Public Gaming Research Institute / Public Gaming Magazine

Public GamingPublic Gaming:Congratulations toyou and all of the USLottery directors for getting the cross-selling of thebig multi-state jackpot games off to a fabulousstart. When do you actually sell your first MegaMillionsticket?Tom Shaheen: Our target date is January31st. However, this isn’t like implementingyour own in-state game. The implementationof any multi-state game requires aconsensus involving all the different participatinglotteries. I would estimate that 36 ofthe 45 US lotteries are targeting January 31stas the launch date. Reaching consensus fromthis many organizations on a multitude of issuesis no easy task.What’s involved logistically for implementingMegaMillions and Powerball in a whole new setof state lotteries?T. Shaheen: There are several pieces thatmust be in place. First of all, each lottery hasits own governing board and legislative procedures.So the approval processes will bedifferent. Even if all states sign on, the timingand launch dates may not be the samefor everyone. Some states are structured likea corporation, having a lottery board. Otherstates may be a state agency with a commission.In these cases, the approval process canusually be completed by that board or commission.Some states, however, may have togo through rule changes that are approved bybodies outside of the lottery. Some may evenneed legislative approval. A lottery that reportsdirectly to the governor may need thegovernor’s approval. As you can see, theprimary logistical issue impacting timing toparticipate is each state’s approval process.In the case of cross-selling MegaMillionsand Powerball, that could delay the startdate until June or even later for some states.But almost every state is in agreement thatparticipating in both jackpot games shouldbenefit their state.Tom ShaheenExecutive Director, North Carolina Education LotteryPresident of the Multi-State Lottery Association (MUSL)(This interview is continued online. Please go to www.publicgaming.com to see this interview in its entirety.)Any changes in prize structures and gamematrices?T. Shaheen: Right now we’re not planningon changing prize structures for either game.The prize structures currently in place shouldaccommodate the additional population andvolume of play for now. We may need to look atchanging one or the other or both in the future.For the January 31st launch, Powerball and MegaMillionswill remain exactly as they are today.What is the legal mechanism or arrangementthat enables Powerball states to sell MegaMillionsand vice-versa?T. Shaheen: The Powerball states willparticipate in MegaMillions as a licensee. Powerballstates will be granted authority througha licensing agreement from the MegaMillionsstates to sell their game. Conversely, MegaMillionsstates will be granted authority from thePowerball states to sell Powerball.Each group continues to control the gamesjust as they do today. Each lottery selling thenew jackpot game will in essence function almostlike a retailer that is licensed to sell lotterygames. Licensees in either group will not havevoting rights with regard to the rules, policies,procedures, etc. of the other game. So eachGroup continues to operate much like theyhave always operated; only now they have anew set of licensees. Of course, this new set oflicensees will have a dramatic impact on thebusiness, so they will still have input.Keeping that management structure the samewould seem to be the best way to minimize decision-makingbottlenecks.T. Shaheen: Exactly. This is the easiest,quickest, and cleanest way to bring the lotteriestogether. The challenge will be in trainingretailers and players. The games are very similarbut do have small differences. That’s good becauseit will give us a great opportunity to interactwith our retailers and players by providingan additional revenue stream, a new story totell, and an avenue to explain the differences.What are some of the differences?T. Shaheen: The second prize is a differentamount between the two games. The drawingtimes are the same, but the draw close times aredifferent. Starting jackpot amounts are different.The annuity factor is different. MegaMillions is26 years at a straight line of payments, and Powerballis 30 years at graduated payments. Thereare enough nuances there that it’s going to be alearning curve for players. But we don’t thinkit will be overwhelming. It’s similar to trainingretailers and players for any other game that weintroduce. They have to learn how to play thegame, learn the rules, when the drawings are,and what the payouts are.I would think the market is ready for somethingnew and different and the customer readyto be introduced to more options and variety inthe products.T. Shaheen: I think you’re exactly right.Why have a product available in some placesand not in others? Of course, what’s been happeningis those who live on the borders willdrive over and play that other game in otherstates when the jackpot is high. What thismeans is that people who don’t live near theborder don’t have the opportunity to buy theother game because the travel time makes it lessenticing. Now everybody will have easy accessibilityand opportunity to play both games andthat’s the way it should be.So there are enough differences between thetwo jackpot games that you don’t feel a compellingneed to differentiate them further right now.Is there a point of time in the future, maybe 12to 18 months from now, that you will explore additionalways to differentiate the games?T. Shaheen: Our goal right now is to offerboth games in as many states as possible. Then,as we continue to work together and learn abouteach other’s rules, policies and procedures, we’lldevelop a best practices approach to smooth outthe implementation of two multi-state jack-…continued on page 32Public Gaming International • January 2010 12