ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI

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ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
JANUARY/FEBRUARY 2020

                      www.PublicGaming.com

LOTTERIES RESHAPE
THE ROLE OF RG
IN CORPORATE SOCIAL                    ARTIFICIAL
RESPONSIBILITY                         INTELLIGENCE
SARAH TAYLOR                           TRANSFORMS THE
                                       BUSINESS OF KNOWING
                                       AND SERVING YOUR
                                       CUSTOMER
                                       SRINI NEDUNURI

                                              SMALL-BALL
                                              VERSUS
                                              THE NEXT
                                              BIG THING
                                              GORDON MEDENICA
ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
YOUR E VERYWHERE
                                   STARTS HERE

                      Our dedicated people are here to help you get started today. Only GLI combines 30 years
                       of leadership with proprietary testing methodologies, resulting in illuminating insights
                               to help guide your journey, everywhere and anywhere the future leads.

                                       S E E W H E R E I T A L L S TA R T S . C O N TAC T G L I T O DAY.

                            #globalperspective | gaminglabs.com |
2   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
Just 87 days after awarding its contracts, the Mississippi Lottery
                   successfully went live on November 25th with nearly 1,200
                   retailers - and realized more than $30 million in sales in the
                   first three weeks!

                   As a lottery-growth partner to the Mississippi Lottery,
                   IGT promises to deliver unrivaled gaming experiences
                   that engage players and drive growth.

                   We are proud to have been named the lottery partner of
                   choice for the Mississippi Lottery.
                   © 2020 IGT Global Solutions Corporation. The trademarks used herein are owned by IGT or its affiliates, may not be used without permission,
                   and where indicated with a ®, are registered in the U.S. IGT is committed to socially responsible gaming. Our business solutions empower
                   customers to choose parameters and practices that become the foundation of their Responsible Gaming programs.

3   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
CONTENTS
    JANUARY/FEBRUARY 2020

                                                                                 Publisher &
           F E A T U R E D                           I N T E R V I E W S         Chief Executive Officer
                                                                                 Paul Jason
                                                                                 pjason@publicgaming.com
     10                                 26                       30              President
                                                                                 Susan Jason
                                                                                 sjason@publicgaming.com

                                                                                 Brand and Design
                                                                                 Dan Eggers Design

                                                                                 Honored Founders
                                                                                 Doris & Duane Burke
                                                                                 Contact Information
                                                                                 T: +425.449.3000
    10 Lotteries re-imagine their role as leaders in Corporate Social            F: +206.374.2600
       Responsibility                                                            For email address changes,
       Sarah Taylor, Executive Director of Hoosier Lottery in Indiana            subscription requests and
                                                                                 requests to be placed on
    26 Reimagine Play™                                                           our e-Newsletter distribution
       Patrick McHugh Executive Vice President & Group Chief Executive,          list, contact:
                                                                                 sjason@publicgaming.com
       Lottery, Scientific Games Corporation                                     PGRI, Inc.
                                                                                 218 Main Street, #203
    30 One Connection that Changes Everything                                    Kirkland, WA 98033
       JCM FUZION® unleashes the power of “what if…”                             PublicGaming.com
       David Kubajak Senior Vice President of Sales, Marketing, and
                                                                                 Subscriptions
       Operations at JCM Global                                                  Annual Public Gaming
                                                                                 International magazine
                                                                                 subscription rates:
               F E A T U R E D                            A R T I C L E S        United States: $145 USD
                                                                                 Canada & Mexico: $160 USD
    14 Small-Ball versus the Next Big                                       14   All other countries: $225 USD
       Thing: Traditional Lottery thrives                                        Public Gaming
       on incremental improvements                                               International Magazine
       and “small-ball” wins – Gordon                                            Published six times a year and
       Medenica, Director, Maryland                                              distributed to readers all around
       Lottery and Gaming Control Agency                                         the world. Electronic version is
                                                                                 e-mailed and is also available on
                                                                            30
                                                                                 our news website:
    20 Harnessing AI to Benefit                                                  PublicGaming.com
       Lotteries – Srini Nedunuri, Vice
       President - Play Digital, IGT                                             January/February 2020
                                                                                 Volume 47, Issue 1
                                                                                 ©2018 all rights reserved.
    24 Should Powerball Go Global? –                                             Public Gaming Research Institute
       By Simon Jaworski President of                                              cISSN: 1042-1912
       the U.S. Office, Leger the Research
       Intelligence Group

4   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
5   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
F E ATU R E D A R TI C LE S C O NT.
                                                                                                                                                                                                              Visit Our Family
    32 20/20 VISION: With Ever                                                                                                                                                38                                Of Websites
       Expanding Global Business,
       Future is Bright at Scientific
       Games – Scientific Games
       Corporation
                                                                                                                                                                                                                   PublicGaming.com
                                                                                                                                                                                                               industry news & information
    36 New Opportunities Ahead:
       Harness the Power of the                                                                                                                                                                                      PGRITalks.com
       Curiosity Gap – Pollard Banknote                                                                                                                                                                     videos of conference presentations

                                                                                                                                                                                                                   PublicGaming.org
    38 Self-Service Payment Stations                                                                                                                                                                           PGRI conference information
       and Convenience for Retailers
       and Consumers – Grover Gaming                                                                                                                                                                            PGRIDigitalLibrary.com
                                                                                                                                                                              45                             magazine archive of past issues
    45 CX: Unlock the Exceptional Asia                                                                                                                                                                             PGRIDirectory.com
       Pacific Lotteries Association                                                                                                                                                                          listing of lotteries and vendors
       Annual Conference,
                                                                                                                                                                                                                    PGRIAwards.com
       Oct. 14-18 in Brisbane                                                                                                                                                                                Showcase of industry honorees
                                                           Scenes from the New Years Rockin' Eve Extravaganza
                                                           Announcing the First Powerball® Million dollar winner of 2020!
                                                                                                                                                                                                                     recognized by the
                            D E P A R T M E N T S          The partnership between dick clark productions and Powerball® started in early 2019 with a series of second chance drawings in
                                                           partic-ipating jurisdictions to win a VIP trip to New York City. It culminated in the early morning of January 1, 2020, with the
                                                           awarding of $1 million - live on ABC's New Year's Rockin' Eve with Ryan Seacrest national broadcast. Following are photos from the
                                                           3-day Extrav-aganza. The highlight of the trip was New Year's Eve and the Powerball Party at the Crowne Plaza Hotel in Times
                                                                                                                                                                                                               Lottery Industry Hall of Fame
                                                                                                                                                                                                            PGRI Lifetime Achievement Award
                                                           Square. Just after midnight, country music star Jessie James Decker announced the First Powerball Millionaire of the Year live on TV.
                                                           Congrats to lucky winner, Blaine Marston of Maine!

