Mobilizing a defense against illegal iLottery
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JULY/AUGUST 2019
www.PublicGaming.com
Mobilizing Andreas
a defense Kötter, CEO,
Westdeutsche
against illegal Lotterie
iLottery
Connecting
with Stakeholders
Lynne Roiter,
CEO, Loto-Québec
Aligning Strengths
to Serve Customers
and Players
Renato Ascoli and IGT
Executive Team
PLUS: • Sustainability = Diversity, Inclusion & WILL
• Evgeniy Vlasenko, MSL Lottery in Ukraine • EL Congress Antwerp 2019
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JULY/AUGUST 2019
INSIDE Publisher &
Chief Executive Officer
18 Paul Jason
pjason@publicgaming.com
President
Susan Jason
sjason@publicgaming.com
Honored Founders
PUBLIC GAMING INTERVIEWS Doris & Duane Burke
Contact Information
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12
Evgeniy
For email address changes,
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Vlasenko
requests to be placed on
22 our e-Newsletter distribution
list, contact:
sjason@publicgaming.com
Vice President, MSL LLC, Ukraine
PGRI, Inc.
20
218 Main Street, #203
IN T E RV IE W S Kirkland, WA 98033
PublicGaming.com
12 State Lotteries Mobilize
to Defend the Interests
UPDATE on MSLSubscriptions
22 IGT: Aligning Strengths
to Serve Customers
Lottery in Ukrain
Annual Public Gaming
of their Stakeholders
Andreas Kötter,
and Players adversity
Renato Ascoli,
in a market disrupted b
International magazine
subscription rates:
Chief Executive Officer, United States: $145 USD
Chief Executive Officer,
Westdeutsche PGRI Introduction:
North America
Wendy Montgomery,
Canada & Mexico: $160 USD
All other countries: $225 USD
Lotterie GmbH & Co. OHG
Chair of the Illegal Lotteries and Senior VicePaul JasonGlobal
President, visited with Mr. Vlasenko at the EL Congress in An
Betting Committee, World Lottery three years
Brand, Marketing, Public Gaming
and since our last discussion.
Association (WLA) Communications
Ukraine is the largest country International Magazine
in Europe by land mass, and ha
Dallas Orchard, Published six times a year and
Senior Viceoperator
President in
andUkraine.
Chief It wasdistributed
launchedtoinreaders
1970alltoaround
raise funds f
18 Loto-Québec mission changed when the Ukraine
Product Officer, Gaming the world.became independent
Electronic version is in 199
Annual Report Marco Tasso, e-mailed and is also available on
Lynne Roiter, Senior ViceSportloto”, but is now the brand name.
President, Global our news website:
President and After
Manufacturing andUkraine
North gained independence in 1991, there was a perio
PublicGaming.com.
American Operations
Chief Executive Officer fully intact. There were no regulations and private operators w
close without paying out prizes. Public trust in lotteries was de
20 Update on MSL 33 Interviews from the
mented. Even so, and even JULY/AUGUST
though MSL always 2019 operated with
Lottery in Ukraineby EL Congress in Volume 46, Issue 4
difficult for MSL to reestablish
©2019public trustreserved.
all rights and confidence. Bu
POLALEvgeniy Vlasenko, Antwerp,confidence
Belgium that its operations are totally
Vice President, MSL LLC, Ukraine Public Gamingtransparent and prize
Research Institute
operated with integrity. The cISSN:
business 1042-1912
of lottery relies not just o
partners also need to be confident that the time and resources a
that the lottery operator will be a good business partner in ever
4 P U B L I C G A M I N G I N T E R N AT I O N A L • JULY/AUGUST 2019
Before the political and military turbulence which began in 20
Ukraine into a war zone, the market was growing considerably
10
F E AT U RE S 42 Dreamtouch Smart:
The Largest Ticket Capacity
in the Smartest Size
10 Women’s Initiative INTRALOT
in Lottery Leadership
(WILL) and Preview of 46 House of Experts:
PGRI Lottery Expo NYC Powering the World’s
Lottery Revenues
Scientific Games Corporation
28 Women in Leadership:
Doing the right thing is 58 Dick Clark’s
Good for The
theshiftBottom Line,
has made an impact. Lotteries
New Year’s Rockin’ Eve:
can choose the tech and services that suit
for Organizational Culture,
their needs and, by extension, directly 41
for CSR, address
and for Brand
the needs of their end users. Excitement Grows for
Without the added footprint of duplicate
Image or overlapping sports betting features, First POWERBALL
Lee Stuart, lotteries are free to focus on the most
THE NEXT LEVEL Millionaire of the Year as
impactful elements of their sportsbook.
Management Consultant and Sports betting is the next big thing in the Lotteries Launch
editorial contributor for PGRIof the one-size-fits-
This deconstruction U.S. gaming industry, and stakeholders--
from supplier to lottery to consumer—are
Promotions
all strategy means customers across
chomping at the bit to capitalize on what
the gaming and lottery industry can
is effectively a new entertainment space.
30 Keeping Lotteries in better serve sports betting fans with
By opening up and building product based
Motion with MOMENTUM
specific, tailored features. Operators
who are open to the growth and
on player preferences and a constant
feedback loop, the industry can set a new
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the most of the new market while while shaping the gaming channel into a
remaining future-focused and ready
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8 From the Publisher
38 Sports Betting: disruptive technology. Paul Jason
An Open Opportunity
Keith O’Loughlin, 51 Pulse of the Industry
Senior Vice President, Synopsis of Recent Industry
Sportsbook & Platforms, News
Scientific Games Corp.
41 The World Post-PASPA:
Re-Drawing the Map
of Sports Betting
Lee Stuart,
Management Consultant and
editorial contributor for PGRI
46
38
PUBLIC GAMING
PGRI GAMING
GAMING
PUBLIC © 2019 Scientific Games Corporation. All Rights Reserved.
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IGT is committed to socially responsible gaming.
From the
Publisher
I t’s human nature to feel like our own
problems, our personality, our life
situations are unique. Likewise, we
feel our gaming and consumer culture, our
political environment, the priorities of our
much to be proud of and should stretch to
make sure our stakeholders understand that.
