BuSiNeSS PlAN - California Lottery

In an effort to break intoadditional multi-lane retailertrade styles, the CSLembarked on a specialpilot test of a new businessmodel in February 2007Scratchers sales, so retailers are forced to reconcile ticket inventorychanges to ticket sales reported by the CSL. For “mom and pop” storeswith ample clerk time and centralized inventory control, these reconciliationchallenges are manageable. For multi-lane retailers, these challenges areoften considered too labor intensive and not cost effective.In an effort to break into additional multi-lane retailer trade styles, theCSL embarked on a special pilot test of a new business model in February2007. Under the new business model, the CSL rents space for self-serviceterminals and performs all machine maintenance and Scratchers inventorymanagement. Retailer activities are effectively limited to cashing winningtickets for which they receive standard handling fees and cashing bonuses.While retailer workload drops significantly under the new business model,the rental and cashing bonus income retailers receive is much less thanunder the conventional business model.The new business model is in the process of being evaluated for its financialfeasibility, with pilot test evaluation results expected in December 2007.4.7 Retailer Recruitmentand OptimizationAs noted earlier, retailers are the foundation of the CSL’s business model.While the CSL is continuing to explore alternative product distributionopportunities, it must also continue to improve the current businessmodel to be as cost-effective as possible.Retailer RecruitmentEfforts to improve retailer recruitment include identifying and recruitingnew retailers that show a high potential for sales, replacing consistentlyunderperforming retailers with new retailers, offering retailer incentives,and providing new products that appeal to specific tade styles.Retailer OptimizationThe CSL has a program to help increase sales and efficiency of its existingretailer network. The CSL identifies underperforming retailers based onseveral criteria and visits those retailers to determine the causes andworks with the retailers to improve sales. Recommendations includeplacement of terminals and equipment and better use of point of salematerials. During the past 10 years, the CSL has been providing betterand more gaming equipment and improving the quality of retailer financialstatement and billing information. For example, the CSL now provides– 58 –California Lottery 2007–2010 Business Plan