BuSiNeSS PlAN - California Lottery

prize payouts. The trend toward higher priced, higher payout ticketscontinues today. In fact most lotteries now offer Scratchers tickets at $20price points, with Texas recently introducing $50 tickets.Because consumers expect higher cost tickets to provide more prize value,more prize money is needed to fund higher cost tickets. Unfortunately, theCSL does not have this prize money available due to statutory restrictions,so our highest priced Scratchers games are $5, and even these gamescan only be released occasionally when prize funds are available.Multiple ScratchersWhen the CSL first started selling Scratchers tickets in 1985, the industrynorm was to issue a single $1 game at a time. When this single game soldout or sales dropped to unacceptable levels, a replacement game wouldbe introduced. In the late 1980s, a few state lotteries started experimentingby simultaneously selling two or three Scratchers games at the same time,and the results were positive. Before long, the multiple Scratchers marketingstrategy became the industry norm, and the trend moved to increasingthe frequency of game introductions. The CSL now issues about 40 gameseach year. In recent years, this trend seems to have peaked with statelotteries averaging about 50 Scratchers game introductions each year.Multi-state Lotto Games and Bigger JackpotsRecognizing that higher lotto jackpots trigger higher sales, a numberof state lotteries decided to organize into consortiums in the 1990s soprize money could be pooled to fuel larger jackpots. Two consortiumsemerged: Powerball with 29 current member states and MEGA Millionswith 12 current member states, including the CSL. With multiple stateparticipation, jackpots soared with the industry record being a $390million MEGA Millions jackpot in March 2007.The industry continues to focus on increasing jackpot sizes with ongoingdiscussions revolving around changing game designs to worsen theodds of winning, increasing annuity periods to advertise higher jackpots,and establishing national and international lottery games.With multiple stateparticipation, jackpotssoared with the industryrecord being a $390million MEGA Millionsjackpot in March 2007.Jackpot FatigueIt has long been known within the lottery industry that large lotto jackpotsstimulate incremental sales, and very large jackpots create a conditioncalled “lottomania” or “lotto fever” where millions of players willinglystand in line to buy tickets for a chance to win huge jackpots. Lotteriesnow depend on these occasional players, who only play when jackpotsCalifornia Lottery 2007–2010 Business Plan – 39 –