We are trying to connect with our colleagues
all around the world by participating in
us to request to be on our e-newsletter
distribution list. It’s free, and it’s not used
for anything other than to send our industry
e-newsletter three times a week.
stakeholders, etc. are unique. And of course, their regional events as we are able. We We hope to see you all at the upcoming
they are to an extent. Evgeniy Vlasenko hope this will enhance the perspective we events:
is the vice president of MSL, the Ukraine bring to you. It’s not so much about being • NASPL Professional Development
lottery, and, to be sure, the circumstances “global” as it is about being relevant to Seminar, July 22-26, Phoeniz, AZ.
in the Ukraine probably are quite different each one of you, our readers. We look for Visit NASPL.org for more info.
from almost anywhere in the world (see the common threads and how different • PGRI Lottery Expo: Mark your
interview page 20). More interesting, though, experiences, and different ways of responding calendars for October 28 to 30.
is to consider the commonalities, how the to challenges and opportunities, might PGRI Lottery Expo will be held
most fundamental issues our industry faces open our eyes to new and different ways at the Park Lane Hotel on Central
are universal throughout the world. The of understanding our own businesses and Park South in New York City. See
intrusion of secondary bet-on-the-outcome circumstances. There are five regional lottery PublicGaming.org for complete
of lotteries, for instance, affects jurisdictions associations – NASPL (North America), information - hotel reservations,
stretching from Europe to Canada to EL (Europe), APLA (Asia-Pacific), Cibelae conference registration and program
Australia. Presently, the U.S. does seem (Latin America), and African Lotteries. Last updates.
to be effectively preventing this secondary year we participated in the APLA conference • Women’s Initiative in Lottery
“synthetic” lottery model from disrupting in Singapore as well as EL Industry Days Leadership (WILL) session October
its market-place. But even in the U.S., we in Prague and NASPL Cleveland and 30, led by lottery directors and
need to be sensitive to the profound impacts NASPL Professional Development Seminar special keynote speaker and
that operators who exploit loopholes in in Orlando. This year there was WLA/EL sponsored by Scientific Games
regulatory laws have on us now, and especially Marketing Seminar London, EL “Success Corp. And launching the first
in the future. The ingenuity and resources of Chance” Congress in Antwerp, and then scholarship funded by the Jumbo
of these operators when it comes to evading in early July we participated in the African Interactive WILL grant. See page10
the laws is abundant. And the disruption Lotteries Association Congress in Casablanca. for more info but also visit www.
wrought by these operators has nothing This issue includes interviews done at the WomenInLotteryLeadership.com
to do with “innovation” any more than Al EL Congress in late May (including Messrs. for complete info.
Capone could be described as an innovator Kötter and Vlasenko and ten others beginning
in the distribution of alcohol. As Andreas on page 33). A review of the African
Kötter, the chair of the illegal lotteries and Lotteries event will be in the next issue.
betting committee for the WLA, explains,
the global community needs to recognize The challenge to improve business process and
our commonalities and work together to performance is a never-ending opportunity. Paul Jason, Publisher
combat these threats to our common interests, IGT’s enterprise-wide integration began years Public Gaming International Magazine
and defend the interests of the stakeholders ago. Our visit to the IGT Game Design
throughout the world who depend on lottery and Manufacturing headquarters brought us
funding. This industry absolutely depends inside the tent at an auspicious juncture when
on the integrity of regulatory structures to an ambitious vision is transforming into a
enforce the rule of law. That applies to all of concrete reality. Thank you to Renato Ascoli,
us. Wendy Montgomery, Dallas Orchard, and
Marco Tasso for sharing the insights and
Government-lotteries throughout the world future-plans gleaned from their journey.
are dedicated to serving good causes and
protecting the interests of society. But doesn’t We also want to thank Scientific Games
it seem like that fact is not always appreciated and INTRALOT and all our advertisers and
by the general media, the public, or even our editorial contributors for their invaluable
stakeholders? I want to thank Lynne Roiter contributions! These genuine thought-
for allowing me to share her Annual Report leadership pieces help us optimize our
Message which is such a great example of how potential as we prepare for the future. These
we can communicate our accomplishments are exciting times indeed!
and clarify our mission. Of course, there is
much to be proud of when it comes to the Keep up with us on a daily basis at our news
performance of Loto-Québec. But we all have website www.PublicGaming.com. E-mail
8 P U B L I C G A M I N G I N T E R N AT I O N A L • JULY/AUGUST 2019
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© 2019 Scientific Games Corporation. All Rights Reserved.
© 2019 Scientific Games Corporation. All Rights Reserved.
Women’s Initiative in Lottery
Leadership (WILL)
And Preview of PGRI Lottery Expo NYC
Women’s Initiative in Lottery Introducing the first WILL player-base and benefits retailers: Land-
Scholarship Grant: based retail sales grow because of iLottery
Leadership (WILL)
growth.
We have started a tradition of holding a Thank you to JUMBO Interactive for Charlie McIntyre, Executive Director,
WILL session on the afternoon of the second generously funding the WILL Scholarship New Hampshire: Unpacking the U.S.
day of PGRI conferences. Thank you to program with a $50,000 grant. The first DoJ posture towards iLottery and sports-
IGT for sponsoring the WILL session at recipient will receive an all-expense-paid betting. iLottery as key to a sustainable
PGRI SMART-Tech Florida last February, trip including round-trip airfare and hotel success pathway forward.
and to Lottery Directors/CEO’s Rebecca to attend the WILL session in NYC on the Presentations and Panel Discussion includ-
Hargrove (TN), Gretchen Corbin (GA), afternoon of October 30. Additionally - ing the directors of sports-betting states to
Sue van der Merwe (Tabcorp Lotteries, hotel, breakfasts, lunches are all paid for the provide update on progress and glimpse
Australia), May Scheve Reardon (MO), recipient to attend Lottery Expo on October into the future
Lynne Roiter (Quebec), Sarah Taylor 29 and 30 as well. The first recipient of the Presentations and Panel discussion on Re-
(IN), and Keynote Speaker Ann Simmons WILL Scholarship Grant will be announced tail Modernization which continues to be
Nicholson, for leading a wonderful afternoon on September 9. the surest pathway to lottery success. Lots
that was both inspiring and enlightening. of opportunity for improvement, and lots
The next WILL session will be held … And Preview of PGRI of solutions to make it happen.
