EUROPEAN STATE LOTTERIES AND TOTO ASSOCIATION

Compared to lotteries in other parts of
the world, most European lotteries do
not experience the same success with
instant tickets. Their market share for
instant tickets generally ranges between
1 and 20 percent. The corresponding figure
in the U.S., for instance, is from 50 to
70 percent. Lotto, Keno, sports betting
and other games sold via a retailer terminal,
the Internet and mobile phone represent
the lion’s share of the European
lottery market.
There are, however, exceptions like
France, UK and Sweden, where instant
tickets are popular. Italy is another example
where sales have increased tremendously
in recent years. The main reason
Italy’s Monopoli di Stato has experienced
such phenomenal growth can be traced
to Scientific Games’ Cooperative Services
Program (CSP), a performance-based
business model in which a third-party
provides specialized services traditionally
handled by the lottery. Third-party
compensation is determined by lottery
sales, a model proven to deepen the business
relationship between lottery and
third-party supplier because the attendant
risks and rewards of managing
the business are shared more equally.
The lottery is able to respond more
quickly and efficiently to changing market
demands.
A CSP implementation was a key initiative
of the Monopoli di Stato’s bold vision
in 2003. At the time, the Italian gaming
regulatory body charted its plan to re-
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Instant tickets –
the Untapped Lottery Segment in Europe
vitalize its instant scratch-off category.
It has been four years since Monopoli
di Stato implemented CSP and today
its Gratta e Vinci product line routinely
smashes sales records. Annual Gratta e
Vinci sales in 2004 (pre-CSP) were 165
Mil. e; by the end of Calendar 2008, sales
are projected to be around 8.3 billion e,
an increase of about 4,000 percent.
Eyes Have Been Opened
Italy’s growth has opened the eyes of
European lotteries. Increasingly, CSP is
now viewed as a viable business model
for arresting declining or stagnating instant
lottery sales. Five more lottery
jurisdictions, in fact, have begun using
the CSP business model. Key objectives
embedded within each relaunch are what
Scientific Games refers to as the 15 determinants
of instant ticket demand.
Among them:
• Further develop product portfolio
and adapt marketing strategy. Players
say they want more tickets, they
want fresher tickets, and they like to
see something new and different every
time they go into a retail location.
• Optimize product positioning and improve
players’ winning experiences.
• Create more exciting games.
• Enhance instant lottery presentation in
retailer shops and promote the games.
When retailers feel the excitement,
they sell more actively.
• Implement an efficient and effective
ticket distribution system (need-based,
24-hour delivery of tickets).
P AN RAMA
“Some lotteries will experience moderate
sales increases from executing three
or four determinants, but are unable to
achieve the level of success they could if
they would only make the commitment
to execute all 15. That’s really the key
to maximizing instant sales,” says John
Walsh, Senior Vice President, Global
Sales & Services for Scientific Games.
On August 1 st , MSL, Ukraine’s largest lottery
operator, began selling instant tickets
under the CSP business model. “After
witnessing Scientific Games’ success
in other European countries, we realized
Scientific Games would be the perfect
partner to help grow instant ticket sales
in the Ukraine,” said Georgiy Lozhenko,
President of MSL.
The Whole Story
Premium
Scientific Games has a whole division
dedicated solely to the service side of
the lottery business. This division is now
comprised of over 200 people whose collective
skills and talents can run from one
to a myriad of components of a lottery’s
business – including everything from
sales and marketing to distribution and
warehousing.