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What is the Future of the Lottery?

The technological advances of the twenty-first century have significantly improved how consumers integrate digital elements into their daily lives. As a result, gaming, betting, and lottery operators go to great lengths to create an easy-to-use and engaging customer experience that rivals other technological advancements in the entertainment industry. While the Covid-19 outbreak dealt a heavy blow to retail and caused a significant shift in how we shop, lotteries and retailers alike have recognized that the key to success is prioritizing the customer experience.

The end of retail is not as near as once thought. Retailers, in particular, remain at the heart of the lotteries’ ecosystem. The importance of impulse purchases and the footfall of players looking to buy lottery tickets in a retail setting cannot be overstated. That said, today’s consumers will shop online or in person, depending on their preferences, convenience, and possibly even the weather. Integrating a digital strategy is critical for engaging a new generation of players while also reinvigorating core and infrequent players.

Expansion of Digital 

Only seven states have implemented full iLottery programs, in which both instant and draw games are sold online, since 2011. In stark contrast, sports betting has been legalized in 34 states plus Washington DC in the four years since PASPA was repealed, allowing this market to expand.

The acceleration of iLottery is critical to the growth and sustainability of the $95 billion US lottery industry. The adoption of iLottery programs has demonstrated the ability to raise awareness and broaden players to new audiences who expect digital purchases and engagement. The average age of a mobile instant player is 47, indicating that iLottery attracts a different audience than traditional retail lottery while appealing to people of all ages due to rising eCommerce trends.

Genuine Omnichannel

With a decade of performance data from the United States, iLottery has been shown to supplement traditional retail lottery sales. In fact, states in NPi’s partner network saw an average of 32% growth in total retail sales in FY21, compared to 23% growth in the US overall. Parallel growth in retail sales has been fueled by innovative strategies that promote the convergence of retail and online channels.

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

Player Experimentation

The increased connectivity provided by digital expansion ultimately benefits the player. Acquisition and retention efforts benefit as the lottery becomes more accessible, convenient, and relevant.

Personalization 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, driven by the acceleration of iGaming and sports betting.

Investing in solutions that enable lotteries to create ultra-personalized player journeys directly improves iLottery KPIs by reducing friction on the path to player acquisition, conversion, and retention. Opportunities to predict player personas and provide custom-created journeys that align with a player’s end goal when visiting an iLottery website are quickly becoming the expectation as sophistication in data collection along the lottery player journey improves across channels. 

Consumers expect to be able to quickly access content or complete a desired action. Lotteries will be able to capitalize on this trend with the right data capture and improved predictive capabilities, which will also enable real-time marketing strategies to steer desired player actions.

Finally, a greater reliance on digital wallets that reduce friction at the point of purchase – whether physical or digital – contributes to the evolution of the lottery into true omnichannel experiences centered on the player. 

Enabling the purchase of lottery products through a single digital wallet supports ongoing data collection, feeds the ability to deliver personalized, relevant engagement strategies, and strengthens responsible gaming programs, thanks to increased program efficiency and real-time data collection across channels.

Lotteries require a modern playbook that seizes responsible growth opportunities to continue generating vital state income. However, some factors will remain critical for long-term lottery success:

Differentiation from other forms of gaming is achieved through powerful brands strongly linked to good causes and based on responsible gaming principles.

A diverse range of game content and a well-executed roadmap will keep players interested.

A large retail network to provide sales muscle

All activity is supported by data and insights, from game design to advertising placement and in-store merchandising.

Omnichannel encounters The lottery industry of the future will embrace digital technology to improve product and player experiences. As player engagement improves, digital and retail should be viewed as complementary channels, with retail sales increasing in tandem with new digital experiences and revenue streams.

Future-focused lotteries will adopt an omnichannel approach, working within legislative constraints to provide players with an immersive digital play experience across all channels.

This includes physical ticket scanning and email/push notifications in their most basic form, leading to a digital roadmap that delivers more engaging experiences like animated gameplay in retail.

The Illinois Lottery is the first in the United States to sell draw-based Fast Play games online and to create a digital play experience for players purchasing tickets in retail (dubbed “Scan-N-Play”), both of which are driving significant player and sales growth. In addition, a consistent cadence of game releases with progressive content will keep players interested.

Marketing effectiveness

The marketing budget is typically the highest controllable cost line item, but it is frequently underutilized. The lottery can significantly reduce spending by making marketing dollars work smarter without sacrificing top-line results.

A strategic shift to programmatic media, improved media targeting, and advanced AI models will result in a higher return on marketing dollar investment, supporting the retail estate through dynamic spend allocation and a better understanding of marketing asset performance. The Illinois Lottery reduced its existing marketing budget by nearly a third while increasing state returns year over year.

Data-driven decision-making 

Modern lotteries place their players at the center of decision-making, surrounded by an ecosystem that integrates retail and digital experiences. As a result, lotteries receive a massive amount of data from retail and online channels (web, mobile, app), promotions, CRM systems, and marketing, to name a few. By leveraging available data, lotteries can better understand consumer behavior and the attributes and preferences of various customer segments.

Generating actionable insights from the available player and sales data will drive incremental growth across retail and digital channels. Digital growth, in particular, necessitates targeting players based on typical behavior and predicting player behavior using machine-learning models. Then, manual and automated communication flows can be created for player segments based on play habits, subscription status, wallet status, location, and communication history.

Gaming responsibly

A lower risk profile than other forms of gaming is an important differentiator for lottery products, which are purely chance-based games. A successful lottery aims to increase playership across all games by encouraging more people to play a little bit.

An ambitious lottery expansion strategy should therefore emphasize creating a responsible gaming environment for players, retailers, and employees that are integrated throughout the business.

Growing the lottery responsibly in a difficult operating environment ensures the lottery’s long-term health and viability, focusing on online safeguards, education, and support for retailers, and the readily available access to treatment and support across all channels and games.

An innovation program focused on omnichannel product experiences, marketing efficiency, and data-driven decision-making will help lotteries grow responsibly over time.

Betting on numbers is popular for centuries, but what about the future of lottery? Tell us in comments what do you think!

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