the afternoon of Wednesday October Lottery Expo NYC
30 to immediately follow the PGRI Visit www.PublicGaming.org for complete EL Congress Antwerp May
Lottery Expo event at the Park Lane information including registration, hotel 26-29, 2019
Hotel in New York City. Sponsor Sci- accomodations, and program updates. We had the great pleasure of participat-
entific Games Corp., Rebecca Hargrove October 28, 29, 30 ing in this event a few weeks ago. The EL
and colleagues are planning a very special Open Night Reception Monday Oct. 28 Congress is a conference and trade show
event, including Keynote Speaker Frances Receptions and conference sessions Tues- that is held every other year, this year in
Fragos Townsend. Ms. Townsend is day and Weds, Oct. 29 and 30 Antwerp, Belgium. Europe is a more ma-
the former Homeland Security Advisor WILL (Women’s Initiative in Lottery ture gaming, gambling, and lottery market,
to United States President George W. Bush, Leadership) afternoon of Weds Oct. 30 with many if not most government-autho-
serving from 2004-2007. She has also Lunch on TU and WE rized lotteries operating in all the different
served as Deputy Assistant to the President The Fabulous Park Lane NYC Hotel on game categories like sports-betting and
and Deputy National Security Advisor for Central Park South, New York City all varieties of distribution channels like
Combating Terrorism. In 2008, Ms. Keynote Speakers: the internet. Opportunities, challenges,
Townsend joined CNN as a contributor, then Drew Svitko Executive Director, Penn- regulatory issues and such that eventually
moved to CBS where she is now a national sylvania Lottery: Why iLottery expands manifest everywhere in the world tend
security analyst and political commenta- to appear first in the European markets.
tor on TV. Ms. Townsend is also president That’s what makes this event so interesting
of the Counter Extremism Project. We look and forward-looking. An example of these
forward to an exciting session! issues can be seen in the interview with
Andreas Kötter which begins on page 12.
PGRI interviewed industry leaders and
those video-recordings are posted to PGRI-
talks.com. Excerpts from those interviews
are on four pages beginning on page 33.
10 P U B L I C G A M I N G I N T E R N AT I O N A L • JULY/AUGUST 2019PUBLIC GAMING INTERVIEWS
Andreas
Kötter
Chief Executive Officer, Westdeutsche Lotterie
GmbH & Co. OHG (WestLotto)
Chair of the Illegal Lotteries and Betting Committee
for the World Lottery Association (WLA)
Mobilizing State Lotteries to Defend
the Interests of their Stakeholders
even if that group is a worthy charitable
PGRI Introduction: cause. We must demonstrate that the
Andreas Kötter delivered the keynote presentation, How to protect against illegal application of monopoly practices to lottery
iLotteries, at PGRI SMART-Tech conference in Fort Lauderdale, Florida. Go to gaming is necessary to protect the health
PGRItalks.com to see the video-recording of this talk to get the full understand- and well-being of the consumer by reducing
ing for how illegal iLottery operators got their start, how they captured millions addiction and harmful behaviours.
of customers operating illegally before now attempting to convert this customer
How have regulations been modified to
base over to the legally licensed and regulated sector. We met at the EL Congress allow for the operation of Social Welfare
Antwerp to discuss how the distributional landscape is changing faster than (also called “Society”) lotteries?
regulators can keep up with, how the traditional state lottery operator can adapt,
and the once and future impact of illegal iLottery operators. A. Kötter: WestLotto as well as the fifteen
other lottery operators in Germany, are
the exclusive operators within the borders
Paul Jason: Why has it been such exist ten years ago. Without modernizing of their own federal state-jurisdiction of
a challenge to create a regulatory gambling regulation nationally as well large jackpot lotteries that may exceed
framework in Germany that meets the as intensifying the exchange between € 2 million. The regulator decided that
requirements of the EU and German regulators internationally, the different the games with larger jackpots should
federal laws? Shouldn’t all EU member legislative bodies will continue establishing be operated only by the state operator to
states have the authority to determine rules for their own jurisdiction that may not ensure integrity and minimize problem
regulatory policy? be helpful cross-border. gaming. In contrast to this, Social Welfare
lotteries are granted license to operate the
One of the foundational principles of the
Andreas Kötter: The trends towards lower jackpot games that must not exceed
European Union is that all EU member € 2 millions as long as they contribute
liberalization create complications
states agree to a system of free-markets and to good causes and comply with other
for regulators and challenges for state
open cross-border competition. For that restrictions, including a fixed percentage of
authorized lotteries which rely on
reason, German and EU law in principle revenues that can be paid back in prizes to
enforcement of laws that protect the
prohibit restraint of trade and monopoly the players.
consumer and the stability of the market-
practices. Because of the ancillary public
place. The games-of-chance market-place is
policy objective of minimizing social costs
being disrupted by a wide variety of factors. Does this system work well for the
and harm to the consumer, an exception
Consumer shopping behaviour and player stakeholders of WestLotto?
to this rule was made for gambling
tastes and preferences are changing as new
amongst others, allowing member states
games and options for how and where to A. Kötter: Germany has a very long
to determine their own regulatory policy
play are proliferating across the globe and history with “Aktion Mensch” and
for gambling and lottery. But there are
across jurisdictional boundaries. There “Fernsehlotterie”, its two major Social
constraints to how this exception may
is genuine innovation to the games and Welfare lotteries, which account for more
be applied. Monopolistic practices must
channels of distribution. And there are the than 10% of the revenue that the state
serve the interests of society, protect the
illegal operators who steal IP and brand- lotteries do. That may seem like a large
consumer and preserve Public Order,
marks and call their actions “innovation.” percentage, but that is the result of many
and not be used as a means to channel
Rules and even definitions need to be
economic benefit to a particular group,
updated to address issues that did not even Continued on page 14
12 PUBLIC GAMING INTERNATIONAL • JULY/AUGUST 2019Andreas Kötter from page 12 Lottery in principle is less dangerous to border sales” and “illegal” and “iLottery”.