    8     From the Publisher                                                                                                                                                                                  Sharp Award for Good Causes
                                                          42
          Paul Jason                                                                                                                                                                                            Lottery Industry Statesman
                                                                                                                                                                                                                 and Stateswoman Award
    42 Scenes from New Years Rockin’
       Eve Extravaganza: First                                                                                                                                                                             Rebecca Hargrove Mentorship Award
       Powerball Millionaire                                                                                                                                                                                       Collaboration Award

    46 Scenes from the Asia-Pacific
       Lottery Association (APLA)
       Annual Conference – October 14
                                                                                                                                                                                                                   Subscribe To Our
       to 18 in Brisbane, Australia                                                                                                                                                                             Free Digital Newsletters
                                                                                                                                                                                                            Receive our daily newsletters at no
    48 Scenes from the African
                                                                                                                                                                                                            charge, published 5 times a week
       Lotteries Association Annual                        Scenes From African Lottery Association Congress
                                                           July 2019 in Casablanca, Morocco
                                                                                                                                                                                                             to bring you the latest breaking
       Conference – July 1 to 3 in
                                                            1                                                  2                                                             3

                                                          48                                                                                                                                                news in the global lottery industry.
       Casablanca, Morocco                                                                                                                                                                                          Send an e-mail to:
                                                                                                                                                                                                               sjason@PublicGaming.com
    52 Pulse of the Industry                                4                                       5                                                 6

                                                                                                                                                                                                              with “add to Daily Digest list”
       Synopsis of Recent Industry News                                                                                                                                                                             in the subject line.

    58 AI : The Lottery community’s
       pathway for both protecting                                                              7                                                                   8

       players and enhancing the
       player experience – Philippe                         9

       Vlaemminck, Managing Partner                                                                                                          11

       & Beata Guzik, Director EU Public
                                                                                                        10

       Affairs
                                                           1. Rhita Lahlou, Yannis Stathis 2. Amadou Samba Kane 3. Jean-Luc Moner-Banet 4. Ndéyé Fatou Sylla Samba 5. Younes El Mechrafi 6. Sylvère-Hen-
                                                           ry Cissé , Amadou Diaw, Thierry Gabarret, Giancarlo Sergi 7. Stanislas Zeze 8. Alexandre Qader 9. Andreas Kötter 10. Susan Jason 11. Rhita
                                                           Lahrou, Rebecca Hargrove

6   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
™

Scientific Games is the ONLY company to offer the authentic LOTERIA brand,   TM

            with over 1.2 billion tickets sold by 31 different lotteries.

LOTERIA ™/©: Licensed by Don Clemente, Inc. 2020. All Rights Reserved.
© 2020 Scientific Games Corp. All Rights Reserved.
ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
From the
                               Publisher
    Adoption of new technologies and                      at managing our gaming assets for                by thinking of them more as a portfolio
    business process rarely happens in a steady           long-term sustainable growth than are our        of games to be integrated for optimal
    predictable continuum, but rather in                  counterparts in the other gaming sectors.        synergies. Presentations to complement
    discontinuous ebbs and flows in the long              Gordon Medenica puts some of these               this session will focus on portfolio
    runup to wide-spread acceptance. For                  themes into proper context. To be sure,          management, and how we might integrate
    instance, many people were relegating the             Team Lottery faces some major challenges.        the marketing and promotion of games to
    internet to the status of over-hyped fad just         What Gordon’s presentation (re-cast              appeal to the broadest spectrum of play-
    twenty years ago. And just fifteen years              as an article) at PGRI’s last conference         styles and preferences.
    ago, Google was losing money and had                  did, though, was put into context the            I want to congratulate dick clark
    fewer website visitors than MySpace. It’s             nature of our issues, how we have faced          productions for producing the most
    hard to grasp just how quickly everything             challenges in the past, and how we might         fabulous New Year’s Rockin’ Eve
    changes and who will be the innovator                 chart a course for ongoing success in the        Extravaganza ever. The first Powerball
    with staying-power.                                   future. For one thing, there have been           Millionaire of the year and the decade was
    I am not clear on exactly how AI will                 some home-run innovations that bumped            announced after a series of high-profile
    affect our industry, or how to apply AI to            the Lottery growth curve up in a big             spots on ABC’s national broadcast from
    positive effect. But at this point, hopefully         way. Many of those have come from the            Times Square. It was magical.
    the fact that we don’t understand                     effective collaboration of the community
    something doesn’t cause us to under-                  of U.S. lottery directors. But what keeps
    estimate its impact. We can observe how               Lottery on top as the most popular game-            We look forward to seeing you all at
    AI powered Google and Amazon into                     of-chance in the world, with the largest           PGRI Smart-Tech and WiLL Miami
    dominance, and we can expect it will                  player-ship, revenues, net profits, longevity,
                                                                                                                    Eden Roc Miami Hotel
    do the same for those who figure out                  and probably any other measure … is
    how to apply it to their own businesses               continuous, incremental improvements.                          March 3 to 5
    going forward. The line from AI to                    This disciplined approach towards                  Check in at PublicGaming.org for
    transformative value for the customer in              shepherding this $85 billion industry in          conference updates and more specific
    our own business may not be crystal clear.            the U.S. has been criticized as not being         info about the venue and conference
    But successful application of AI will be              innovative enough. Some mantras that                           program.
    reshaping entire competitive landscapes               describe the new-age approach include
    just as the internet has done over the                                                                 And Visit WomenInLotteryLeadership.
                                                          “move fast and break things”, and “you              com for more info about WiLL
    past twenty-five years. And it won’t be               gotta allow for mistakes”. What might
    twenty-five years, or fifteen years. It’s now.        work in a start-up with little to lose and
    Srini Nedunuri and Philippe Vlaemminck                a mission to disrupt an industry is not
    get the conversation started for us in the            the recipe for success in an established
    lottery industry.                                     business, in fact the dominant business in
    Predictions of Lottery losing “relevance”             its industry, and with stakeholders who
    in a world enamored with the Next Big                 appreciate a risk-management calculus that
    Thing have proven to be misguided. We                 does not jeopardize their equity position.
    can be thankful for that. But instead                 We will be exploring What’s Next at PGRI
    of breathing a sigh of relief, we might               SMART-Tech Miami on March 3-5.
    consider how to leverage our strengths into           The theme of the conference is "Store of
    a more defensible platform that will serve            the Future" which includes integration
    us well into the future. The consumer                 of the online and off-line connection to              Paul Jason, Publisher
    now enjoys a huge variety of options and              the consumer, iLottery and digitization               Public Gaming International Magazine
    that certainly affects our market-place.              of the in-store shopping experience as
    MMOG (Massively Multi-Player Online                   well as innovative POS, cashless options,
    Games), “e-sports” and Fantasy and sports             merchandising and promotion to comport
    betting, and Fortnite may be carving                  with changing consumer shopping
    out their share of the consumer market-               behaviours and market trends. We will
    place. But we now know that Lottery has               also explore ways to improve the combined
    a resilience and longevity that no other              performance of multi-state games, and the
    game has ever had. And we know that                   two national jackpot games in particular,
    we are more resourceful and effective
8   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
The Lottery Center™ is a dynamic
       modular unit that turns counter space
       into an attention-grabbing, clutter free
       lottery space.

