In the lottery industry, it’s been important for states to evolve and adapt.
That doesn’t just apply to introducing a new product. It also means knowing when to cut ties with one.
The Georgia Lottery made the decision for fiscal year 2024 to eliminate the production of $1 scratch tickets from its gaming library.
The move came with hopes that the traditional $1 player was already being phased out and would make the jump to higher price points.
Though it risked alienating part of its customer base, the Georgia Lottery knew it needed to shake things up. As scratch ticket sales continued to decline, it couldn’t just rely on lottery draw games to make up the difference.
The question is, did the strategy work?
$1 scratch tickets on clear decline in Georgia
During La Fleur’s Raleigh Conference in May, Georgia Lottery Corporation VP of Product Development and Research, Katherine Cundiff, spoke about the state’s decision to move away from $1 tickets.
Cundiff first shared that nationally, the sale of $1 scratch tickets had declined by an average of 16.5% in FY23. For Georgia, that number was 19.8%.
In FY06, $1 games had produced $4.5 billion in revenue in the US. By FY23, that dropped to $1.5 billion, a decline of 67%.
Many factors play into that sharp decrease in revenue. Lotteries have increased price points of their tickets, while consumer bases have become more attracted to larger prizes.
The Georgia Lottery conducted a survey to see why players weren’t purchasing the $1 tickets as often over time. The most common answers were that there weren’t enough prizes available to win and that the top prizes weren’t appealing enough.
Those points are why Cundiff believed there was no saving the $1 game:
“Over the years, we really tried hard to rejuvenate our ($1 games). We used promotions, made them part of a family of games, we even increased payouts here and there. But, it was really to no avail. We kept going on a downward trend.”
GLC tests theory in 44 stores
The decision to back away from $1 tickets wasn’t a quick one for the Georgia Lottery.
By the end of FY22, it knew it wanted to make a move. However, the state decided to do its homework throughout FY23.
It started with surveys to see how its customer base would respond.
When asked if $1 games weren’t available, 65% of Georgia Lottery players said they would spend the same as they had before, while just 18% said they would spend less.
That was important data for the GLC, according to Cundiff:
“Before we stopped launching our $1 games, we really took a step back and we had to be mindful of our customers. One of the things that we had to consider is we didn’t want a negative impact to our bottom line sales. We also didn’t want to alienate those players that were still purchasing $1 games, or turn away a possible new player.”
The next step was for Georgia to implement a pilot test.
From October to December 2022, the state removed the $1 games in 44 different stores. In 22 of those, the $1 tickets were replaced with a $2 game. In the other 22, they were swapped with a $5 game.
While the stores that featured the $2 games saw a sales decline of 10.6% at that price point, the 22 locations that highlighted the $5 games had an increase in sales of nearly 16%.
Scratch ticket plan implemented for FY24
Starting in fiscal year 2024, the Georgia Lottery decided to stop manufacturing new $1 scratch games. It believed the decision would ultimately move players to the $2 or $5 games.
In executing its plan, the GLC decided to make some of its new $2 games have a look and style like some of the $1 options players had enjoyed. That included titles with better odds to win an overall prize and games with more total prizes that featured a lower jackpot value.
The GLC also still kept two $1 game options available for its retailers if they weren’t onboard with completely eliminating the price point. “Junior Jumbo Bucks” and “5x The Money” were kept in production, but less than 50% of the 8,624 retailers in the state opted to sell the games.
In April, the Georgia Lottery went back and surveyed customers again about the $1 tickets. Of those questioned, 56% didn’t even notice that the $1 games had disappeared.
Of those who did notice a difference, 75% said it didn’t impact their lottery spending. In fact, 33% said they were spending more.
Georgia Lottery looking to end diminished scratch sales
The fiscal year is approaching its end for Georgia, so the overall result of its decision won’t be known until the state lottery releases its annual financial report.
However, Cundiff reported that at the end of April, the move had no negative impact on the GLC’s overall gross gaming revenue (GGR). That was due to the small portfolio contribution that $1 games had year over year, said Cundiff:
“We had no negative impact to our GGR primarily because of the small contribution our $1 games have really been giving us over the past couple of years.”
According to the FY23 GLC financial report, $1 scratchers had decreased in sales by $19.8 million compared to FY22. That was after the $1 games dropped by $23.4 million in sales the year prior.
Cundiff noted that the increase in $2 game sales will offset any losses from the removal of the $1 tickets.
Georgia has seen a decline in overall scratch ticket sales since FY21:
- FY23: $3.694 billion
- FY22: $3.743 billion
- FY21: $4.006 billion
- FY20: $3.428 billion
- FY19: $3.219 billion
Should the removal of $1 games lead to an increase in overall scratch sales, that would be a big positive for Georgia. Most states are seeing notable declines in their instant sales for FY24.
Cundiff says Georgia is happy with the results it has seen thus far. She also noted that the state is planning on the same approach for FY25:
“We will not be launching any new $1 games this year. We’re going to monitor how the two $1 games that we do offer in our warehouse, how they do. If we continue to see drops in our retailer selling $1 games, then we may remove those. But again, we put a lot of time and effort in talking to our players, talking to our research, retailers looking at our numbers to make sure we’re doing the right thing for the market.”
Photo by Mehaniq via Shutterstock
Graphic from the Georgia Lottery
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