cause addictive and harmful play from a We agreed on a multi-state treaty that
decades of co-existence between monopoly
responsible gaming perspective than most established terms and conditions for a wide
lotteries like WestLotto and Social Welfare
other games-of-chance categories which variety of games, not only lotteries. The
lotteries which are legally licensed to offer
have more flexibility when it comes to Interstate Treaty proscribes how the games-
smaller jackpot games.
advertising and marketing. Restricting our of-chance market-place is to be regulated
ability to advertise and promote Lottery and is now binding because it has been
Are Social Welfare lotteries subject to just smooths a path for other games-of- signed by all sixteen heads of the states.
the same advertising and marketing chance categories to increase market-share. This Treaty is in effect until 30 June 2021.
restrictions as the official state lotteries? We respectfully submit that society is The states still have autonomy over some
aspects of the regulations?
A. Kötter: Yes, of course. The Interstate
Treaty addresses those matters which
affect all of us in similar ways, and
which we are all in agreement on how
they should be addressed. We are all in
agreement, for instance, that the rule
of law should be enforced everywhere,
and that if the law requires a license to
operate, then unlicensed operators should
be prevented from doing business. We
are all in agreement that rules placing
more restrictions on advertising of lottery
products than other gaming products
should be changed to be more logical
and aligned with the goals of protecting
the consumer from harm and addictive
© FK/PH play. On the other hand, the public policy
priorities of the sixteen states differ in many
“It is not the government policy to better served by channeling the consumer ways, and the regulatory structure will
to less addictive or harmful games like differ accordingly. The Interstate Treaty
support illegals. But it may be the Lottery than driving the consumer over to allows for these differences. For instance,
unintended consequence of the more harmful games. But we also respect some states decided to authorize their state
restrictions placed on legally licensed the authority of regulators to make that lottery to sell scratch cards online, while
decision. others did not.
operators. Illegals are increasing their
market share because they operate Has the intrusion of “bet-on-the- Gray market operators seem to be
outcome-of-lottery” operators like confused over the meaning of “illegal.”
with fewer advertising and marketing
Lottoland and Tipp 24 caused regulators
restrictions and pay less in taxes, to reconsider those restrictions? After A. Kötter: First, in countries where it is
enabling them to spend more on all, these gray-area operators violate illegal to operate without a license then,
those advertising restrictions, hijacking by definition, the operator is illegal if they
advertising.”
revenues from legally licensed operators do not have a license. Second, they need to
and the good causes they support in be licensed to operate in every jurisdiction
A. Kötter: No they are not. Social Welfare Germany. where they operate. Illegals want to be
lotteries are granted more freedom in classified as “legal” if they operate legally
advertising. For example, they are allowed A. Kötter: Regulatory authority over in one jurisdiction, even if they operate
to advertise the good causes they raise this issue resides with each individual illegally in other jurisdictions. We consider
money for. state, not at the federal level. The sixteen them at least to be illegal if they operate
German states realize, though, that it is illegally anywhere, means without the
Insofar as the official state operator in everyone’s interest to work together locally required license.
exists solely to serve good causes and to combat unlicensed activities like
protect the consumer, can we hope that the bet-on-the-outcome-of-the-lottery But what about the aspect in which
those restrictions might someday be model. We all realize that we need to illegals do not have to comply with any
have one agreement to get the basic rules, of it because they operate outside of the
amended to allow for some flexibility to
guidelines, and principles to be as precise jurisdictional borders. The restrictions
promote the large jackpot games?
and detailed as possible, and for those to placed on the legal operators effectively
be applied consistently throughout all channels consumers over to the illegals.
A. Kötter: Of course, we do hope for sixteen states. There can be no ambiguities
that, and we ask for that. We agree that Why is that a good policy?
in the definitions of things like “cross-
Continued on page 16
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A. Kötter: Exactly. It is not the government digital world has created complications What can be done to stop illegal iLottery?
policy to support illegals. But it may be the when it comes to controlling cross-border
unintended consequence of the restrictions commerce and advertising. A. Kötter: Currently, we have filed 45 legal
placed on legally licensed operators. Illegals actions against illegal operators. But while
are increasing their market share because Now, operators like Zeal Networks and this is being litigated, illegal operators are
they operate with fewer advertising and Lottoland are attempting to re-shape their spending as much on advertising to capture
marketing restrictions and pay less in business model to be accepted in the the online market in Germany than the
taxes, enabling them to spend more on legally licensed, regulated sector. state authorized lotteries spend altogether
advertising. And since their operation itself on advertising. Together, the state lotteries
is not even legal, they might not comply A. Kötter: Tipp24, which is now a division spend just over € 80 million to advertise
with Responsible Gaming requirements of Zeal Networks, got its start in Germany all our products for all the land-based and
that legal operators comply with. There is as an online re-seller of lottery tickets. all channels of distribution. The illegals
no requirement for them to avoid overly They operated legally, purchasing the spend the same amount but with all their
aggressive appeals to gamble. lottery ticket from the authorized state resources focused on the online players.
operator. Then, the online selling of lottery Combine that with the fact that they hardly
Isn’t it the case that Germany is culturally products was changed in 2008. Tipp24 pay taxes or contribute the same as state
and politically even more committed than moved to London and implemented the lotteries to good causes in the consumption
most to idealistic principles of freedom first bet-on-the-outcome-of-the-lottery country, so they can offer bonuses and
of the internet as well as free-market model. The millions of customers who were other enticements to attract new players.
competition? So tactics successfully buying from them when they were selling The result is that illegal operators now have
applied in other jurisdictions, like IP the legally authorized product could see a bigger market-share of the online channel
blocking, are more difficult to get no difference in the way the product was than legal operators.
approved in Germany? packaged and sold and so continue to buy
from them even today. Zeal Networks And they are further leveraging their brand
A. Kötter: In addition to that, the German has now assembled a family of online
system of jurisprudence, our court system, companies, some of which operate with
adheres to rigid procedural standards that legal license and others which operate in
serve a very good purpose but can lengthen at least some jurisdictions without proper “Our concern is not so much about
the time it takes to litigate a case. local license. Zeal Networks now bought
the biggest German reseller and announced short-term financial impacts on
So, by the time you win in court, the to transfer the clients of Tipp24 back into the business as in the long-term
illegals will have figured out a different the legal system. This is a big success for
all stakeholders and may result in the sustainability of regulatory models that
way to evade enforcement and continue
conversion of millions of illegally acquired protect the consumer as well as the
to go about their business.?
customers into legally authorized revenue stability of the markets. It is challenging
streams.
