Is lottery dying?

Is lottery dying?

Monday, January 29, 2018

More than 35 million people, 70% of UK adults, admit to playing the lottery on a regular basis. Lottery-funded films, which include The King’s Speech and Billy Elliot, have won numerous BAFTA and Oscars awards, and over 3500 newborn millionaires would attest their overall satisfaction with this national pastime.

Reportedly even the Queen herself has had a go (and won a tenner) on the very first Lotto draw. Lottery, it seems, is a successful business, rooted in tradition that can be traced back to the 16th century. So why do so many panels and conversations in lottery conferences start with the exact question mentioned above?

The reason lies in the trend line; In the UK, while the gambling industry demonstrated continued growth in 2017, lottery and bingo were the only exceptions. Lottery has retained its position as the second largest sector in the industry, but its Gross Gambling Yield has fallen by £376M (10%), largely due to National Lottery sales dropping by 9.1%.

This shouldn’t come as a surprise; for years the average age of lottery players has been steadily rising and the number of players falling. The number of people playing The National Lottery has dropped by 35% since 2013 and while 70% of people in the 55+ age bracket play the lottery regularly, less than 15% of 16-25 year olds do. In short, it seems that the biggest contributor to the decline in lottery popularity is death of old age.

In recent years, one of the most popular explanations for this decline has been that lotteries are not fun enough. Lottery providers, therefore, started launching more and more games to try and catch the attention of the younger player, alas to no avail. The lack of success emanates, in my opinion, from the biggest misconception in the industry, the fact that lottery is categorised as “gaming” makes people think it’s a game, it’s not - it’s a service.

A game is an activity that delivers entertainment value while played. Buying a lottery ticket is no more entertaining than paying your gas bill; you pay and get a receipt. We also print “Good Luck!” on ours. The value a lottery provides is similar to that of insurance; in both cases you pay a premium on a chance. Whether the chance is for a positive event in the former or a negative one in the latter, the ‘fun’ comes in the end.

Furthermore, if one considers winning as the main fun outcome of a lottery, then they are  defeated stock and barrel by slots. While an average slot machine returns to player about 95% of the stake on average, the most generous lottery scratch card wouldn’t exceed 70% and a lottery draw that returns more than 50% is yet to be seen. Even on the jackpot front lotteries fail to compete with slots, whose progressive jackpots span into millions. Continuing to compete on the winning front is doomed to fail by design; a gaming vehicle that is required to give 20-40% of the stake to charity will always win people less than a vehicle without the same restriction.

There is only one area where lotteries have a competitive advantage over slots and other money games: charity. It is also the area where lotteries should focus their service improvement efforts. Give people the option to choose the charity, segment people by the causes they care about and create communities around them, reward players regularly through the charity element (thank you for supporting XXX, in the last year customers like you have helped us build a new day-care centre in this area). Find more ways to give value based on the power of the community.

Making sure that funds go towards designated field of players’ choosing, whether in health, education, arts or sport, would foster a community of givers united by common goal. Underlining the ability to shape projects or field of their choosing is the key to revive lottery and make it attractive to wider demographics. This is an opportunity that will do nothing other than matching the product to customers’ expectations, thus unlocking lottery’s untapped potential.

Yakir Firestane is Director of Gaming at Northern and Shell (Health Lottery). Connect with Yakir on LinkedIn here.