinning all activity – from game design to advertising placement and in-store merchandising.
  • Omnichannel experiences. The future of lottery will embrace digital technology to innovate product and player experiences. Digital and retail should be seen as complementary channels, with retail sales growing in parallel to new digital experiences and revenue streams, as player engagement improves.

Future-focused lotteries will move towards an omnichannel view, working within legislative guardrails to offer players an immersive digital play experience across all channels.

In its most basic form, this includes ticket scanning of physical tickets and email/push notifications, leading to a digital roadmap focused on delivering more engaging experiences such as animated game play in retail.

The Illinois Lottery has become the first US lottery to offer draw-based Fast Play games for sale online and to create a digital play experience for players purchasing tickets in retail (known as “Scan-N-Play”), which are driving significant player and sales growth. A regular cadence of game launches with progressive content will keep players engaged.

Marketing efficiency. The marketing budget is typically the highest controllable cost line item and yet is often not deployed efficiently. By getting marketing dollars to work smarter, lotteries are able to significantly reduce spend without impacting top-line results.

A strategic shift to programmatic media, improved media targeting and advanced AI models will produce a higher return on investment of marketing dollars –  supporting the retail estate through dynamic allocation of spend, and better understanding of the performance of marketing assets. The Illinois Lottery reduced its existing marketing budget by almost a third, while growing returns to the state year-over-year.

Data-led decision making. Modern lotteries put their players at the heart of decision making, surrounded by an ecosystem that aligns the retail and digital experience. Lotteries have a huge amount of data coming at them from retail and online channels (web, mobile, app), promotions, CRM systems and marketing to name a few sources. By leveraging available data, lotteries can better understand consumer behaviour, and the attributes and preferences  of various customer segments.

Leveraging available player and sales data to generate actionable insights will drive incremental growth, across retail and digital channels. Digital growth, in particular, requires targeting players based on typical behaviour and the use of machine-learning models to predict player behaviour. Manual and automated communication flows can then be created for player segments based on play habits, subscription status, wallet status, location and communication history.

Responsible gaming. An important differentiator for lottery products, which are purely games based on chance, is a lower risk profile than other forms of gaming. A successful lottery aims to encourage more people to play a little and increase playership across all games.

An ambitious lottery growth strategy should therefore put equal focus on creating a responsible gaming environment for players, retailers and employees that is incorporated across all areas of the business.

Responsibly growing the lottery in a challenging operating environment ensures the long-term health and viability of the lottery with a focus on online safeguards, education and support for retailers; and readily available access to treatment and support across all channels and games.

A program of innovation focused on omnichannel product experiences, marketing efficiency, and data-led decision making, will help lotteries expand their player base and drive responsible growth over time.  

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