BuSiNeSS PlAN - California Lottery

are large, to maintain sales in lotto games. However, as lotteries havestrategically sought to maximize jackpot amounts over time, the playingpublic has continually modified its definition of a large jackpot. As a result,occasional lotto players wait longer and longer before participating.Jackpots of $30 millionor more were enoughto trigger the lottofever phenomenon inthe 1980’s. In 2007,the lotto fever thresholdis about $200 million.For the CSL, jackpots of $30 million or more in the 1980s were enoughto trigger the lotto fever phenomenon. In the 1990s, the lotto feverthreshold increased to jackpots of $100 million or more. In 2007, thelotto fever threshold is about $200 million, with the recent $390 millionjackpot raising the lotto fever bar yet again. Because it is difficult to fundlarger and larger jackpots, player interest in lotto-style games is waningacross the lottery industry. Consequently, an argument can be made thatstate lotteries have maximized large jackpot games, and that futuresales declines for these games are almost inevitable. It is interestingto note the Ohio State Lottery recently began a campaign to encourageplay at lower levels to address jackpot fatigue.Player Loyalty ProgramsVarious lotteries offer lottery clubs that allow players to sign up andreceive benefits such as e-mails on winning numbers and jackpots,chances to win free merchandise, promotion notices, birthday coupons,and text message notices. Some lotteries provide videos of daily drawsand lottery commercials, web-based interactive games for fun, andsubscriptions through the Internet.Draw Game StagnationThe last significant draw games to be introduced in the lottery industrywere fast draw keno and cash lotto games (e.g., Fantasy 5) in the early1990s. Since that time, the industry has struggled to find entertainingnew draw games. A number of state lotteries experimented with noveldraw game concepts, but the results have been consistently disappointing.The CSL’s only attempt to introduce a novel draw game occurred in 1998with the launch of Daily Derby, a $2 draw game with a horse racing theme.This game also proved to be disappointing, as it never exceeded 1% ofthe CSL’s total sales and it now languishes at about three-tenths of 1% oftotal sales. In recent years, draw game sales have been declining acrossthe lottery industry and state lotteries are still looking for a major newdraw game success story.Recently, lotteries in about 20 states have found success with raffle styledraw games. However, by their nature, raffle style draw games can only beoffered for limited time periods and they do not provide the type of revenuea permanent and ongoing draw game can provide. Nonetheless, rafflegames have provided some excitement and novelty in the lottery industry.– 40 –California Lottery 2007–2010 Business Plan