Powerball Drives Record Lottery Sales in FY2016

2. FY2016 Powered by Powerball • According to data from the North American Association of State and Provincial Lotteries (NASPL), total US lottery sales for all traditional games for FY2016 were $73.48 billion, a 9.4% increase from FY2015’s $67.14 billion. • The NASPL includes net revenues for gaming operations in some states from electronic gaming machines and table games in its grand total of $80.55 billion for FY2016. • The primary impetus behind this significant increase was the January 2016 record-setting Powerball jackpot of $1.58 billion, which was almost 2.5 times more than the previous US record as well as a new world record.

3. Peak Performers • Canadian lotteries performed even better than the US during FY2016, totaling $10.36 billion (including electronic gaming machines and table games), a 13.5% increase. • The top 5 states in total traditional game sales were New York, $7.7 billion; California, $6.3 billion; Florida, $6.1 billion; Massachusetts, $5.2 billion; and Texas, $5.1 billion. • The top 2 states with the largest growth in traditional game sales were Wyoming, 90%, and North Dakota, 32%, but they don’t have instant tickets, so the January Powerball was primarily responsible for these big numbers.

4. Juiced for the Biggest Jackpots • As mentioned on page 1, the lottery story of 2016 was January’s $1.58 billion Powerball, which 60% of Americans played, or almost 200 million people, with approximately 50% spending from $11 to $100 during the two months prior to the drawing. • With January’s jackpot, Powerball sales for the first 10 months of 2016 totaled $5.91 billion while Mega Millions generated $2.04 billion in sales for the same period. • According to a computational forecast, Mega Millions is likely to generate more sales during 2017 because any jackpot more than $400 million attracts many players and there is a more than a 70% probability of that occurring during 2017.

5. Life Changes in an Instant • Although instant games ($45.2 billion for 2016, a 61.8% share) generate more sales than draw games, the profit from instant games is a lower percentage of sales. • Most lotteries are offering game families, thus leveraging sales, advertising and marketing across multiple price points, simultaneously. Many lotteries are promoting more instant games with lower price-points because they attract more new players. • Research from Scientific Games found that 75% of casino slot machine players also play lottery games; 50% of lottery instant game players also play casino slot machines; 74% of casino slot machine players also play lottery instant games.

6. Buyer Behaviors • The June 2016 Gallup poll and data from The Media Audit both help debunk the myth that only lower-income Americans play the lottery and that lotteries consciously promote the games to those who can least afford to play. • Gallup reported that 40% of households with less than $36,000 income played while 56% of those with household incomes of $36,000–$89,999 played and 53% of those with household incomes of $90,000+ bought a ticket during the previous 12 months. • In The Media Audit’s Fall 2016 Orlando, FL survey, the largest age group to have purchased a lottery ticket during the past 4 weeks was 35–44, at 22.2%, followed closely by 55–64, at 21.4%.

7. Evolving With Technology • Many states, such as New York, Michigan and Nebraska, are using mobile apps to engage with their citizens. Michigan, for example, has added QR codes to in-store instant ticket displays, so people can scan them to see an updated list of prizes. • New York included a 3D app with its July Gold Castle $5 scratch ticket. Players download the app and scan a barcode on the ticket, which reveals a 3D rendering of a medieval castle. By tapping the windows, they can see the game’s cash prizes and their odds. • During July 2016, New Mexico became the fifth state (California, Missouri, North Carolina and Pennsylvania) to offer play-at-the-pump technology at convenience stores, allowing customers to purchase a ticket while filling their vehicle’s tank.

8. Advertising Strategies • TV and digital can be used in complementary ways to attract participants, such as using early morning TV to motivate consumers to purchase a lottery ticket when they stop at their local convenience store on the way to work to buy breakfast and/or coffee. • States that have difficulty attracting consumers to Powerball and Mega Millions when the jackpots are “smaller” can adopt Tennessee’s “Wouldn’t at Least $40 Million Change Your Life?” campaign, and promote the other ways to become a winner. • Because TV reaches a very large portion of seniors, or Baby Boomers, lotteries could promote games based on retirement- years activities, such as “You Could Have a Much Bigger Boat” or “Travel to Every Corner of the World.”

9. New Media Strategies • As cited in a February 2017 New Media Insights Report, consumers expect more from loyalty programs. Lotteries must reward points for more than making purchases: referring a friend, posting a win on Facebook, video of what was purchased with winnings, etc. • Since themes attract a significant number of scratch-ticket buyers, lotteries may want to try themes that are more targeted than simply sports, games and holidays, such as “foodie” themes to attract Millennials. • Reward lottery winners who provide periodic updates via social media about how their lives have changed with special loyalty-program points, especially those who are volunteering their time and/or money to help various charitable and community organizations.