It’s easy to think that iLottery is the future of the lottery industry.
We are already seeing the gambling landscape change in many states with the addition of online sports betting. Online casinos have also made their way into a handful of markets.
Online is the wave of the future, but the path to getting there isn’t necessarily clear.
As some states with online lotteries are seeing growth in their player databases, it isn’t happening at a frantic pace.
During La Fleur’s 2024 Raleigh Conference, a panel of iLottery experts weighed in on the challenges of growing the brand and acquiring new customers.
iLottery can’t be treated the same as retail
One focus of the iLottery panel was how retail and online differ so much.
According to a report from Eilers and Krejcik Gaming, retail accounted for 91.8% of all lottery sales in 2023. On the flip side, iLottery represented just 7.3%.
Rob Wesley, VP of North America Customer Development at NeoGames, touched on the fact that the iLottery player is a small part of the overall lottery population:
“I don’t know that everybody realizes the comparison to playership numbers online, generally speaking compared to retail. I think it’s generally accepted that about half the adult population plays (the lottery) in a given year, or somewhere in that neighborhood. You’re probably looking at 40-45% play scratch tickets. Well, if you look at the highest performing iLottery state has seen in total, for their entire duration, about 11% of the population make a deposit. We typically see in a non-jackpot month about 1-3% of the population play in any given month, which is significantly lower than the retail side. Acquisition is very difficult on the iLottery side.”
Wesley believes that one of the issues right now is too many online lotteries try to operate like their retail counterpart.
The sooner the lotteries can have a better feel to make the online product more unique, the stronger the iLottery industry will get. Wesley added:
“Trying to operate an online business and ecommerce business the way you operate a traditional business is going to be problematic. You cannot compete against the competition that we have today. Moving slowly, you can’t compete with them on budget. The one differentiator we can try to do is be a little more agile in the way that we work.”
How can online lottery set its product apart from retail options?
Playing the lottery online or through a mobile app can create a unique experience for players.
The panel discussed the different ways they can make the iLottery product more attractive than the retail options.
Updating and introducing games quicker
One way to drive the customer to the online product is to give them a different experience than when they play their retail lottery.
The online platform allows state lotteries to quickly update their gaming library. Each can provide new games on a more frequent basis.
Wesley stated that speed and game implementation are big strengths the industry should exploit:
“We talked about speed for iLottery, and that means how quickly can the platform provider, and is platform capable of bringing new releases and bringing new features to you ongoing after iLottery has launched. I would say that’s a very big component that is different from the traditional retail side, you’re used to the long bat cycle and focusing on how quickly features can be implemented is important.”
Brad Cummings, the Founder and CEO of EQL Games, believes the quicker ability to add in new games can also allow lotteries to take more chances with their online content. If an iLottery game isn’t a hit, there’s not as much capital that was placed into bringing it into the market:
“That’s also the advantage of digital, you can’t take those kinds of chances in a paper ticket world, right? Because you’ve got so many slots and my Sevens tickets going to do X (among of sales) no matter what. So, everything I add to it needs to be above that, or there’s a risk to bring something outside of that box. But in digital, I can do something very specific to 10% of my player base who’s going to love this game, because it can sit there in the same shelf space as everything else and it doesn’t affect the fact it doesn’t affect my production of that game. That is going to have a smaller but more concentrated audience.”
User-focused display and features
Along with constantly updating the gaming library, creating a unique experience for each customer will become a priority.
Michigan online lottery sales were up 8% in 2023 compared to 2022. Zac Strickler, Director of Digital Operations for the Michigan Lottery, touched on making sure it gave each player an entertaining experience when they play online:
“We sell entertainment, the product provides the entertainment. So, one of the trends that you see that lines up with all of this is a much bigger focus on the UI (user interface) within the game. The graphics, and especially the base math supporting the game. We’re seeing games that are able to drive our sales even better, when we still have a harder time getting the same level of customer base, and the same level of their entertainment budget.”
Frank Suarez, Executive Director of the Washington D.C. Lottery, believes focusing too much on the VIP players would be a mistake. He thinks emphasizing the casual player is key. That’s been a focal point of the Washington D.C. online lottery.
“I think part of (building the iLottery player base) is really looking at what’s the experience that we’re providing players and how do we make sure we provide variety and sort of expand beyond that VIP, or just the core player, so that we can actually get those players that might be looking for a little bit of a different experience, and continue to build.”
Thinking outside the box to build an online audience
Saying you want to build the player database is easy; executing it is the challenge.
The panel discussed putting more promotion and focus outside of the top multistate lottery draw games like Mega Millions and Powerball. Trying to drive more attention into a Pick 3 or Pick 4 game could lead to more frequent sales.
We’ve seen some states begin to merge for progressive jackpot Fast Play games. The Pennsylvania online lottery and Virginia online lottery introduced the first of its kind last June. The game was produced by Instant Win Gaming and is called “Mega Money Jackpots.”
It features a multi-million dollar top prize, and each of the two states contributes a small percentage of sales to fund the drawings.
More of these collaborations could be in the works.
Advertising will be an important approach to growing the audience, as well.
Strickler wants to see Michigan’s iLottery product find its way to digital shopping carts. That’s similar to the ads you might see at your local retail grocery store.
“I want to be in digital shopping carts, on a variety of different, already strong, consumer sales platforms. If you have a shopping cart that hits at least three quarters of Michigan, (that’s the target).”
These iLottery experts have already noted the challenges of trying to compete with sports betting advertising in the states where it’s legal. Landing digital ads on popular shopping sites could be a way for online lotteries to make an impact on player acquisition.
Photo by Talaj via Shutterstock
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