Lottery Center™ shown with Indiana Lottery merchandise.
ARTIFICIAL INTELLIGENCE - TRANSFORMS THE BUSINESS OF KNOWING AND SERVING YOUR CUSTOMER SRINI NEDUNURI
PUBLIC GAMING INTERVIEWS

                                                  Sarah
                                                  Taylor
                                                  Executive Director of
                                                  Hoosier Lottery in Indiana

     LOTTERIES RE-IMAGINE THEIR
     ROLE AS LEADERS IN CORPORATE
     SOCIAL RESPONSIBILITY
                                                                                                         revenue and corporate social responsibility
         PGRI Introduction: Hoosier Lottery earned WLA Level 4                                           are not mutually exclusive, is an ideal that
                                                                                                         the Lottery industry can embrace. We
         CSR Certification four years ago and was re-certified late in                                   need to identify and codify best-practices,
         2018. Sarah Taylor, member of the World Lottery Association                                     and establish CSR/RG/Sustainability
                                                                                                         markers against which to measure results.
         Corporate Social Responsibility (CSR) Committee, discusses                                      Let’s utilize our role as the leader in this
         the transformative impact of expanding Responsible Gaming                                       space and inspire others to think bigger as
                                                                                                         well so that everyone is working together
         (RG) into the broader vision of CSR.                                                            to raise the standards of CSR.
                                                                                                         Not all lotteries are members of the WLA.
     Paul Jason: It seems like a natural                   before the EL WLA Marketing Seminar           But NASPL, the EL, APLA, Cibelae,
     evolution for Team Lottery to be leaders              that Lynne Roiter was kind enough to          and African regional associations are all
     in the more expansive space of Corporate              invite me to join. It was interesting to      working towards many of the same RG/
     Social Responsibility (CSR).                          hear the passion from the EL members for      CSR goals. Oregon Lottery Director
                                                           the vision and the impacts that expanding     Barry Pack is leading the NASPL CSR/
     Sarah Taylor: The new vision for                                                                    RG committee. NASPL has its own
     Responsible Gaming is about how we,                   the focus of RG (Responsible Gaming)
                                                           to include CSR and Sustainability             certification program in partnership
     how all of us, and the enterprise in which                                                          with NCGP, and has developed a set
     we work, can serve the broader interests              should have. Many organizations in
                                                           both the private and public sectors,          of responsible gaming guidelines for
     of society. How can we reshape the                                                                  sports betting. We all learn from each
     corporate mission, and the underlying                 for-profit and non-profit alike, are
                                                           integrating this broader vision into their    other and apply best-practices from
     culture that supports that mission, to                                                              wherever they can be sourced - overseas
     include a long-term focus on making this              corporate missions. In addition to the
                                                           central purpose of maximizing revenue         or within the U.S; within our industry
     world a better place?                                                                               or outside of our lottery gaming sector.
                                                           for shareholders or even good causes,
     For those of us in the government lottery             corporate culture now includes the larger     NASPL participates in the Responsible
     sector, service to good causes is in our              impact of the business on its community       Gambling Collaborative, which brings
     DNA. Most of us derive significant value              and society at large. While the principal     together gaming operators, academics
     from the knowledge that our mission is to             business strategy is to produce the best      and treatment and prevention advocates
     generate funds that our state governments             product or service for the customer, issues   to align around best practices related
     allocate for various good causes. I was               like creating a diversified and empowering    to responsible gambling. We are all
     introduced to this larger vision of RG                work environment are critical as well.        working hard to create the tools to support
     at a CSR committee meeting with the                   This holistic approach, where maximizing      our dedication to the RG/CSR mission.
     Independent Assessment Panel held just
10   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
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© 2019 IGT Global Solutions Corporation. The trademarks used herein are owned by IGT or its affiliates, may not be used
without permission, and where indicated with a ®, are registered in the U.S. IGT is committed to socially responsible gaming.
Our business solutions empower customers to choose parameters and practices that become the foundation of their
Responsible Gaming programs. Images are representative only.
PUBLIC GAMING INTERVIEWS
     Government lottery has always played a                is highly engaged in this more expansive  Segueing over to the sales side of the
     leadership role in RG and CSR. I realize              view towards RG, CSR, and the positive    business … What product categories or
     we do that because it is the right thing              impact that our organizations can have on even specific games represent the most
     to do. But wouldn’t society be better off             society.                                  exciting potential for growth over the next
     if our political stakeholders recognized     In your experience with the different trade 18 months?
     Lottery’s dedication to serving society, to  associations - are there things that the           S. Taylor: For the Hoosier Lottery,
     RG and CS, and were quicker to reward        WLA does differently from NASPL and                scratch-off games generate about 75% of
     Lottery with authorization to operate more   vice-versa? How do the different CSR, RG revenues and 25% comes from the draw
     games of chance and distribute online and    groups differ in the service they perform          category. We’re continuing to focus heavily
     provide cashless options and otherwise       or the way they perform it?                        on the scratch portfolio and in creating
     support the expansion of Lottery?                                                               innovative games and prize structures. For
                                                  S. Taylor: The WLA has a longer history
     Paul: It would be best for me to not         of focus on these issues and therefore has         example, we are developing more games
     respond to this question.                    a more robust structure and certification          with stronger middle and lower tiers for
     Is there a trade-off-between pushing hard program. NASPL put together a wonderful secondary and tertiary prizes. I think
     to maximize sales and pushing hard to        program that, among other things, helps            we’ve seen a shift in how we design the
     minimize problem gambling?                   and supports lotteries which want to               matrix and prize structures. We have
                                                  participate  fully but may   not   have  all the   produced measurable improvements from
     S. Taylor: No, there isn’t. You just do
     both. And they work together quite           resources to allocate towards RG and CSR. changes to the prize structure. And just
                                                  The Hoosier Lottery has been a member              introduced our second $50 ticket late
     well. You maximize sales responsibly for                                                        in 2019. We are also assessing the ways
     the long-term sustainable growth of the      of WLA for many years. We have always
                                                  pursued   excellence  in every   component      of in which consumer shopping behavior is
     business.                                                                                       evolving, and especially how technology
                                                  the business and so we wanted to elevate
     Sales and Marketing-focused enterprises      the performance of the organization in RG is enhancing the variety and consumer-
     like lotteries typically have at least one   and CSR in particular. Seeking higher              appeal of point-of-sale options - self-service
     all-employee meeting a year. For us, that    levels of RG certification is a process that       in particular, and how we might allocate
     has always included a big emphasis on sales. causes you to be better. It shows you what investment towards modernizing the whole
     We want to engender a passion for the        can be done to improve and teaches you             lottery-playing experience at retail. On
     industry, for the service we perform, and    how to do it. It has been such a rewarding the draw side, IGT’s new Cash Pop™ game
     for the funds generated by our organization experience for us that I want to do what I          has been introduced in New Jersey and
     for the benefit of good causes. Sales is     can to give back and share with others.            Georgia. We are keeping a close eye on
     the part of the business that readily lends                                                     their performance for a possible future
     itself to the goal of creating high-energy
     excitement for our mission and purpose.
     But over the past several years we have
                                                           We need to identify and codify best-practices,
     increased our discussion on CSR issues                and establish CSR/RG/Sustainability markers
     like responsible gaming/positive play and
     our community service initiatives. A
                                                           against which to measure results.
     couple of years ago our executive team
     led a recovering problem gambler panel                                                          launch here. We have decided to launch
     conversation that included a recovered       There are different levels of certification        Double Play for Mega Millions this spring.
     problem gambler. Last year we invited a      to complement whatever level of resources          It’s important to stagger various launches
     sportscaster who is a recovered problem      and  attention  the lottery  is able to  allocate  to maximize the marketing impact of each
     gambler. He described his daily life being   to the process. The important thing is just one. Moving Cash4Life to seven days a
     immersed in the very sports he used to       to start somewhere and pursue the goals            week has had a positive effect on sales of
     wager on. It was very moving because he      that are appropriate and attainable for you. that draw game. And our local Daily 3 and
     is a public figure whom many may know.       Be engaged in the process and you will             Daily 4 games are performing quite well.
     We were surprised and touched that he        accomplish your goals. It is important             We are improving our Fast-Play offering
     was willing to be so raw and transparent     to stay involved with your regional                that prints instant-games directly off the
     in sharing his trials and tribulations. It   association. NASPL has completed its               in-store lottery terminal.
     is an important story and life experience    building  blocks   and EL   has  a solid  RG   and
     and perspective for our team to hear and     CSR programs. I will say, though, that the What modernization tools and strategies
                                                                                                     represent the most promising pathways to
     understand. It’s not just that we are paying WLA RG certification program is more               drive sales growth?
     more attention to RG and CSR. As an          mature and was the best route for us to
     industry, we are forging a more enlightened take. The development of its program is             S. Taylor: We are very enthusiastic about
     and, we feel, more productive and effective informed by a long tradition of service to          our self-service program. There are many
     approach towards problem gambling and        its members   across  the world,   along   with  a operational advantages to making the
     the broader CSR issues that will create      global  brain-trust  and  experience    that  the  product available through self-serve kiosks,
     a sustainable future that really serves      entire  games-of-chance    industry    turns  to   and this is an area in which we will be
     everyone’s interests and minimizes harm.     for guidance and leadership. Time and              increasing our focus. The Hoosier Lottery
     I don’t think anyone presumes to have all    participation  continue   to  enhance    all of    still utilizes ITVMs in addition to the
     the answers. I do think the entire industry  these  available programs.                         IGT Geminis that sell both scratch and
                                                                                                                               Continued on page 40
12   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
SMALL-BALL VERSUS
             THE NEXT BIG THING
             TRADITIONAL LOTTERY THRIVES ON INCREMENTAL
             IMPROVEMENTS AND “SMALL-BALL” WINS
              Gordon Medenica
              Director, Maryland Lottery and Gaming
              Control Agency

