Future of the Lottery Industry

The Future - A Five-Year Outlook For The Lottery Industry

I'll have to admit that I am no more of a sage than most people, but I do have one advantage: an excellent staff of people who are helping PGRI to stay at the forefront of what is happening and what is likely to happen in the future. With that in mind, I would like to take this opportunity to share some thoughts about the future of the industry.

Duane Burke (Honored Founder and former CEO for 36 years - now Retired) Wrote this Outlook in September of 2001. ==========================================

Technology

The Internet will become an important marketing tool. Hand-held, multipurpose devices such as cellular phones with Internet capabilities will become key to marketing and sales to important segments of world lottery markets.

As the Internet becomes a vehicle for the sale of lottery products, the television set will ultimately be the principal conveyor of that product as it becomes the principal device by which most people interact with the Internet.

Television as a means of selling lottery products, which is currently blocked in most areas of the world, will now come to fruition indirectly as a result of the Internet.

Marketing

Generation X is probably the next big challenge for marketing lottery products, but fortunately the technology that they've grown up with will be an important vehicle for future lottery games.

As the population ages, games that historically have been popular will be replaced with games more appealing to Generation X. Marketing will take on a different approach and a different emphasis as products move deeper into technology. There will be an impact on traditional lottery retailers that can be overcome by tying retailers to prize redemption and products.

Games On-line

The traditional on-line products are maturing in their current formats and require modification to get them back on track. Fortunately, the on-line technology lends itself to a variety of game formats that will work well with the technologies of the future. This will be a continuation of on-line systems growth. On-line systems provide an important foundation for the delivery of a wide range of products through whatever sales means might be used.

Instant

Scratch-off games will continue to be important. Probability games will be key in scratch-off importance. The industry will see more of those types of games, as well as more specialty games with even higher price points than seen on the market today.

Theme Games

Instant games and other theme-related games will continue to see higher price points and greater success.

Government

The U.S. Government will continue to take periodic shots at gaining control of state lotteries but with little actual effect. Canadian lotteries are better insulated from their national government. But state and provincial governments are another matter. Lotteries will always be subject to politics and current public opinion in regard to expansion and advertising of lottery games.

Multi-jurisdictional lotteries such as multistate lotteries and interprovincial lotteries will continue to grow and will eventually account for major portions of all participating lotteries' revenues. Additionally, there will be major potential for more cooperative international ventures.

There will be increasing competition from casino gambling in areas where the lottery does not have control. It is a possibility that unless lotteries develop a very strong program of legal presence on the Internet, illegal Internet lotteries will become a measurable competitive factor in another five years. Competition from illegal lottery entities is another good reason for lotteries to be a force on the Internet.

Public Attitudes

Public attitudes in the United States and Canada, in state and national surveys, convey a strong continuing support of state/provincial lotteries. Lottery support, as long as game integrity continues, is unlikely to change. There are still 13 states that do not have lotteries. It's very likely that at the next downturn of the U.S. economy, when states are once again struggling to find more money, the remaining 13 states will turn to lotteries as an opportunity to provide revenue without increasing taxation.

Motivation will be even stronger than in years past because lotteries continue to be successful and generate more money than ever imagined, even as recently as 10 years ago. It is hoped and expected that all the jurisdictions will legalize lotteries in the next century. New lotteries will use modern models (such as the ones found in the United States, Canada, and overseas) which keep the agencies more independent of government in their day-to-day operations rather than operating as government agencies.

Prizes

Large prize amounts continue to be a surefire way to get people to play lottery. Another key factor is repetitive winning experiences. Large prizes and repetitive winning experiences are tied deeply to human response, which will not change in the future.

Payouts

Payouts in the future, increasingly in U.S. lotteries, will be giving players the option of getting cash in lieu of the traditional annuities. Expect to see this trend increase and expect the cash award to become the dominant method of awarding large prizes in the United States.

POS Machines

Machines may become more important in retail outlets as Internet games become more important. For example, a person going into a store to buy something can use a machine from which all on-line and Internet games can be accessed. The possibility of having more machines in one retail location could provide an opportunity for lotteries and suppliers.

Video

Video lottery will increasingly become an opportunity for lotteries. As a result of the spread of casinos in the United States and Canada, and the widespread use of video-type machines in those areas, lotteries will find the stigma associated with video diminished, enabling them to more easily offer video as a product.

The Future of PGRI

Public Gaming Research Institute will remain committed to the success of the lotteries, the success of lottery people, and the success of lottery suppliers. The company's products and services will evolve in response to new needs, opportunities, and the changing market.

PGRI would like to take this opportunity to thank everyone in the entire lottery industry for their participation in PGRI sponsored conferences, PGRI managed trade shows, and for continually relying on PGRI publications and services to support industry professional needs.