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Lottery Overview and Sales Report

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Title: Lottery Overview and Sales Report


1
Lottery Overview and Sales Report
  • Presentation to California State Lottery
    CommissionDecember 3, 2008

2
Lottery Sales Over Time
  • Over 23 years, there have been periods of sales
    growth and periods of decline in sales.
  • First Year sales over 1.76 billion
  • Lowest FY sales 1.358 billion in FY 1992
  • Highest sales 3.58 billion in FY 2006

3
Fiscal Year Total Sales over 23 Year History
4
Key Reasons for Growth over Time
  • The key strategies contributing to sales
  • Product Improvements Higher Prize Payouts
  • Scratchers sales more than doubled between FY
    1997 and FY 2000
  • Sales were 525 million the fiscal year before
    this payout strategy started. And, by FY 2000,
    Scratchers sales were nearly 1.2 billion
  • See the orange bars in the chart on the following
    page.
  • Scratchers Sales Grew by 700 million morefrom
    FY 2003 to FY 2006 due to growth in the sale of
    3 and 5 games
  • Growth in 3 games is due to Bingo and
    Crosswords. These extended play games were
    launched with Bingo after that theme restriction
    was removed from the Lottery Act by the
    Legislature in 2002.
  • Strong and Continuous Marketing efforts
  • Only conducted for Scratchers in the first few
    years of the Lottery and periodically for Lotto
    games.

5
Scratchers Sales History
1,930
6
The Most Successful Strategies Cant Be
Maximized Now
  • The 34 mandated to education limits funding for
    the best revenue generating strategies
  • Programs like Higher prize payouts and Marketing
    support
  • Real business would invest in proven sales
    builders
  • It would driven by growing dollar profits not
    maintaining a fixed percentage of profit
  • Other Lotteries have seen their Sales and Profits
    grow dramatically in past several years w/
    Scratchers
  • 5, 10, 20 games have fueled growth elsewhere
  • Higher prize payouts are essential for having
    successful games at 5, 10 and 20 price points.

7
In FY 2007-2008, CA had the Largest Year over
Year Sales Decline
  • Because California cannot fully adopt the
    successful strategies that have been done in
    other states, sales in California during FY
    2007-2008 declined by the largest amount compared
    to other U.S. lotteries.
  • Chart on the following page
  • Despite this large decline, California still had
    the 7th highest amount of ticket sales and
    produced the 3rd largest profit in terms of
    dollars among U.S. lotteries.
  • NY was 1 at 2.579 billion in profits on sales
    of 6.67 billion
  • FL was 2 at 1.288 billion in profits on sales
    of 4.17 billion
  • North Carolina had the largest increase in sales
    a jump of 21 over the prior fiscal year.
    Their increase was primarily in Scratchers due to
    boosting their payout as a result of legislative
    change.

8
In FY 2007-2008, CA had the Largest Year over
Year Sales Decline
9
Instant Ticket Sales Trends in a Sample of Large
States
Fiscal Year
10
Prize Payout Relief Crucial to Long-Term Success
  • The California Lottery has known that sales and
    profits improve by increasing the prize money in
    Scratchers games but has been unable to gain the
    ability to make this change.
  • As early as 2001, a bill has been in the
    legislature to allow the California Lottery to
    increase its prize payouts
  • In 2001, SB 930 got to a floor vote in the State
    Senate but failed to get the two-thirds majority
    needed for passage
  • Subsequent legislative sessions saw somewhat
    similar bills introduced.
  • Because no change in the law occurred, schools
    have lost potential money.

11
Impact of MEGA Millions Not as Great as Expected
  • If more sales from a game like MEGA Millions
    (which works at a 50 prize payout) materialized,
    this could help fund more Scratchers prizes and
    add Marketing programs.
  • Unfortunately, the impact of the MEGA Millions
    game was short-lived. Jackpot fatigue quickly set
    in as consumers saw enormous jackpots.
  • A high percentage of the MEGA Millions sales were
    cannibalized from Super LOTTO Plus.
  • There were not enough funds for a sustained
    marketing effort.
  • As MEGA Millions sales fell below expectations,
    Scratchers sales had to be curtailed since there
    was less money available to fund the higher
    payouts.

12
Sales for First 4 Months of FY 2008-2009
  • Total Sales 985 million (7/1 thru 10/31)
  • Last Fiscal Year 1,090 million same period or
    down 10
  • Jackpot Games represent the greatest decline
    due to fewer big jackpots
  • Super LOTTO Plus MEGA Millions Sales of 278
    million for the first 4 months of this year
  • Compared to 378 million last year - down 26
  • MEGA Millions had 4 draws with a jackpot of 100
    million or more this year but had 9 draws with
    jackpots of this size last year.
  • The Largest this year was 132 million vs. 330
    million last yr
  • Super LOTTO Plus had 1 draw with a jackpot above
    50 million between July and October this year
    compared to 9 such occurrences last year.
  • The Largest this year was 53 million vs. 93
    million last yr

13
Sales for First 4 Months of FY 2008-2009
  • Scratchers Sales from July 1 to October 31 were
    555 million this year
  • Just 2 down from last year
  • Daily Games Sales are up 3 over the comparable
    period last year. This is due to the addition of
    the Daily 4 game launched in May, 2008.
  • While Daily 3 sales were down 14 relative to
    year ago figures, the total of Daily 3 plus Daily
    4 sales were nearly 60 million vs. sales of just
    Daily 3 last year of 51 million.
  • Hot Spot Sales continue to decline
  • This years sales of 40 million represent a 7
    decline compared to figures from last year at
    this same time.

14
Other Lotteries
  • The most recent quarter July - September saw the
    vast majority of jurisdictions have year over
    year sales declines. Many more lotteries are
    experiencing a slow down in sales this current
    fiscal year compared to the earlier chart looking
    at last fiscal year.
  • Of the 12 MEGA Millions states, 7 are showing a
    sales decline. There are 3 states with sales
    gains so far this year.
  • Georgia The biggest gains were in Daily 4 and
    Keno during the quarter.  And, their strong
    selling Instant Tickets grew by 5. 
  • New York The biggest increase for a single
    product line was Instant Tickets where sales grew
    by 8.   
  • Mass Instant Tickets and the 4 digit numbers
    game grew by 3.

15
This Year, Only a Quarter of Lotteries Had Sales
Gains in First 3 Months
16
Other Gaming Also Down
  • Gaming Revenue in greater Las Vegas is also down
    compared to year ago figures
  • July 2008 819 million down 15.0 vs. July
    2007
  • August 759 million down 9.4 vs. August 2007
  • Sept. 853 million down 2.9 vs. Sept. 2007
  • Visitor Volume to greater Las Vegas is also down
    during those months
  • July down 4.6 vs. year ago figures
  • August down 4.3 against last year
  • Sept. down 10.1 vs. year ago numbers
  • Source Las Vegas Convention and Visitors
    Authority (www.lvcva.com)

17
Strategies and Tactics in January June 2009
  • Premiere of new TV Show Make me a Millionaire
  • Supports efforts to Improve Brand Image
  • Continue developing no cost Cross Promotions
  • Leverages other companys marketing efforts
  • Associations w/ fun or other entertainment
    products
  • Launch 2nd Chance Drawings for all Scratchers
  • Supports positioning of more winning
  • Pursue administrative efficiencies
  • Elimination of manual processes w/ cost savings
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