A. Kötter: Or they close down their entity because our adversaries disrupt the
Lottoland started its bet-on-lottery
in Gibraltar and move to Malta. Or vice
operation in 2013 and is still acting without market-place not with innovation but
versa. Or move to a jurisdiction that has
a local license in the German market. We
even fewer regulatory requirements and with tactics that exploit loopholes in
hope that our efforts will also lead them
even lower taxes. It is difficult, but we are laws and regulations.”
into a legal system in Germany.
making progress, one step at a time. The
16 PUBLIC GAMING INTERNATIONAL • JULY/AUGUST 2019ONE
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CHANGES
EVERYTHING
EVERYTHING
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ON YOUR
YOUR FLOOR
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When
Whenyouyouconnect
connectJCM’s
JCM’snewnewGEN5
GEN5™printer and iVIZION
printer and iVIZION® bill
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your CMS,
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you the power of FUZION.
you unleash the power of FUZION. Every machine on your slot floor could deliver aa server-
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suiteofofplayer-focused,
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into aa multi-line
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profit center, with
with slot
slot play,
play, sports
sports
book
bookwagers,
wagers,promotional
promotionalcouponing
couponingand
and lottery
lottery ticket
ticket vending
vending at your player’s
player’s fingertips.
fingertips.
FUZION
FUZIONisisatatthe
thecore
coreof
ofthe
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In the meantime, from first
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touch
totolast touch, the most dependable, versatile BV/Printer combo
last touch, the most dependable, versatile BV/Printer combo in the business has your
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CONNECT
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WITHTHE
THEFUTURE
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AT JCMGLOBAL.COM
JCMGLOBAL.COM
andtheir
and theiroperating
operatingassets
assetsbybydeveloping
developing In this
In this as
as in all aspects of business, we we need
need to
tothe
theconsumer.
consumer.Of Ofcourse
coursewe weexpect
expectthethe
a B2B strategy in addition to theirB2C
B2C to keep
to keep the
the consumer at the center of of our
our rule
ruleofoflaw
lawtotobe beenforced
enforcedoveroveragainst
againstthose
those
a B2B strategy in addition to their
business.OfOfcourse,
course,the
theincreased
increasedvolume
volume attention. Our concern is not so much
attention. much who
whoviolate
violateit,it,and
andwill
willfight
fighttotodefend
defend
business.
furtherenhances
enhancestheir
theirliquidity,
liquidity,increases
increases about short-term
about short-term financial impacts on on the
the our
ourIP,
IP,the
theintegrity
integrityofofour ourbrand,
brand,and andthe
the
further
cash-flowtotofund
fundprize
prizepayouts
payoutsandand business as in the long-term sustainability
business sustainability interests
interestsofofour
ourstakeholders.
stakeholders.But Butwe weneed
needtoto
cash-flow
reduceinsurance
insurancecosts,
costs,thereby
therebyincreasing
increasing of regulatory
of regulatory models that protect the the drive
driveinnovation
innovationtotomake makesure surethetheproducts
products
reduce
profitabilityand
andthe
thefunds
fundstotoexpand
expand consumer
consumer as as well
well as
as the
the stability
stability of
of the
the we
wecreate
createcontinue
continuetotodelight
delightthe theplayers,
players,
profitability
market-shareeven
evenfaster.
faster. markets. It
markets. It is
is challenging
challenging because
because our
our and
andmake
makethemthemavailable
availableininallallthe
thedifferent
different
market-share ways,
adversaries disrupt
adversaries disrupt the
the market-place
market-place notnot ways, through all the channels, thatthe
through all the channels, that the
modern
modernconsumer
consumerexpects.
expects.We Weneed needtotohold
hold
Youare
You arechair
chairofofthe
theIllegal
IllegalLotteries
Lotteriesand
and with innovation but with tactics
with innovation but with tactics that
that exploit
exploit
loopholes in in laws
laws and
and regulations.
regulations. The ourselves
ourselvesaccountable
accountabletotothe thesame
samemetrics
metrics
Betting Committee for the World
Betting Committee for the World Lottery Lottery loopholes The good
good
news isis that
that our
our goals
goals are that
thatmeasure
measureperformance
performanceasasother otherbusiness
Association.What
Association. Whatisisthetheglobal
globaloutlook
outlookon
on news are genuinely
genuinely aligned
aligned business
with the
the state
state and
and the
the general sectors
sectors do. For instance, if we seethat
do. For instance, if we see thatonly
illegal lotteries?
illegal lotteries? with general public
public toto only
defend thethe interests
interests of
of society, 10%
10%of ofour
ourrevenues
revenuescome comefromfromthe theonline
defend society, protect
protect the
the online
consumer, and and support
support worthy channel,
channel,we wecancanprobably
probablyknowknowthat thatour
A.A.Kötter:
Kötter:The
Theproblem
problemofofcombatting
combatting consumer, worthy causes.
causes. But
But methods
our
the mandate
the mandate to to make
make our
our voices
voices heard
heard isis methodsofofonline
onlinesales
salescan
canbebeimproved
improved
illegal lotteries is global. It isiscross-border
illegal lotteries is global. It cross-border
more urgent
urgent thanthan ever
ever because to
tomeet
meetaahigher
higherstandard
standardofofconsumer
and affects everyone everywhere.
