Do lotteries really need to totally reinvent the wheel?

12 February 2020

There’s been a lot of talk in recent years about how lotteries need to attract younger players and move online to stay relevant. But they mustn’t forget about their core player base, the audience heard at various panels at ICE. Joanne Christie reports.

In recent years lotteries around the world have focused heavily on digital innovation, in part to increase their appeal to the much-coveted Millennial generation.

In Europe, recent years have seen the introduction of annuity games and experience lotteries as operators vie for the attention of the younger crowd. Operators from both the monopoly and private sector have also increased their instant games ranges to attract more youthful players.

Some of these initiatives have indeed succeeded in increasing the number of younger players. The fact remains, however, that the core lottery player is still middle-aged or older and that the major sales channel is retail.

But is this actually a problem? After all, many lotteries are growing both sales and player numbers. Is it really an issue if Millennials don’t want to play?

This was one question posed to a panel at ICE last week in the Modernising Lotteries conference at VOX, with some surprising answers from industry experts.

What’s wrong with older players?
David McMorrow, managing director at the Scottish Children’s Lottery, told the ‘Lottery: Who plays it anyway?’ panel that the company’s core player base was housewives aged 45 and over and that he was perfectly comfortable with that.

“Look, I’d love to get both older and younger people in but the good thing about younger people is that they eventually become older people, so in that way they will obviously mature to become your customers.”

He raised another point he said was gleaned not only from his time at the lottery, but also his previous experience working for bookmakers such as William Hill and Ladbrokes. “Typically your younger customer has got less to spend and is probably more infrequent with their spending as well, so focusing on a younger audience is a difficult beast because of the expense of doing that and constantly trying to get their attention.

“Whereas once they have matured to older customers, it is actually fairly straightforward to get them signed up to a subscription.”

Of the lottery’s circa 250,000 players, about 50,000 have regular subscriptions, said McMorrow.

His experience was echoed by myLotto24’s chief strategy and risk officer Blerina Essen, who said the majority of the company’s online betting lottery players were 55 or over.

But she added. “Yes, we also have the older audience, however, I still think we should try to attract a bigger player base. l think that obviously expanding your products and expanding your business is not a bad thing.”

Fast-paced flavour
The panel was generally agreed that younger players were attracted to different types of games than older players. “If you look at the portfolio, we have the instant win games, which normally draw the attention of the younger crowd,” said Essen. “They like the fast-paced products.”

Similarly, McMorrow said. “We do have younger players too and they are more likely to play our instant win games online, which probably indicates that younger customers are more interested in that experience, that fun, that immediacy.”

Liking different products wouldn’t necessarily be a problem for operators, however, younger players also demonstrate less loyalty, which is a bigger issue, according to McMorrow.

“What we find as well is that younger people are more likely to play draw by draw but as a result they can be harder to both recruit and retain. Whereas older customers very quickly go into subscription – they understand the product and want to sign up and subscribe, which is obviously the most lucrative market.”

Essen raised another pertinent point about the motivation of the valuable subscription players. “The only subscriptions I can think of and what keeps us surviving is actually the people who normally play birthdays. So if you are playing your children’s birthdays and your grandchildren’s birthdays you would always keep playing just in case these numbers come up.”

Playing the charity angle
One question posed to the panel by moderator Wendy Lawrence was whether or not emphasising the charitable element of lotteries was vital in appealing to Millennials.

In both the US and the UK, various studies have pointed to the Millennial generation being more inclined to give to charities than older generations.

Essen said she believed this was important to younger audiences. “The younger generation do things like running marathons or half marathons and they are all linked to charity so they see that it brings something, it brings joy to people. So they perhaps understand that lotteries are not just lotteries.”

However, myLotto24 parent company Zeal Network’s venture into pushing the charity angle to Millennials, via Lottovate’s ‘experience lottery’ Raffld, didn’t turn out to be successful.

Launching in July 2018, the Dutch lottery aimed to appeal to younger players not only by giving them the chance to win experiences such as city breaks, but also by letting them choose which organisation the charitable portion of their ticket went to. However, it shut down after just eight months.

And McMorrow raised another issue with emphasising lotteries’ charitable credentials. “We give a percentage of each pound, which is 28% currently, but that is really difficult to advertise because if you are trying to sell the charity aspect people would somehow expect that 100% goes to good causes, not taking into account things like prizes, expenses, advertising.

“People just say that if it’s for charity then 100% should go to charity,” he said. “Where we’ve had to put in the percentage that we give to good causes it has actually been a negative.”

Retail reigns supreme
Another area that has perhaps been overemphasised is the importance of digital. While admittedly an important sales channel – and indeed the only one for digital-only brands – it’s clear that due to older players being the dominant demographic for lotteries, different sales and communication channels are vital.

McMorrow said that while most people in the older generations were in fact tech-savvy, many still preferred to sign up with the Scottish Children’s Lottery by phone or post, or buy tickets in-store.

“One of the things with the over-60s is that they want to sign up without an email address, they want to ring someone on the phone and sign up. They also respond a lot more to traditional methods, postal campaigns work really well. You would be surprised by the number of people who would still put all their banking details and pop it through the post.

“If you sign somebody up without an email address and go to that trouble, those people are incredibly loyal.”

This view was echoed by Yakir Firestane, head of digital at The Health Lottery, as the conference then moved into a panel entitled The Death of Retail.

“When we communicate with our customers on social media, on Facebook, on Twitter we realise that it is not that they don’t use digital, they do, they communicate with us through these channels. They don’t use the call centre, they send us private messages, but they don’t want to buy their ticket online, they don’t want to have a subscription, they prefer the route through retail because they get the human touch.”

He said while in the UK there was a higher adoption rate for digital lottery sales than in other countries, and that it had grown rapidly over recent years, he felt the market had now reached something of a plateau at a split of about 70% retail and 30% digital.

He said there were a number of reasons for the stalling of digital growth, one of which was that it was unable to match some elements of the retail experience. 

“There is a type of excitement in retail which I don’t think that digital would be able to achieve, at least I haven’t found a way for digital to achieve it. Actually I realised this when we had a focus group and we were talking to the customers.

“They said, ‘I prefer to buy retail because I get this ticket and I have it in my wallet and I actually don’t check the numbers for a while, because as long as it is in my wallet and I see that in my wallet I think that might be a million pounds’. I cannot replicate that. There is nothing absolutely nothing in digital that will give that feeling to the customers.”

Firestane said the company was happy with its channel split and had learned it was not a good idea to try and push retail customers towards the digital channel.

“It is not up to me to tell the customer how they should interact with me. I am grateful for the fact that they do. My job is to be there, to be available in a good state where they want me and when they want me.

“I don’t think that our strategy is grow retail or grow mobile. Our strategy is to grow the business.”