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The lottery long game: Trends and challenges in the lottery business

By: Jessica Gares


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Gone are the days of lottery players huddled around their television sets, clutching their lottery tickets, eagerly awaiting the broadcast of the winning numbers. The lottery business has come a long way since the introduction of Lotto 6/49 in 1982, marking the first time players could pick their own numbers. The industry continues to change and adapt based on expectations of players, but it faces a number of challenges including the pace of changing consumer demands, evolution of shopping practices, and proliferation of entertainment and consumer activity on mobile devices. Lottery executives from across North America can likely unanimously agree on one thing: Growth in the lottery business as it stands today is uncertain with many jurisdictions looking at flat or declining sales. There are a myriad of factors contributing to this, ranging from changing habits to shifting demographics, to an absence of new games, and a jackpot drought. These challenges have gaming executives across the country brainstorming the best potential methods to evolve and reverse the downward trend. BCLC President and CEO Jim Lightbody previously served as Vice President of the corporation’s Lottery division for a decade. Lightbody sees an opportunity for collaboration and cooperation among members to tackle shared challenges together. Addressing new challenges The lottery business as a whole has excelled in distribution of products, but the industry is currently confronting the challenge of how to effectively grow the business and further leverage existing distribution channels. How can the retail experience be modernized to attract new players, while continuing to satisfy the existing, loyal player base? This is a fine balance that leaders across the business are attempting to strike. While lottery executives across Canada face challenging forecasts, it is difficult to identify a single factor that can explain why the player base is shrinking.

Lightbody does not believe shifting demographics should shoulder the entire blame for the decline in lottery sales. Instead, Lightbody asserts that the industry needs to keep pace with its customers and he underscores the importance of introducing new content to keep players engaged.

“We are in the entertainment industry and people want to experience something new; an exciting, different game to play. It’s in human nature to want to explore the unfamiliar and ultimately, I believe some of our player base has grown tired with playing the same game over and over again,” says Lightbody.

New content needed

Kevin Gass, Vice-President of Lottery at BCLC also emphasizes the importance of new content for players.

“The fundamental challenge upon us now is the notion of content. We need to create new products or games which have the potential to appeal to players who don’t find our current products interesting or engaging,” says Gass.

How does the industry successfully implement original games and provide players with innovative content in a world where the average Canadian’s attention span is less than a goldfish, according to Microsoft? The simple answer is collectively the industry needs to start making changes and from there, it can assess the success of individual new games and whether or not they successfully entertain our player base.

Lightbody highlights that ideally, he would like to implement two separate teams in the BCLC lottery division; one team would focus on enhancing existing games which are currently popular with B.C.’s core players and a second team would focus on creating and developing new games.

A sense of urgency

“We don’t have a burning platform or competitors who are threatening to eat our lunch. All of our products are profitable, but we need to create a sense of urgency to create more products and push the envelope,” says Lightbody.

Both Lightbody and Gass stress the need for the industry to challenge itself, even though overall, the business is strong.

“We need to think about the retail differently — how can that experience be modernized? We also need to look for opportunities to perform our business better from a customer service perspective. Lastly, we need to look for opportunities for digital integration,” explains Gass.

There is certainly a thirst for innovation at BCLC and a desire to take calculated risks and put ideas into action.

“There will be two parts to our lottery success,” says Gass. “The first step is stabilization, where we will seek out new, short-term opportunities and try new methods that may turn out to be high-value activity that will correct the downward trend in lottery sales. The second part is transformation, which will be a long-term plan to make fundamental changes to create year over year growth.”

Innovation is key

Despite the heavy focus on the need for change, it is important to note the lottery business has seen its fair share of innovation. To address the challenge of shifting shopping patterns, BCLC introduced Lotto Express, which enables players to buy lottery tickets while they check out their groceries. Big box stores and their added convenience have changed the way people shop and in light of this, BCLC struck a partnership with Costco and for the first time in North America, Costco is selling lottery products, in the form of Scratch & Win ticket packages, across B.C.

BCLC is also one of several jurisdictions that offers lottery tickets online. These new distribution channels are not intended to replace the traditional retail outlets but they provide players with more options and avenues to play. While the distribution in lottery across Canada is very strong, it is ultimately new content which will expand the player base and keep existing players interested.

Parallels evident

Lightbody draws many parallels between the lottery business and the soft drink business and gleans inspiration from the soft drink industry’s voracious appetite to introduce new products to the marketplace.

“Take Coca-Cola or Pepsi for example, where distribution is also critical for their success and survival. Coca-Cola has not rested on the laurels of its solid brand recognition; instead it has introduced a wide range of products from Vitamin Water to Coca Cola Zero and Powerade – they did not choose to rely solely on Diet Coke or Coke. For the lottery business, we need to recognize the need to introducing new products,” says Lightbody.

The lottery business is not going to change overnight and nor should it; developing and introducing new content will take time, creativity, patience, boldness, and a willingness to experiment. Both Lightbody and Gass express the importance of creating a workplace that recognizes the value in taking calculated risks, learning from the results and moving forward.

“We can continue along the same path because it has been a safe and successful one but I believe maintaining the status quo is the last thing we should be doing,” says Lightbody. Any business that does not innovate and adapt will not prosper and that includes the lottery business.

About the author:

Jessica Gares is a Communications Officer at BCLC. Connect with her by email at jgares@bclc.com.