and affects everyone everywhere. That That more because there
there isis no
no expectations.
consumer
is why the WLA has taken
is why the WLA has taken up the jobup the jobof
of end to the ingenuity of illegals and their
end to the ingenuity of illegals and their expectations.
trying to support its members in their ability to
ability to find
find newnew ways
ways to
to evade
evade the
the laws.
laws.
trying to support its members in their In
Inthe
theend,
end,nonoamount
amountofofregulatory
regulatory
own efforts. The first step is to build protection can replace the need to create
own efforts. The first step is to build The bet-on-the-outcome-of-the-lottery protection can replace the need to create
awareness and understanding of the nature The bet-on-the-outcome-of-the-lottery games that players love, make them
awareness and understanding of the nature is an especially egregious example of no games that players love, make them
of the problem, the implications it has is an especially egregious example of no available to play on all the new trade-styles
of the problem, the implications it has innovation, just a theft of the Lottery’s available to play on all the new trade-styles
for traditional authorized lotteries, and innovation, just a theft of the Lottery’s and channels of distribution, and exceed
for traditional authorized lotteries, and intellectual property. and channels of distribution, and exceed
the need to protect the interests of our intellectual property. consumer expectations in every category of
the need to protect the interests of our consumer expectations in every category of
stakeholders. performance.
stakeholders. A. Kötter: We are the ones who are performance.
A. Kötter: We are the ones who are
innovating and creating new products, new
innovating and
services, new creating
ways new more
to deliver products,
valuenew
services, new ways to deliver more value
PUBLIC GAMING INTERNATIONAL • JULY/AUGUST 2019 17
PUBLIC GAMING INTERNATIONAL • JULY/AUGUST 2019 17Loto-Québec Annual Report Message
Lynne Roiter, President and Chief Executive Officer
F
or a fourth year in a row, we achieved
gross and net revenue growth,
thanks to the good performance
of all of our businesses and tight
control over expenses. In fact, our
total sales were up $ 84.9 million (+ 3.1%)
when compared to preceding year. Our
consolidated net income surpassed last year’s
by $ 72.7 million (+ 5.4%); is $ 147.4 million
more (+ 11.7%) than our budget target. For
their part, our total expenses were down $
22.0 million (-2.3%) compared to 2017-2018
which themselves were in lower than the
preceding year.
The lottery sector had a remarkable
year, mainly because of the record number of
Lotto-Max jackpots but instant lotteries also
continued to grow, as did our event betting.
The casino sector also obtained good results,
notably thanks to the success of the different
thematics allowing visitors to enjoy our
entertainment offer in a variety of ways.
Our online gambling site, lotoquebec.
com, continued its growth, posting revenues
23.2% higher when compared to the ing, maintained a responsible marketing have in our casinos and gaming halls. They
previous year. In 2017-2018, we developed approach and continued to improve the way allow visitors to entertain themselves in
a portal facilitating navigation between our we do business to foster convergence, agility multiple ways, be it at one of our restaurants
different product lines - whether it’s lottery and efficiency. or bars, attending a show or taking advantage
games event betting or casino - which has of our diverse game offering.
greatly contributed to this growth, thus A customer centric year In ongoing aim to answer customer
increasing our market share. As for the VLT We have once again made many winners in needs, we also launched products introducing
sector, it presents a fairly stable income. all of our gaming sectors. We paid a record out of the ordinary features, including the
The lottery video network in bars, however, of 129 prizes of $1 million or more in the Box Bingo, which combines a board games
showed a slight decline. This is more pro- lottery sector. The lottery payment centers in with lotteries. Casino game lovers are not left
nounced in the areas where we have removed our 4 casinos and 2 gaming halls received an out, with landing of new initiatives, like the
video lottery machines (VLTs). The gaming increasing number of winners, which shows Live Casino. This allows you to play table
halls on the other hand, saw an increase. that they enjoy this local service. games online and chat in real time with live
It should be noted that new accounting A full year of festivities has been planned dealers. We have also launched keno games
standards changed the presentation of our to celebrate the 25th anniversary of the on the site lotoquebec.com.
financial statements for lotteries, bingo and Casino de Montréal, our first casino, which To renew the customer base in the bingo
Kinzo. The prizes awarded are now deducted opened on October 9, 1993. Customers market, we set up a bingo pilot project elec-
from sales, as was already the case for casinos were entitled to several surprises as thanks tronic, bingo +. Offered in four bingo halls,
and video lotteries; this does not affect gross for their loyalty. We also adapted some of it promotes socialization and proposes new
profit or net income. Figures from previous our products to meet the expectations of forms of Entertainment. It is to be noting
years have been adjusted to for comparison consumers; the image of certain lotteries, that all bingo profits go to the benefit of none
purposes. including Winner for Life, has been updated for profit organizations.
and our event-betting offer has been We have infused entertainment into our
The pursuit of improved. sponsorship program by providing festival-
a winning strategy goers with fun experiences. We have also
To achieve these good results, we continued Entertainment put forward maintained our partnerships with players
the approach from our 2017-2020 strategic Several initiatives have helped to accentuate in the fields of video games and innova-
plan. We remained customer centric, intensi- our positioning focused on entertainment. tion. An always for us, a constant priority in
fied our gaming-entertainment position- Among those are the thematic activities we Continued on page 37
18 P U B L I C G A M I N G I N T E R N AT I O N A L • JULY/AUGUST 2019PUBLIC GAMING INTERVIEW
UPDATE on MSL Lottery in Ukraine
A study in overcoming adversity in a market disrupted by
PUBLIC
political GAMING INTERVIEWS
& economic turmoil.
By Evgeniy Vlasenko
Evgeniy
Vice President, MSL, LLC, Ukraine
Vlasenko
PGRI Introduction:
Paul Jason visited with Mr. Vlasenko at the
EL Congress in Antwerp to get an update on
Vice President, MSL LLC, Ukraine
the progress made over the last three years
since our last discussion.
