An Interview With Lottery Leaders: North American Lottery Innovation

Throughout this article, you will find condensed insights from interviews with four lottery leaders:

• Alec Thomson, Executive Director, Arizona Lottery
• Harold Mays, Director, Illinois Lottery and Immediate Past President, NASPL
• Kim Clark, VP Lottery & Customer Success, Ontario Lottery & Gaming Corporation (OLG)
• Sarah M. Taylor, Executive Director, Hoosier Lottery and Past President, NASPL

Much like the global lottery landscape, states and provinces across North America are incredibly diverse, ranging from pure play lotteries to organizations that also manage casino and sports wagering in their portfolio. The various regulatory landscapes influence what organizations can offer, how they can go to market, and how they approach innovation, which comes to life in all different shapes and forms.

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The North American Lottery Landscape

The North American sector is changing faster than ever, and the ripple effects are being felt everywhere. The rise of legal sports betting and igaming has brought a whole new level of competition, raising the bar on what players expect from their gaming experiences. Moreover, economic pressures are forcing consumers to be more choiceful about discretionary spending and are driving operating costs for organizations across all sectors.

Kim Clarke of OLG explained, “We [lotteries] no longer have a monopoly. The whole ecosystem has completely changed. This competitive shift is forcing us to think differently about what we offer, what success looks like, and how we generate awareness and relevancy in the market.”

It’s no longer just about buying a ticket and waiting for the draw. Today’s players – especially the next generation of player – are looking for entertainment that’s interactive, social, and always within reach. They want instant results, live engagement, and digital experiences that feel as seamless as their favorite apps.

At the same time, rising costs of living and pressure on disposable income have become defining features of the consumer landscape in the wake of the pandemic. While this pressure isn’t felt evenly across all regions or demographics, it has prompted many players to be more selective with their entertainment spending. For lotteries, this means competing more directly for wallet share and finding new ways to demonstrate value, relevance, and excitement in an environment where every discretionary dollar is under closer scrutiny.

Kim continued, “All market factors are coming into play – channel, economic, competition. Some player segments are wanting smaller prizing now… how they think about the value of money is changing.”

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Channel Innovation

Innovation extends beyond games themselves, or even what the player sees at the surface. Success in this changing environment requires thinking differently about where and how lottery shows up in players’ lives and how services are delivered behind the scenes.

Redefining How and Where Lottery Shows Up – Ontario Lottery and Gaming Corporation (OLG)

One of OLG’s strategic priorities is to innovate and build for the ‘player of the future’ in the context of evolving shopping habits, gaming and entertainment trends, increased competition, and economic conditions. Game innovation alone isn’t enough build relevance in this new paradigm – there needs to be a rethinking of how and where lottery shows up in players’ lives.

Kim remarked, “When we’re looking at a player who wants to be ‘entertained’ we need to find them at a time when they’re having fun and are in the mood. This often takes place in different environments compared to where lottery is traditionally sold.” She continued, “This means being in new places like bars and restaurants. We need to think laterally and find the right place and the right time in a way that adds to their experience.”

OLG will continue embracing this more holistic approach to channel going forward. Kim concluded, “Our innovation channel is focused on new modalities of distribution, breaking away from linear thinking. Lottery needs to live in a different headspace for the ‘player of the future’.”

Innovating the Operating Model – Arizona Lottery

In a highly regulated environment focused exclusively on retail, Arizona Lottery took an inward-looking approach to innovation to transform its operating model to better serve the needs of its retail partners and, in turn, players.

While privatization of pieces of lottery operations isn’t an uncommon model in the United States, this was a bold shift for the Arizona Lottery, which has operated under the same model since it was established in 1981. Alec shared, “We’re leaning into strong partnerships with our vendor partners to allow us to act more like a true business, optimizing our operations to better serve retailers and players alike, and in turn, maximize net revenue for our beneficiaries. Operational changes to our Sales and Customer Service divisions have delivered almost immediate results and allowed us to be more nimble, adaptable, and efficient in supporting retailers and serving players. Our approach for supporting retailers has shifted to align with what most other major [private enterprise] product brands would.”