              Following is an edited transcript
              of the presentation by Gordon
              Medenica at PGRI Lottery Expo
              NYC on October 29, 2019 in New
              York. You can view a video of
              the complete panel discussion at              I was originally going to speak about          in the U.S. and it survives on direct
              PGRItalks.com.                                what lotteries can learn from other gam-       subsidies from casinos. If you look at
                                                            ing entities, and then talk about where        New York, Pennsylvania and Maryland,
              What a difference a year makes.               the lottery business stands in terms of        those subsidies add up to more than
                                                            the broader gaming industry. I’d like to       $500 million, just in those three states.
              A year ago at this time, the jackpots         start with the gaming industry and then        Many other states support horse racing,
              were rolling like crazy. The $1.5 billion     go through a number of more familiar           but mainly for political and employ-
              Mega Millions jackpot hit in South            topics, along with some concepts and           ment reasons. Finally, there’s also a small
              Carolina, and Hogan Brown and I were          analysis.                                      category for miscellaneous that includes
              running around to all of the morning                                                         charitable gaming.
              TV shows – it was one of the most excit-      In the United States, the lottery business
              ing times of my lottery career. That was      accounts for more than $80 billion, and        But then we come to sports betting,
              followed by the $700 million Powerball        in terms of total size, the casino industry    and everyone’s salivating at the notion
              jackpot. It just blew out everybody’s         is very similar. While the casino business     that the illegal sports betting market
              numbers; in fact, by the end of the           is bifurcated into tribal and commercial       may be $150 billion. That $150 billion
              fourth month of the fiscal year, we had       properties, that distinction is really in-     figure is pulled out of the air – nobody
              basically made our numbers for the year.      visible to the player. There’s a real debate   really knows what the basis of it is,
                                                            on the question of how much we can             but it seems to be accepted. Neverthe-
              But shortly thereafter, I starting thinking   learn from what’s going on in casinos --       less, it’s really important – especially
              about how we were going to top those          but maybe the casinos are also learning        when we talk to our legislators – that
              numbers the following year. Of course,        from us; it’s not clear which way the          we distinguish between handle and the
              we’re living through that now and it’s        creative inputs are flowing! Horse racing      money that we actually take away from
              been sobering and quite an awakening.         no longer has a viable business model          it. Sports betting is very low margin,
                                                                                                           and the $150 billion probably doesn’t
                                                                                                           generate more than about $10 billion in
                                                                                                           profit. So that bar on the chart shrinks
                                                                                                           tremendously when you start thinking
                                                                                                           about the internal economics of how
                                                                                                           that number is generated. The reason
                                                                                                           I mention it is because we, as lottery
                                                                                                           people, are always looking for the next
                                                                                                           big thing.

                                                                                                           Historically, there have always been big
                                                                                                           things that drove this business. First,
                                                                                                           there was the shift from an illegal market
                                                                                                           to a legal market, and the daily numbers
                                                                                                           games were an impetus for the legaliza-
                                                                                                           tion of lotteries across the country. Then

14   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
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$80 billion that represents the whole indus-
                                                                                                         try. The next change came in FY2018 when
                                                                                                         Mega Millions went to the $2 price and there
                                                                                                         was a nice boost in sales of the two jackpot
                                                                                                         games, from $6.9 billion to $8.4 billion.
                                                                                                         Then, a year ago, Mega Millions had the
                                                                                                         $1.5 billion jackpot. It had been two and a
                                                                                                         half years between the $1.6 billion Powerball
                                                                                                         jackpot and the $1.5 billion Mega Millions
                                                                                                         jackpot, and as a category, the jackpot games
                                                                                                         jumped to $10.4 billion in total sales.

                                                                                                         If you weren’t an insider in this industry, you
                                                                                                         might look at those numbers and say, “Wow,
                                                                                                         look at those growth rates – this is a vibrant,
                                                                                                         healthy business.” But, of course, we know
                                                                                                         that it’s driven by these jackpots. A year later,
                                                                                                         we’ve all experienced jackpot fatigue, and as
     instant games became a big growth lever               and Florida joined in FY2013, and at that
                                                                                                         our sales decline, we’re all trying to explain to
     through multiple price points and a ton of            point all U.S. lotteries were selling both
                                                                                                         our legislators and others why the numbers
     distribution. The big jackpot games gave              games.
                                                                                                         look so bad this year. But it’s not that differ-
     us another giant lever of growth. So, we’ve
                                                           Mega Millions made matrix changes in          ent from the volatility that we’ve always seen
     had these big concepts in the past that have
                                                           FY2014, and there was some volatility,        in this category. Of course, this is a category
     driven our growth, and now we’re starting to
                                                           and sales dipped again in FY2015. Then in     that’s important to us because high jackpots
     see the limits of that.
                                                           FY2016 Powerball had the world-record         are an entry point for infrequent players to
     Let’s concentrate on Mega Millions and                jackpot of almost $1.6 billion. The jackpot   jump in. But it’s not that big a category in
     Powerball and look at their history since just        category generated $9.2 billion out of the    larger lotteries’ portfolios. Even in Mary-
     before the cross-selling agreement began in
     FY2010. Of course, cross-selling itself was a
     tremendous boost for the industry. It took a
     lot of work to get there, but obviously it did
     extremely well. It’s interesting to look at the
     events that have taken place over the past
     decade, which are noted in the boxes across
     the top of the chart.