Paul Jason: How have things
UPDATE on MSL Lottery in Ukraine: A study in overcoming
Ukraine is the largest country in Europe by land mass, and has a population of 43 mil- changed since our last interview
lion. MSL is the state lottery operator in Ukraine. It was launched in 1970 to raise of September 2016?
funds for the development of sports in the Soviet Union. That mission changed when the
adversity in a market disrupted by political & economic turmoil.
Ukraine became independent in 1991. MSL was originally an abbreviation for “Molod
Sportloto”, but is now the brand name.
Evgeniy Vlasenko: We live in a challenging
and dynamic world. European markets of
traditional lotteries are under pressure from
After
PGRI Ukraine gained independence in 1991, there was a period of time when govern-
Introduction: non-licensed operators, especially in the
ment regulatory structures were not fully intact. There were no regulations and private
Paul Jason visited with Mr. Vlasenko at the EL Congress in Antwerp to get an online updateworld. on theSpecifically
progress made to the over
Ukrainethe islast
operators were free to start lotteries, sell tickets and take in money, then close without that in addition to unlicensed operators on
three years since our last discussion.
paying out prizes. Public trust in lotteries was destroyed. In the year 2000, a regulatory the internet, non-licensed outlets that offer
systemUkraine is the largest
was implemented. Evencountry in Europe
so, and even though MSL by land mass,
always and has
operated withaintegrity,
population of 43 million. MSL is the state lottery
VLT-like games are mushrooming in brick
the entire industry was tainted and it was very difficult for MSL to reestablish publicdevelopment
operator in Ukraine. It was launched in 1970 to raise funds for the of sports in the Soviet Union. That
and mortar venues. They may not be clas-
trust andmission changed
confidence. Butwhen the Ukraine
they succeeded, became
step by step, inindependent
re-establishinginconsumer
1991. MSL confi- was originally an machines,
sified as slot abbreviation for “Molod
but they deliver all
dence Sportloto”,
that its operations but isare now the transparent
totally brand name. and prize monies are paid out promptly the same functionality and player experience
and the After
games Ukraine gained independence
always operated with integrity. The in 1991, there
business was arelies
of lottery period
not ofjusttime
on when government
– so, in realityregulatory
they are slot structures
machines,were which not
fully intact.
the confidence of the There
consumer. wereRetail
no regulations
and advertising andpartners
privatealsooperators
need to bewere free to start are
confident illegal. And
lotteries, becauseand
sell tickets the take
lotteryinmarket
money, then
that the timewithout
close and resourcespaying allocated to lottery
out prizes. will generate
Public trust inalotteries
positive ROI
was for them, andIn the has
destroyed. yearbeen2000,contracting
a regulatoryover the last 5was
system yearsimple-
in
that the lottery operator will be a good business partner in every way.
mented. Even so, and even though MSL always operated with integrity, the entire industry was tainted and it was very Ukraine under the pressure of non-licensed
Before the political andtomilitary turbulence gambling, we have to spend more and more
difficult for MSL reestablish publicwhichtrustbegan in 2014, whenBut
and confidence. Russia
they succeeded, step by step, in re-establishing consumer
annexed Crimea and turned eastern Ukraine into a war zone, the market was growing of our limited resources, and time and
confidence that its operations are totally transparent and prize monies are paideffort, out promptly and the games
not for development of thealways
market
considerably. MSL sales were increasing at an annual rate of 50-80% between 2010
operated with integrity. The business of lottery relies not just on the confidencebut of to
theprotect
consumer. Retailand
the business anddefend
advertising
the
and 2013. Total revenue in 2013 was over 2.5 billion UAH (approx. $150 million
partners also need to be confident that the time and resources allocated to lottery will generate
principles which a positive
the WLA ROI
and EL for them, and
member
euro today but twice that before the devaluation of the Ukrainian currency in 2015).
Amongthat thelotteries,
classic lottery bingooperator rankswill
firstbe
ata30%goodofbusiness
revenues,partner in every
scratch cards secondway. at 24% lotteries stand for.
Before the political and military turbulence which
and growing fast, and Lotto third at 6%. Sports-betting and toto is 40% and is the fast- began in 2014, when Russia annexed Crimea and turned eastern
Have Russian intrusions and
Ukraine
est growing into aOnly
category. war18% zone,ofthe the market
population wasingrowing considerably.
Ukraine plays the lottery at MSLleastsales were increasing atwith
interference an annual
Ukraine rate of 50-80%
dimin-
once abetween
year. That 2010 and 2013.
compares to 70%Total in the revenue
UK. Illegal in 2013
onlinewas over 2.5
gambling billion
is vast. ThereUAH (approx.
ished over the last three years?twice that
$150 million euro today but
are more beforethanthe 270devaluation
sites accessibleoftothe theUkrainian currency in
Ukrainian customers. They2015).
are notAmong
properlyclassic lotteries, bingo ranks first at 30% of revenues,
E. Vlasenko: The Crimea peninsula was
regulatedscratch cards second at 24% and growing fast, and Lotto third at 6%. Sports-betting
or taxed. annexedand by and totoisisstill
40% and isby
occupied theRussia,
fastest
95% of MSL’s sales are at land-based stores. Transitioning
growing category. Only 18% of the population in Ukraine plays the lottery atand from a state-owned econ- leastsome
onceEastern
a year.Ukraine
That compares
territoriestoare70% in
omy tothe a capitalist
UK. Illegal system online
is a big gambling
transition. isIt vast.
is not There
just a matter
are more of installing
than 270 modern
sites accessible
stillto the Ukrainian
occupied. There iscustomers. They are
no active warfare
business notpractices
properly andregulated
models. The cultural adaptation as well as economic and logistical
or taxed. that is reported in the international press,
transformation
95% of MSL’s is not sosaleseasilyareaccomplished.
