The U.S. lottery industry could see more online action in a post-COVID-19 world.
Right now, only the lotteries of Michigan, Illinois, Kentucky, Pennsylvania, New Hampshire, and Georgia have online gambling. On Monday afternoon, a panel of lottery experts met for a virtual panel for the ICE North America Digital conference. The conference was originally slated for New Orleans.
The iLottery panel included Gordon Medenica, director of the Maryland Lottery and Gaming Control Agency; Lauren Walker, director of interactive content at the Kentucky Lottery Corporation; Ludovico Calvi, president of Global Lottery Monitoring System; and David Isaacson, VP at Spectrum Gaming Capital.
According to Pew Research, U.S. lotteries had $91.3 billion in sales during fiscal year 2019. Players received back $52.8 billion in the form of prizes.
Medenica said lotteries face a “balancing act” to continue innovating while also satisfying their network of brick-and-mortar retailers.
However, online play can complement and not cannibalize existing retail revenues.
According to Medenica, the sale of traditional tickets via the internet only represents a tiny fraction of total sales. The major revenue generator is online instant games, also known as eInstants. Those games can allow for continuous play and offer higher payout percentages than traditional lottery games.
“Lotteries have found with eInstants you almost need to push that to casino typical payout levels, perhaps 90%,” Medenica said of the product.
“You don’t want someone to lose all their money right away, you want them to have an enjoyable experience and be able to play for some amount of time,” he added about the eInstants, “and that is now becoming part of what iLottery is finding to be the successful formula.”
Per Medenica, Michigan and Pennsylvania have had success with the eInstants, where he said those games can generate double-digit percentages of revenue.
It’s the early days of state lotteries across the country exploring the lucrative eInstants.
Calvi added that lotteries could be more eager to go cashless after the pandemic, which could further accelerate online adoption in the U.S.
Michigan is the model
Kentucky, which has no casinos, is also looking to attract new players to its lottery. The Bluegrass State, which also has online instants, has looked up to Michigan on this front.
“Michigan is who everyone wants to be when they grow up, at least in the iLottery world,” Walker said in praise of the Wolverine State, which kicked off its iLottery in 2014.
Walker said that in Kentucky players of all ages have taken to online play since it became available in 2016 to those 18 and older.
Sports wagering proposed in Kentucky’s legislature has failed to gain enough momentum for passage. Walker said that the Kentucky Lottery would implement sports wagering in the state if the legislature tasked it with the process. Proposals in the state have sought to do just that.