     Cross-selling was done with a very explicit
     strategy. The entire industry came together
     and agreed that the first step was to cross-sell
     both games in all jurisdictions. The second
     step was to take one or both games to a $2
     price point - that was already laid out back in
     2010. The third step was to have a $5 national
     game. While we’ve explored that concept, it
     hasn’t happened yet, although it might still.
     Powerball began that second stage of the
     strategy by going to $2 during FY2012 and
     we had a nice boost. That same year, we also
     had a $656 million Mega Millions jackpot,
     which was a record at the time. So 2012 was a
     great year.

     Interestingly, when cross-selling started, two
     very large states – Florida and California –
     chose not to participate. California had a
     successful in-state lotto game that sold for
     $1, and they were afraid of the competition
     of selling too many lotto-style games. They
     explicitly said they weren’t going to join until
     Powerball’s price moved to $2. California

16   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
We have a bunch of little games, and,
                                                                                             thanks to Drew Svitko, we tried something
                                                                                             new with one of them. Drew pushed the
                                                                                             Cash4Life consortium, which represents
                                                                                             nine Cash4Life states, to think about going
                                                                                             to daily drawings. He had done that with
                                                                                             one of his games in Pennsylvania. The group
                                                                                             was initially skeptical, but the argument that
                                                                                             carried the day was, “What have we got to
                                                                                             lose?” We made the change, and sales have
                                                                                             been up 60, 80, 90% in various jurisdic-
                                                                                             tions with very minimal cannibalization. We
                                                                                             held a joint meeting with the Lucky For Life
                                                                                             consortium, which is very interested in our
                                                                                             success with going daily. We hope they will
                                                                                             come along to do that, and down the road,
land, a medium-sized state, the jackpot                                                      we may redesign the game with the objective
                                             2016. Another way to think about the sales
games only account for about 10% of our                                                      that it become an even bigger national game.
                                             slowdown is to look at how many more
sales. If you’re a smaller state where jackpot
                                             draws it takes to get to the same jackpot       This brings up other initiatives that are going
games account for 40% or 50% of your sales,  level. In Mega Millions, it takes about two     on in the industry – there are tons of them.
this is devastating, and your results are a  more draws, and for Powerball, it takes about   However, I would characterize them as “small
giant rollercoaster. States where this category
                                             three more draws. We are still the dominant     ball.” Baseball fans know that small ball is
isn’t as important will survive as the other gaming entity in this field in North America,   about hitting singles, stealing bases and bun-
major game categories continue to grow.      but do these numbers give any indication        ting to advance baserunners and just eking
                                             that this is the beginning of the decline?      out one run at a time as opposed to hitting
Sales building up to the big Mega Millions   Have we seen our best days? How do we go
jackpot were off by about 40% from the sales forward from here?                              home runs. One of the big questions for
building up to the big Powerball jackpot in                                                  our industry is can we develop another huge
                                                                                             breakthrough concept – like the national

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new solutions to make your operations more efficient and more profitable than ever.
fees. Now, we’ve become convinced that the
                                                                                                                  bank fees shouldn’t be a barrier, and to the
                                                                                                                  extent that lotteries have to absorb those fees,
                                                                                                                  it should be more than offset by the sales
                                                                                                                  increases that can be generated.
                                                                                                                  Double Play is a little add-on game that
                                                                                                                  Mega Millions has approved. We’ve got five
                                                                                                                  states launching in April and a few more next
                                                                                                                  fall. Mega Millions now has three add-ons,
                                                                                                                  including Megaplier and Just The Jackpot,
                                                                                                                  which is still out there. Maybe Powerball will
                                                                                                                  choose to offer some of these add-ons as well.

                                                                                                                  When it comes to sports betting, we have
                                                                                                                  to be realistic that it may not be a game-
                                                                                                                  changer, especially in terms of bottom-line
                                                                                                                  profitability. It’s important for us, but it’s
                                                                                                                  especially important for the casino business
                                                                                                                  where they view sports betting as a traffic
                                                                                                                  driver, not a profit driver. Hopefully many
                                                                                                                  of us will be participating in sports betting
                                                                                                                  very shortly, but I think it’s going to be ad-
                                                                                                                  ditive, and not a game-changer.

                                                                                                                  Our industry has had some talks with
                                                                                                                  CVS about their business model, and the
                                                                                                                  potential for adding lottery sales at thou-
                                                                                                                  sands of CVS stores around the country.
                                                                                                                  Retail expansion, of course, is critical for us
                                                                                                                  and that could be another way to achieve
                                                                                                                  growth. There are 18 states selling Fast Play,
                                                                                                                  a draw game that has the characteristics of
                                                                                                                  instants where players find out immediately
                                                                                                                  if they’ve won. And how much of a role is
     jackpot games, instant games or price point           insurance-backed prize pool in order to
                                                                                                                  there for promotions? We’re all familiar with
     adjustments – or do we have to play small             get us over the initial hurdle of the liquid-
                                                                                                                  the New Year’s Eve promotion that Power-
     ball? And if we play small ball, can we ever          ity problem at the early stages. All in all,
                                                                                                                  ball is doing – is that something that we,
     do something as significant as one of those           there was a lot of work put into big-concept
                                                                                                                  as an industry, need to embrace and fund
     giant breakthrough concepts?                          international games, as a potential way of
                                                                                                                  and pay for? We’re happy to see those types
                                                                         expanding significantly and
                                                                                                                  of experiments and see if they can, in fact,
                                                                         quickly. Nobody really knows
                                                                                                                  move the needle.
                                                                         how big it could be, and there
                                                                         are a ton of operational, finan-         And there’s also iLottery online. We’ve seen in
                                                                         cial, tax and legal issues that are      Michigan and Pennsylvania that if you’re will-
                                                                         being worked through.                    ing to go to the high payout instant model,
                                                                          Another initiative is in Texas,         you can drive significant revenue in that
                                                                          where they are launching in-lane        category. However, the states that are selling
                                                                          sales. It’s all well and good to        existing products at existing payouts – allow-
                                                                          have Mega Millions and Pow-             ing players to buy Mega Millions or Power-
                                                           erball for sale in-lane, but selling instants in-      ball online – that’s not a game-changer.
     I was lucky to be asked to join the Interna-
     tional Working Group, and in that group,              lane is where the real money is going to come          There are 10 ideas here, and we could
     we started by thinking of really big game             from. Are we going to have the patience on             probably add another 10 that several states
     concepts. We were thinking about inter-               in-lane sales if initial results aren’t as spectacu-   are doing. Even if each of these ideas only
     national Powerball, international Mega                lar as we think they will be? Will we hang in          generate 1% or 2% of growth, and if you do
     Millions, jackpots starting at $200 million,          there and develop the rest of our portfolio to         everything on the list, then you can add up
     and having $500 million or $1 billion jack-           be relevant in an in-lane environment?                 to 10% to 20% growth. I would argue that
     pots regularly. We’re not afraid to take an           Cashless payment is another option where               in an industry of this size and maturity, that
     existing idea that we can use to our benefit.         we’ve seen great results. For years, everyone          may be where our future growth comes from.
     We looked at the Lottoland model of an                was reluctant to do that because of the bank
                                                                                                                  Thanks very much.
18   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
19   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
Harnessing
     AI to Benefit
     Lotteries

