Lotto NZ forecasts 8.4% sales decline for FY2020-21

30 July 2020

New Zealand Lottery Commission (Lotto NZ) has released its statement of performance expectations for the financial year ending 30 June 2021, showing an expected decline of 8.4% from forecasted sales for 2019-2020.

Sales are expected to fall from 2019-20's reduced forecast of NZ$1.34bn (£682.2m/€754.5m/$889.4m) to NZ$1.23bn in the coming year. 

The amount to be paid to the Lottery Grants Board, which uses lottery revenue to support charitable causes, is also expected to be down 6.7%, from $300m to $280m. Meanwhile, operating expenses are expected to increase from 5.3% of total sales in FY19/20 to 6.6% for FY20/21.

“At this point it is too early to accurately predict what the impact of [novel coronavirus (Covid-19)] will be on New Zealand, and therefore on Lotto NZ’s performance," the lottery explained. "

However, given the unprecedented nature of what we are witnessing we have taken a conservative approach to setting targets for the 2020/21 year, and have set our sales and profits targets slightly lower than the modelled long-run median.”

The statement offered two explanations of the lower forecast for FY20/21 compared to FY19/20. The impact of the Covid-19 pandemic is cited as a key reason, as well as the “exceptional Powerball jackpots in 2019-20”, which included a must-be-won $50m draw.

Lotto, Powerball and Strike games are expected to make up $1.025bn of next year’s sales, 83.4% of the total forecast. ‘Instant Kiwi’, and other games such as Keno, Bullseye, and Play3, are expected to make up the remaining sales revenue.

Retail currently accounts for the majority of sales made, however forecasts for 2019-20 have been downgraded from their original targets. At the beginning of the financial year, sales targets for retail amounted to $984.4m; however the channel is now forecast to generate $935.2m, down 5%.

Retail forecasts for FY20-/21 are lower still at just $810.4m, down a further 13.3% from the forecasted figure for FY19/20.

The operator expects to increase its digital sales revenues in FY20-21, up 2.8% from a forecasted $406.8m in 2019/20 to $418.3m.

This comes after the closure of NZ Lotto retail locations moved more players online, resulting in the forecasted digital revenue FY19-20 being up over 50% from the original target of $270.2m.