at land-based Of course,
stores. Ukraine is over twenty
Transitioning from afivestate-owned
years but peopletocontinue
economy to diesystem
a capitalist on theisfront
a big
into the process. The cultural transformation has largely been accomplished and so now line. So, unfortunately, very little has
transition. It is not just a matter of installing modern business practices and models. The cultural adaptation as well as
it is largely a matter of executing on fundamental business plans to develop new games, changed. In isaddition, trade five
warsyears
continue
economic and logistical transformation is not so easily accomplished. Of course, Ukraine over twenty into
categories and distribution channels. which create new economic challenges
the process. The cultural
Evgeniy Vlasenko has led MSL since 2011. transformation has largely been accomplished and so now it is largely a matter
for everyone. The additional risks posed
of executing on
fundamental business plans to develop new games, categories and distribution by channels.
trade wars and unrest interfere with
Evgeniy Vlasenko has led MSL since 2011. investment into the economy including the
lottery sector.
pressure from non-licensed operators, Continued on page 45
Paul Jason: How have things changed machines, but they deliver all the same
since our last interview of September especially in the online world. Specifically functionality and player experience – so,
20 P U B L I C G A M I N G I N T E R N AT I O N A L • JULY/AUGUST 2019
2016? to the Ukraine is that in addition to in reality they are slot machines, which
unlicensed operators on the internet, non-NASPL 2019 SEPTEMBER 17-21 Hosted by the Arkansas Scholarship Lottery REGISTRATION NOW OPEN!
22 P U B L I C G A M I N G I N T E R N AT I O N A L • JULY/AUGUST 2019
do not have the regulatory environment Paul Jason: You’ve
to offer this yet. We’re helping to drive all mentioned
the convergence in international markets, players as a
with lotteries expanding product lines and primary focus.
deploying VLTs as new ways to engage How much do
players in lottery. We expect that trend to fundamental player
continue, and as it does, it becomes even tastes and prefer-
more important for our company to be ences vary across
integrated. Since joining IGT a year ago, gaming segments
I’ve taken on a global role in bringing globally?
our lottery and gaming marketing teams
together to ensure synergy across IGT Renato Ascoli:
communications, and, just as importantly, Knowing the
to better support customers with their own player is the key to
marketing and roll-outs as needed. creating great games
and also to forging
Paul Jason: How do you integrate all these innovative pathways
positive and the negative feedback. We learn
different functional areas? and solutions that
meet the needs of the operator, the vendor, from both, and we especially appreciate
Renato Ascoli: We’re still evolving and will the retailer, and the player. Being in all guidance and constructive criticism on ways
always pursue continuous improvement, game categories and all regulated gaming to improve or enhance the value we deliver.
but we’re very excited about the juncture markets around the world gives IGT a
we’ve reached today. The first step in our At many of these events, customers see our
unique perspective on player behavior.
journey was to impose discipline and facilities, visit with the teams who make
Take questions such as, Why do I play? or
structure to the organization. it all happen, and get a true feeling for the
Why do I buy a ticket? What happens if I
energy and passion of IGT people and our
Dallas Orchard: We have implemented win? How do I want to be rewarded? What
workplace culture. We make ourselves ac-
processes that enable more effective func- factors might incline me to play again?
countable and transparent, and I think our
tioning of a newly combined multi-billion- What is the cadence or rhythm that we
customers really enjoy getting to know our
dollar enterprise. After four years, gaming might try to create that would complement
teams on a more personal basis. We strive to
product development is now a highly the player’s natural impulses?
always exceed our customers’ expectations,
efficient, streamlined process that facilitates As we look across the different gaming and our guiding light is the consumer,
collaboration between all our design studios sectors, there are certainly many commonali- because if the products and services we
on four continents. Global communication ties to these behavioral dynamics. Crossover provide excite and delight players, we know
is dynamic, and collaboration is much is also happening in the B2B marketplace, we are fulfilling our mission.
easier because we all think of the outcomes in the way that games are delivered to the
as being owned by the player. It’s the focus Paul Jason: In a sense, then, operators,
consumer. For instance, IGT was awarded
on the player that unlocks the potential players, and retailers are all a part of your
the opportunity to deliver sports betting
of each individual in each of the regional product development team?
in Rhode Island, and we believe that the
studios to produce games that meet the consumer and the operator will benefit Renato Ascoli: Yes, and the one thing
needs of all varieties of game preferences. from our ability to integrate the back-office we ask from them all is ruthless feedback.
infrastructure that enables the games to be That’s our mantra. I was appointed CEO
All the output from the studios undergoes
accessed by the consumer. four years ago, just in time to participate
relentless quality assurance as it is inte-
in the Gaming CAB for 2015, and frankly,
grated with compliance, sales, marketing, Paul Jason: And how about your direct with respect to our gaming customer
distribution, and game design. The players customers – government lotteries, casinos, relationships, IGT was not in a great place
are the product experts that bind the and other operators of games-of-chance? at that point. Management at that time
relationship between sales, game design, Are there mechanisms that facilitate direct was more focused on pursuing deals for
and development, which is why we leverage and ongoing input from them? replacing whole casino floors and central
extensive player focus-group testing prior
Renato Ascoli: The voice of our customers systems with new product. We shifted
to releasing our games. My main job is to
– the lottery and casino operators –informs the strategic focus to be on innovation,
facilitate the feedback loop of information
every aspect of our business operations. We producing great games and cabinets that
that flows back and forth between all these
host Customer Advisory Boards (CABs), appealed to a broader range of player tastes
different functional areas, the whole process
and every two years we invite our lottery and preferences, and helping operators
being designed to support collaboration and
and gaming customers to participate in maximize their profits by partnering with
continuous improvement.
an extensive satisfaction survey. We also us to pursue a player-first strategy. We com-
Wendy Montgomery: No part of the host regular lottery customer workshops in municated our vision to the CAB in 2015,
company is excluded from this effort to both North America and the international and we asked them, our best customers, for
connect and communicate across the markets, which give us the chance to focus guidance. Their answer was that IGT had
different areas of specialization, so that together with lotteries on market research, lost its edge in the important category of
we’re all pulling in the same direction and retail initiatives, and instant game innova- video slot games. IGT had pioneered and
keeping the player as the central focus. tion. Above all, we want to hear both the focused on video – as opposed to standard
26 PUBLIC GAMING INTERNATIONAL • JULY/AUGUST 2019You can also read