      If you don’t plan to implement some form of
      Artificial Intelligence in the next three years,                                           By Srini Nedunuri,
      you might be left behind. AI has arrived, and                                              Vice President IGT
      here’s how lotteries can benefit.                                                          PlayDigital™ Platform

     J
               ust as the steam engine and electri-
               fication once revolutionized whole
                                                           What is AI?
               sectors of the global economy,              Simply put, AI is a collection of technologies
               so are the internet, robotics, data         that, when brought together, allow comput-
               analytics, and Artificial Intelligence      ers to compile and analyze digital data and
     (AI) beginning to dramatically alter today’s          make automated decisions or provide insights
     industries.                                           that previously only human intelligence could
                                                           perform.
     Once merely a buzzword, AI now offers the
     powerful means to solve real-world problems,          While computers are still a long way from
     resulting in an array of enterprise-level tools       “thinking” at the level of a human being, the
     and processes. Globally, as many as three-            enormous amount of data and computing
     quarters of businesses expect to implement            power now available has made it possible for
     some type of AI within the next three years.          machine learning and AI capabilities to excel,
     Will the same hold true for lotteries? Let’s take     particularly in the areas of pattern-detection
     a closer look.                                        and problem-solving.

20   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
Applying AI in the                               improving responsible gaming

     Lottery Space
                                                      efforts, as well as security and
                                                      fraud protection. IGT’s solution,
                                                                                                    Uses of AI Across
     Humans learn from experience,                    Play.AI, is focused on these major            Industries
     but computers learn from data, so                areas (see sidebar: Taking the Dif-           Many of us already experience
                                                      ficulty Out of AI Implementation).
     data is where AI starts and finishes.                                                          forms of AI today in applications
     Today, our industry relies on human              There are countless potential AI              such as virtual assistants (e.g.,
     experts to analyze lottery data and              applications for lottery. Wherever            Alexa and Siri). Amazon’s
     produce meaningful insights. AI
     harnesses technology to automate
                                                      there’s a spreadsheet and ana-                product pricing system updates
                                                      lysts looking at data today, there’s
     this process for massive amounts of                                                            as many as 2.5 million times
                                                      potential for AI to help advance
     data. AI can do it faster and more               our understanding. In the United
                                                                                                    per day using AI to analyze
     efficiently, and can recognize and               States, for instance, a lot of time           customers’ shopping patterns,
     highlight correlations that humans               and effort is spent on plannogram-            competitors’ prices, profit
     might not be able to find.                       ming the allotment of instant                 margins, inventory, and a
     IGT’s exploration of AI began                    tickets. What if there were an AI ap-         dizzying array of other factors,
     with a goal of helping lotteries                 plication for that? AI can constantly         and to choose new, competitive
     gain deeper insights into player                 monitor activities like sales or even
                                                                                                    prices that maximize profits.
     preferences and behaviors — for                  the number of requests for sold-out
                                                      items, and then provide data sug-
                                                                                                    Travel agencies, insurance
     instance, how players react to the
                                                      gestions to improve how and what              companies, and other retailers
     content offered, how frequently
     they play, why they play, and how                is offered.                                   also use AI for dynamic pricing.
     to personalize offerings to them                                                               In the health care industry, AI
                                     AI offers the potential to help with
     while maintaining a responsible less obvious applications as well.
                                                                                                    is involved in everything from
     and safe gaming environment. In For example, when there are roll-                              pharmaceutical research to
     fact, AI can play a central role in
                                     ing jackpots, the demand for play                              medical imaging analysis to
                                                    slips and ticket stock                          suggest the best treatment.
                                                    increases consider-                             Common business uses include:
         72% of businesses that have                ably. Today, humans
         implemented AI say it will be              source, plot, and                               Sales forecasting
         the business advantage of                  manage the data to
                                                    maintain those paper-                           Credit scoring
         the future. (PWC.com)
                                                    supply lines. A current
                                                                                                    Optimizing marketing
         Approximately 75%                          IGT trial is using AI
                                                    and our own data to
                                                                                                    campaigns
         of businesses plan to
         implement AI in the next 3
                                                    map this process in                             Predictive maintenance
                                                    parallel with tradition-
         years. (Accenture)                         al, manual processes,                           Identifying new market
                                                    making it possible to                           opportunities
         Worldwide spending on AI                   correlate the accuracy
         systems was forecast to reach              of the two and create
                                                                                                    Enhancing the customer
         $35.8 billion in 2019 and                  a practical, proven                             experience
         double to $79.2 billion in 2022.           application for lotter-                         Optimizing processes
         Most of this investment                    ies that manage con-
         will be in Decision Support/               sumables at a large                             Reducing operational costs
                                                    scale – for example,
         Augmentation to maximize                                                                   Mitigating risk
                                                    in Europe – to opti-
         profits. (Gartner)                         mize the process and                            Fraud detection
                                                    save money.

21   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020                                      PUBLIC GAMING INTERNATIONAL • NOVEMBER/DECEMBER 2019
AI can also track player choices in                   it’s even more difficult to keep them.     2. Improve Your Content
     the digital and retail realms and look                IGT built a model to make it possible         Offering
     for patterns — whether related to the                 to look at players’ Play Characteris-
                                                                                                      To learn more about how our own
     time of day people play, or the topic of              tics and, combined with responsible
                                                                                                      content was performing, IGT began
     games they choose — to enable better                  gaming models, identify appropriate
                                                                                                      feeding content data to our Play.AI
     overall marketing and game-offering                   offers to send to individual players.
                                                                                                      system and taught it how players were
     decisions in retail and digital. The two              In effect, AI enables personalized
                                                                                                      consuming the games. We first cre-
     worlds are no longer separate.                        1:1 campaigns. Personalization is the
                                                                                                      ated a model to predict consumption
                                                           holy grail for any marketer, because
                                                                                                      based on 150 days of performance —
     How AI Can Benefit                                    relevant content most often generates
                                                                                                      nearly six months. We then reduced
     Lotteries
                                                           the best user engagement.
                                                                                                      the period to 90 days, then 30 days.
                                                           AI can also be used to build a con-        Now, with 15 days of game activity, we
     Here are some of the ways IGT’s                       tent transactions matrix, enabling         can predict with up to 97% accuracy
     Play.AI solution can be applied to                    lotteries to predict the propensity        how a game will perform. In addi-
     benefit lotteries, based on trials with
                                                           of consumption for different types         tion to allowing lotteries to improve
     IGT’s Lottomatica over the past three
                                                           of content. The probability of play-       their content offering, this application
     years in a highly competitive gaming
                                                           ers moving from one kind of game to        of AI gives lotteries great insight
     market with more than 260 operators.
                                                           another is different for different kinds   into their potential revenues for the
     1. Better Understand                                  of games. Therefore, if a player favors    next three months. AI can be used
       Your Players and Their                              one type of game, there’s an opportu-      for retail games, too, provided they
       Engagement                                          nity to suggest other games that the       can access the data to support the AI
     It’s difficult to acquire players, and                player might like to try.                  models. This is possible particularly if

