Lotteries, Gaming and iGamingCorrect Public Policy - Good Business Practice

“The Lottery is a wonderful thing. It

lays the tax, only on the willing.”

~Thomas Jefferson

Thomas Jefferson was the writer of the Declaration of Independence, an American Ambassador to France, and the President of the United States (1801 – 1809).

Founded in 1974, the Illinois Lottery has contributed over $17 billion to the state Common School Fund to assist K-12

public schools, as well as the Capital Projects Fund.

$17B

Déjà vu All Over Again• Lottery brand is irrelevant. • Lottery products invisible. • Lottery proceeds unknown.• Lottery creative targeted

for current players only.• Lottery is “not cool.”

Michael JonesSuperintendent, Illinois Lottery

It’s the marketing,

stupid!

33%of Illinoisans have a positive opinion of the lottery

Only

43%think the Lottery is for people like them

Only

We’re experiencing a transformation

9

New creative has transformed the brand

New creative has transformed the brand

Déjà Vu Meets The Internet

Lotteries and GamingA well run lottery is one in which a lot of people play a little, not a finite group playing a lot.• Lotteries are the most popular form of gambling in the world.• In the US, lotteries enjoy over 80% approval.

• Gaming is not nearly as popular as lotteries.

• Gaming concentrates on maximizing expenditure

by participant.• In classical gaming, odds and

winning experiences are key drivers of participation.

Q: FORMS OF GAMBLING PARTICIPATED IN THE LAST 12 MONTHS, 2011 (AGA 2012 State of the States)

Gambling Participation

• 58.1% had participated in at least one form of gambling in the previous four weeks • 57.3% in 2011; 55.5% in 2010; 55.2% in 2009

• The most popular gambling activity:• 48.0% National Lottery tickets • 13% National Lottery scratchcards• 10.6% Other good cause lotteries

• Betting on horse races, gambling on fruit or slot machines, and private betting with family, friends or colleagues were the next most popular activities (4.3%, 3.4%, and 3.3% respectively)

• More likely to be male, and over 45

Understanding the Internet Lottery TestThe Illinois Lottery Law (20 ILCS 1605) authorizes the lottery to create a pilot program that allows players 18 years or older to purchase on the Internet.

• Existing lottery games:• Mega Millions• Lotto

• Finite length: 36-48 months.• Protections against play by minors.• Exclusive to Illinois.

Internet Lottery / iGaming• The lottery is a monopoly.• Specific to existing large

jackpot lottery games.• Infrequent draws.• Fixed ticket prices.• The grand prize is dynamic.• Very few prizes.• No action.

• Mandatory considerations: geo-location, age control and ticket buying limits.

• Potential audience: 80% of all Illinois Adults (18+) 7.4M

Who would the Internet Lottery Test appeal to?

“My dad has always played the Lottery at the grocery store, but the new site speaks my language,

so I logged on to play online.”~ John Paul, 30

(first nonsubscriber to make an online purchase)

Feelings About Internet Option

Total Joes Jacks Non Player

Positive (Net): 35% 39% 41% 12%

Very Positive 16% 26% 15% 7%

Somewhat Positive 19% 14% 26% 5%

Makes No Difference 29% 27% 30% 28%

Negative (Net): 37% 34% 29% 60%

Somewhat Negative 15% 15% 15% 16%

Very Negative 21% 19% 14% 44%

Q: Overall, how do you feel about the State of Illinois making it possible to play lottery games on the Internet?

• About four in ten Joes and Jacks say they feel positive (very or somewhat) about the State of Illinois making it possible to play lottery games on the Internet while three in ten feel negative.

• Three in five Non Players feel negative (somewhat or very).

Internet Purchase Intent*

Total Joes Jacks Non PlayerPB MM PB MM PB MM PB MM

Top-Two Box 30% 23% 47% 43% 28% 19% 9% 5%Definitely 11% 9% 24% 26% 10% 4% 0% 0%Probably 18% 14% 23% 17% 19% 15% 9% 5%

Maybe 29% 36% 23% 29% 35% 44% 14% 17%

Probably Not 17% 19% 14% 13% 20% 21% 9% 19%Definitely Not 25% 22% 17% 15% 17% 16% 68% 59%

How would you buy these tickets?Only on Internet 39% 32% 32% 24% 42% 35%

Base too small to reportBoth Internet & Retailers 61% 68% 68% 76% 58% 65%

Retailers only 0% 0% 0% 0% 0% 0%

Q: If you could play Powerball on the Internet as well as at retailers, how likely would you be to buy Powerball tickets on the Internet?Q: Looking ahead how likely are you to buy Mega Millions tickets on the Internet?

• Joes are more likely than Jacks or Non Players to be motivated to purchase (definitely or probably) Powerball (47% versus 43%) or Mega Millions (28% versus 19%) tickets when or if they could play on the Internet.

• Jacks are more likely than Joes to only use the Internet to purchase Powerball or Mega Millions tickets.

*Online respondents reported

Internet Play is Likely to Attract a Million New MM/PB Players with 600,000 Being New Lottery Players

600,000 players new to lottery and MM/PB plus450,000 lottery players new to MM/PB

730,000 more weekly MM/PB players

The Internet Provides Access to Young Adults Who Previously Have Not Been Active in the Lottery• Selling Mega Millions over the Internet is likely to substantially expand the

player base and attract a sizeable number of adults who currently do not play the lottery. Those who would buy Mega Millions over the Internet are twice as likely to be under the age of 35 (34%) than those who currently play Mega Millions (18%). We hypothesize that they are also more likely to be white with higher incomes (data not available).

18%

26% 24%

32%34%

25%

18%

24%

18-34 yrs 35-44 yrs 45-54 yrs 55 +

Currently Play Would Play on Internet

N = 1561, Standard Error +/- 3%Source: Online Survey Feb 2006

Lessons Learned To-Date

• Interface must be easy, open, and intuitive and mirror existing e-commerce sites like American Airlines, Apple and iTunes.

• Platform must reflect products sold.

• Media only interested in poker expansion.

• There are pros and cons to starting the internet lottery test with the largest Mega Millions grand prize in the history of the planet Earth.

• 1433 B.C. Saturn Powerball prize of 6.2 Billion in Solar Credits only larger prize discovered by the Hubble Telescope.

The Internet Lottery Test, Powerball, the DOJ letter, Geo-control, Age-control, iGaming, Poker (!!??), Other Games…

OH MY!