This shift in operating model has driven real business impact – reducing out of stocks, minimizing ticket returns, and fostering stronger relationships with retail partners. “All the metrics that matter to grow sales are seeing improvement” remarked Alec. “Among some retailers we’ve been able to move from declining sales into year-over-year growth”

The model has served as a foundation to build valuable new operational capabilities. An example of this is same-day delivery for higher-volume retailers. Alec explained, “If a retailer runs out of product, an internal flag is raised on our end. We now can proactively identify this, reach out to the retailer, and restock in the same day. It’s things like this that are made possible by our new operating model and that really help move the needle for growing sales.”

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Known Play & Loyalty Innovation

Known play and loyalty can take many different shapes and forms across the sector, especially given the diverse operating environments lotteries exist within. While some lotteries offer a fully integrated digital purchase and play experience, others must get creative to drive known play and loyalty in highly anonymous retail environments.

Channel Partner Loyalty Integrations – Hoosier Lottery

Broadly, consumer expectations around seamlessly integrated, personalized experiences and loyalty programs are evolving, which has translated to the lottery sector as well. Hoosier Lottery has taken innovative approaches to strengthen retailer relationships and provide more value to players through loyalty integrations with key retail partners.

Sarah explained, “We’ve built strong relationships with retailers and innovative marketing programs to support each other. We integrate into the retailer’s loyalty program. For example, we launch special promotions where if you’re a retailer loyalty member and you purchase certain lottery products, you may get a free drink or bonus loyalty reward points.”

These partnerships and integrations have allowed Hoosier Lottery to participate more meaningfully in loyalty and reward their players in a world where transactions are limited to anonymous play at retail, all while creating mutual value for key retail accounts.

No Purchase Promotions – Hoosier Lottery

As a state that is restricted to retail purchase only, Hoosier Lottery has taken an innovative approach using “no purchase necessary” promotions to drive registration on their app, which is used to create digital play slips, check tickets, etc. This allows them to drive to a greater degree of player understanding and known play in a strictly retail environment.

“A big focus for us right now is to offer ‘no purchase necessary’ promotions with experiential prizes” mentioned Sarah. “Our player research says that sports are huge here in Indiana, so it was important that we broke into sports, entertainment, music, and other relevant things beyond just sponsorships.” These attractive “no purchase necessary” promotions offer chances to win incredible experiences for players such as VIP meet and greets at concerts and premium sports tickets and memorabilia.

Interestingly, these promotions have been a successful avenue to engage not just Core Players, but Casual Players as well. Sarah reflected, “We are finding that no purchase necessary and second chance entries are growing, and the number of unique entries are growing. We now know that not only are we retaining players, but we’re getting new folks in and it’s not just the typical Core Player constantly registering for all our prizes.”

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Game Innovation

NASPL highlighted the wide variety of game innovations being developed by North American lotteries, ranging from new draw and instant concepts, to multi-media experiential games, to new ways of playing across physical and digital channels.

Direct Support of Good Causes – Illinois Lottery

A defining and differentiating characteristic of state-sanctioned lottery compared to other forms of gaming is the positive impact made on society. While 99% of Illinois Lottery proceeds support K-12 public education, they have gone a step further to develop a specialty “Good Causes” scratch off ticket that supports a variety of other important social causes, further broadening the lottery’s reach. These additional causes include Alzheimer’s support services, breast cancer research and care, homelessness prevention, multiple sclerosis research, Special Olympics support, United Negro College Fund scholarships, Illinois DREAM Fund, the fight against HIV/AIDS, police memorials, and Veteran’s programs.

Harold explained, “Until recently, each cause would have a specific game attached to it. We consolidated the program to now have one ticket supporting all of them. This enables us to better market the ticket throughout the year and provide ongoing support to the great things each of these causes are doing.”

While all state-sanctioned lotteries ultimately support public good, the impact can feel a step removed from the day-to-day player experience. By directly linking games to specific causes, lotteries fundamentally shift the perceived value proposition to players. Beyond the direct link itself, Illinois Lottery has structured the program in such a way that it drives greater return on marketing spend and better positions it to support its partners on an ongoing basis.

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Parting Thoughts

North America, much like the global lottery landscape, is made up of a diverse range of regions and organizations who operate in unique environments fulfilling a range of mandates. The NASPL conference and these interviews highlighted many differences across regions, which were reflective in their approaches to innovation.

Even amongst all these differences, all state-sanctioned lotteries share a similar purpose. In parting, Harold shared, “Lotteries are mission driven. There is power, respect, and honour within that. My advice is to stay true to that Mission and embrace the power lottery has for the good of society. If you stay true to your north star, you have a good shot at making a difference in the industry.”