22   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
SHOULD POWERBALL                                                                                                 By Simon Jaworski

     GO GLOBAL?
                                                                                                                      President of the U.S. Office, Leger
                                                                                                                      the Research Intelligence Group
                                                                                                                      leger360.com

                                                           discussions first-hand, your humble
                                                           scribe from renowned lottery and
                                                           gaming research experts Leger, decided
                                                           to take a stand, and ask some questions
                                                           relevant to this very issue on their
                                                           December 2019 U.S. Omnibus.
                                                           80% of Past Month
                                                           players will remain loyal
                                                           The first, and perhaps most important
                                                           question simply defines whether Joe             Recent players see the
                                                           Public will continue to support Powerball       benefits, lapsed players
                                                           if sales occur across borders. When asked
                                                                                                           less so

     A
                                                           whether ‘we the people’ would still play
               mong key U.S. Lottery personnel,                                                            Among the recent players, 62% of past
                                                           Powerball if it expands its selling base to
               there are two distinct camps of                                                             month Powerball players claim the extension
                                                           other countries around the world, 42% of
               thought as to whether the current                                                           of the game is seen as positive, compared to
                                                           the U.S. population say they will still play,
               U.S.-only branded Powerball game                                                            only 29% of lapsed players. In fact, 43% of
                                                           which translates to 80% of past month
     should be sold in other countries. However,                                                           those lapsed players argue the move would
                                                           Powerball players.
     unlike the Brexit debacle over in my home                                                             be a negative for the game.
     country of England, and the widening of               Lapsed players are split                        When you combine the fact that lapsed
     the political spectrum in America, there              Perhaps more interesting are results from the   players, Americans who have played
     does appear to be potential for some middle           lapsed players (these are former Powerball      Powerball in the past year, but not in the
     ground. Imagine that. People working                  players who have not played Powerball in        past month, are unsure of the positive effect
     together towards a common goal of greater             the past month, but have played in the past     and half already claiming they will not play
     success for all.                                      year), where opinions are almost evenly         an international version of Powerball, how
                                                           divided on their future purchase intent.        easy is it going to be to win back this key
     The difference in this case is that the
                                                           52% of lapsed players state they will play if   market with statistics like that.
     internal controversy over Powerball strategy
                                                           Powerball expands, with the remaining 48%
     emanates from one simple conflict. Team                                                               Key positives of an
                                                           saying they will not. To Leger this seems
     A is crying out for Revolution, while Team                                                            expanded Powerball
                                                           to be the tipping point. Can U.S. lotteries,
     B simply wants Evolution. Two opinions,                                                               “Bigger prizes and jackpots” are the
                                                           with their current monopoly, grow sales
     just one simple letter of difference. Both                                                            key factors among those who favor the
                                                           internationally, to compensate from losing
     paths are qualifiable and quantifiable,                                                               Revolutionary option, stating “It’s a good
                                                           20% of their recent players and potentially
     and yet both teams have the same goal…                                                                opportunity, positive all around”. However,
                                                           half of the casual players?
     to increase revenues to help the townsfolk                                                            those against the new plan simply shake
     of Lotteryville. What was once a relatively           So, is it seen as a ‘positive’                  their heads, with a dose of patriotism
     simple task, sitting back and watching as             step?                                           attached. “Our chances to win would be
     rolling Mega and Powerball jackpots ensured           One third of Americans feel the expansion       diminished, with much lower odds” and
     financial returns satisfied even the meanest          to an ‘internationally extended’ Powerball      “it’s an American game, it should stay
     of Governors (think Headley Lamar from                will be a positive step, with almost the        American”.
     Blazing Saddles), has become more onerous             same proportion (30%) believing it to be
     as the years have worn on.                            negative, with the remaining third neutral.
                                                                                                           Player benefits track with
                                                           The ‘positives’ are driven by those ‘aged       recent jackpot games
     Into the new decade, a 300 million bean
                                                           30-39’ (48%) and families with children         Leger’s survey also asked respondents the
     jackpot win seemingly can’t guarantee
                                                           (42%), while the ‘negatives’ lean heavily       potential benefits of a newly expanded
     happiness for the average person in the
                                                           on those ‘65+ year olds’ (46%). These facts     Powerball. The past month players were very
     street. A billion (or even half a billion) with
                                                           would seem to indicate that the greatest        vocal, with a number of critical attributes
     its “B” has more of a ring to it, but when
                                                           opposition to change, are the oldest age        hitting the 50% + level. Players want ‘Bigger
     was the last time either jackpot game hit
                                                           group, which is by no means a negative,         jackpots more often’ (63%), ‘Better odds of
     that magical mark? Not recently enough,
                                                           given the fact older Lottery players tend to    winning’ (58%) and “Higher prize levels for
     according to leading lottery directors.
                                                           drop off a little in terms of play following    hitting just the Powerball number” (51%).
     So how will another single letter swap help                                                           From one side of the fence it could be
                                                           retirement.
     the current situation? After following these
                                                                                                                                     Continued on page 29
24   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
Reimagine Next
                                     2020 isn’t just a new year – it’s a new decade, a new beginning.

                            So look for us as we work with our lottery partners to reimagine the future.

25   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
PUBLIC GAMING INTERVIEWS

                                                  Patrick
                                                  McHugh
                                                  Executive Vice President
                                                  & Group Chief Executive,
                                                  Lottery, Scientific Games
                                                  Corporation

     REIMAGINE PLAY™
          PGRI Introduction: 2019 was a year of celebrating success                channels expand, the need for integration at the systems level
          for Scientific Games. Instant games retail sales surpassed               becomes mission-critical. Innovation at the operational level,
          the $50 billion mark in the U.S. The world’s largest provider            excellence at execution, and collaboration with customers to
          of instant games announced a manufacturing expansion on                  ensure best-in-class at every level have always been a part of
          two continents, and several major domestic and international             the company’s culture.
          instant games and technology contracts including Florida,
          Turkey and Italy, plus the announcement of the first national            Supporting the U.S. industry with iLottery, players clubs,
          instant ticket lottery concession in Brazil. Much of the global          player account management systems and second-chance
          marketplace is still emerging in the instants product category           promotions, Scientific Games continues to analyze consumers
          with large markets like Brazil poised for explosive growth, and          and follow how and where they want to play. The company’s
          mature markets continuing to represent a huge opportunity to             digital sports betting solutions are powering more than 35
          apply proven best-practices that can expand the player base              markets around the world. Retailer innovations like the SCiQ®
          for responsible entertainment. The category is reinventing               instant game ecosystem, PlayCentral® 54 self-service ma-
          itself for the digital age – poised to grow at rates faster than         chines, and Scientific Games Enhanced Partnership (SGEP)
          ever. Scientific Games is integrating the games with a cross-            programs are revolutionizing the way lottery products are sold
          channel entertainment experience for players, and a modern-              at retail. The technologies to drive success are all in place
          ized technology approach to retail.                                      and innovating peak-performance for many lotteries. And
                                                                                   Scientific Games’ Reimagine Play experience is informing
          Scientific Games provides over 70% of instant games                      a reimagined operational ecosystem for an ever-expanding
          worldwide, serving over 150 government lotteries globally                portfolio of games distributed through multiple channels.
          with games, technology or services. As gaming distribution

