To attract Gen Y and Z players, the lottery sector should focus on understanding what drives the people behind the players. Taking a more active and intentional human-centric and needs-based approach across the customer offering and experience would be beneficial. This includes making the lottery more relevant for younger, potential players by designing games that reflect their experiences and needs, and sharing a narrative aligned with their values.
It is an approach that translates across industries: any business leader concerned about the sustainable growth of their industry needs to immediately become hyper-aware of the emerging generations – and then prioritize monitoring how this sentiment shifts and evolves.
The lottery industry has some hurdles ahead in its ability to appeal to Gen Y and Z. For instance, the lottery product structure does not reflect their experiences or habits. Draw lotteries have a natural built-in delay between purchase and draw, which can be less appealing for digital natives like Gen Y and Z, who are accustomed to immediate, on-demand, and direct results. Streaming services are one example of an industry that has capitalized on this shift in consumer preferences. It’s just one example of the structural challenges of traditional lotteries.
Another example is the nature of the experience. Where traditionally, the lottery experience is relatively isolated, this cohort is used to multi-player games and shared experiences. Recently, Level5 ran proprietary research among lottery players in the U.S. and Canada. Our research found that these preferences (for shared experiences) held true with playing the lottery, too. They prefer a more connected and social component to their games. In fact, we found that lottery players under the age of 35 were three times more likely to play with friends than those over 35. To increase their reach with younger audiences, the lottery industry can adapt their offerings to reflect the desire for a social dimension to play.
But these structural issues can be dealt with – and they should be considered part of the inevitable evolution of industry. At some point, it may mean adjusting how lottery games are built as these audiences require products explicitly designed to suit their needs.
Similarly, aligning the lottery with what younger players care about is an under-leveraged opportunity, particularly regarding social purposes.
The lottery is different from other entertainment forms. For communities across North America, it is a crucial and long-established contributor to their budgets: enabling sports and arts programs, community engagement funding, and programs for the elderly and young children. As an example, in the U.S., several lotteries are devoted to supporting education initiatives for citizens.
Gen Y and Z’ers are progressive, more diverse than the generations before them, and on track to be the best-educated generation yet. They expect brands and organizations they support to align with their social views and make purchasing decisions based on these value alignments. Our data shows that 74 percent of consumers under 35 place importance on the organizations they buy from supporting social causes.
Fortunately, lotteries are significant generators of social impact. Across North America, the lottery is an economic engine of jobs and revenue. In the U.S., the industry generates around $100 billion in annual revenue1 (more than the combined U.S. sales of movie tickets, music, and concerts).
Lotteries across the U.S. and Canada also raise significant funds for governments and public goods. For instance, the New York State Lottery distributed $3.6 billion2 in the 2021-22 fiscal year to local school districts. In Texas, the lottery commission has generated more than $35 billion since 19923 for causes like public education and veterans’ services. But this remains an underappreciated story. We all need lottery revenue to help fund the social and cultural works around us. Less money generated means less support for critical government programs and potential added burdens on the tax base; this is the story for the industry and its leaders to champion.
The recent research we conducted found that two thirds of lottery players under 35 were unaware of where their Provincial or State lottery organizational profits go. More importantly, 22 percent of the under 35 lottery players indicated they would play the lottery more if it went to fund social programs – double that of those over 35, at 11 percent.
The lottery industry should explore ways to proactively share the positive community impact it drives via communication channels and engagement with these groups by telling stories of the hospitals, schools, art centers, sports facilities, and other institutions that benefit from lottery dollars.
Communicating the social component of lottery, alongside essential product evolutions to reflect the drivers of Gen Y and Z gaming preferences, are two powerful ways to go after this market.
Next week, in my third post in this series, I’ll look at the role of the sales channel itself and the digital transformation needed to create product relevancy.