     Paul Jason: How is technology changing                to operate in together. Our approach            Inside and outside our industry, expanding
     the player ecosystem?                                 of integrated technology and products           digital channels, the diversity of pop
     Pat McHugh: For Scientific Games, our                 creates a backbone that supports progress       themes and brands, plus the impact of
     technology has allowed us to connect the              in every corner of our lottery customers’       real-time entertainment – whether that
     entire lottery ecosystem to deliver the               business to maximize proceeds to their          be mobile sports betting or video games
     best games and player experiences across              beneficiaries. Data analytics have become       – is creating an explosion of consumer
     channels and product lines. Momentum™                 a core function of all our systems, allowing    choices that will shape our industry
     is Scientific Games’ enterprise ecosystem             us to help our customers optimize game          going forward. Technology is unlocking
     that connects our suite of value-add                  design, and diversify the variety of            consumers’ ability to enjoy entertainment
     products and applications for effective use           games and playstyles for the consumer.          on demand. Scientific Games uses
     today by lotteries. Momentum creates a                Reimagining retail, with products like          technology to translate those capabilities
     framework that allows us to integrate sets            SCiQ®, is modernizing lottery with              into what we refer to as “entertainment
     of content, products, and data analytics              business intelligence never before available.   ecosystems” that allow our customers to

26   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
manage and analyze their game portfolios              core players to increase their spend.         channel environment, but they still want
     and associated products to entertain                  U.S. consumers now think of games-of-         to integrate what they do have to sell
     players, seamlessly between online and                chance like any other consumer product        through the channels in which they are
     retail play.                                          or service. They expect innovation to drive   authorized to sell. And everyone wants a
     What do you think the government lottery              new product; they expect multi-channel        technology infrastructure that supports
     operator will look like five years from               availability; and they expect a seamless,     change, growth, the addition of new
     now in terms of the portfolio of games                user-friendly player experience. Players      products, new game categories and new
     that they are offering?                               expect operators to engage with them          channels of distribution. The breadth
                                                           across the whole spectrum of online and       and depth of our global experience
     P. McHugh: I think we can expect the                                                                enables Scientific Games to customize
     need to increase funding for good causes              off-line channels, and offer the widest
                                                           diversity of games. That’s why we are         the approach for the specific needs of
     to drive further expansion of game                                                                  each jurisdiction that operates within its
     categories and distribution channels to               focused on products, profit and programs
                                                           for our customers. We are maximizing          own unique set of dynamics, regulatory
     make lottery products more accessible to                                                            constraints and business objectives.
     consumers. The online market will grow                sales growth in a responsible way with
     at the fastest percentage rate. However,              technologies that allow lotteries to launch   Scientific Games has developed the
     Scientific Games remains incredibly                   new games quickly and cost-effectively,       systems technology and services that
     bullish on the ability to maximize profit             and integrate those games into the existing   supports not just instant and draw
     growth, in actual dollars generated,                  portfolio in ways that optimize the           games, but integrates products across
     from the core business.                                                                                         a broad portfolio of games
     Scientific Games has                                                                                            that includes iLottery, sports
                                                                                                                     betting, land-based casino,
     demonstrated that a
     strong partnership with
                                          For Scientific Games, our                                                  iCasino, digital promotions,
     our customers investing
     in innovative products
                                          technology has allowed                                                     loyalty programs, etc. These
                                                                                                                     are all at the ready to deploy
     and game portfolio                   us to connect the entire                                                   for customers that are
                                                                                                                     ready to expand their game
     management can generate
     double-digit growth                  lottery ecosystem to deliver                                               entertainment, just as the
                                                                                                                     Pennsylvania Lottery, Danske
     even for mature and
     high-performing lotteries.
                                          the best games and player                                                  Spil, Atlantic Lottery and
     In 2019, our SGEP                    experiences across channels                                                other lotteries around the
                                                                                                                     globe have successfully done.
     program customers saw
     year-over-year growth far            and product lines.                                                          The European and Canadian
     ahead of the industry as                                                                                         markets are now heading
     a whole. While year-                                                                                             into a second generation
     over-year instant game                                                                                           of systems-enabled game
     performance for the                                                                                              entertainment. The first
     industry is 4.3% growth, we have eight                seamless player-experience.                   generation had the functionality,
     domestic SGEP customers experiencing                  Are lotteries investing in the technology     but it was not fully integrated. This
     from 5.8% to 13.7% growth year to date                that enables modernization?                   next generation is fully integrated so
     (as of December 28, 2019). That is truly              P. McHugh: Yes. Atlantic Lottery and          consumers can migrate seamlessly across
     exceptional performance.                              Danske Spiel are examples of lotteries        game categories, channels and media; and
     As Drew Svitko explained in his keynote               that migrated completely to our multi-        so the operator can sell across product
     speech at the PGRI lottery Expo in New                channel platform, transforming a legacy       lines and multiple media and channels
     York, the Pennsylvania Lottery leveraged              series of separate platforms that served      and use player loyalty clubs to promote
     its iLottery connection with consumers to             all of the various product lines, but were    a diversity of games and playstyles that
     drive performance at retail and vice-versa.           not integrated to work together. Siloed       engage players. The online connection is
     However, the Pennsylvania Lottery’s                   platforms are inefficient for the operator    fully integrated with the retail channel to
     success isn’t just with iLottery. They also           and clunky for the player. Now these          drive the multi-channel relationship that
     added new retail game categories, expanded            lotteries have one wholly integrated          is more convenient for the player while
     the number of self-service vending kiosks,            platform that supports all the products       driving sales growth for the operator.
     launched cash-less payments and digital               they offer – draw games, instant games,       We want to make it easy for sports
     wallet funding at retail, and added new               casino games and sports betting – all         bettors to play e-instants and other
     retailers. This multi-channel model has               operating seamlessly across retail and        lottery games, so we are creating a path
     allowed Pennsylvania to experience record             digital channels that include self-serve      for younger adults who may prefer
     retail sales growth while launching the               kiosks and land-based casinos as well         casino games and sports betting, to try
     most commercially successful iLottery                 as traditional retail stores, iLottery        lottery games. We think the traditional
     program in the industry’s history. Making             and online casino games. The modern           consumer lifecycle is more receptive to
     the games more accessible drives sales                entertainment ecosystem pulls together        Lottery game entertainment as they get
     growth responsibly because it increases the           all those products and channels. Of           older. Scientific Games is making sure
     player base by bringing in new kinds of               course, many lotteries do not offer the       the bridge is there for consumers to cross
     consumers – and it does not depend on the             entire range of products in a multi-          over when the time is right.
27   PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2020
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