BuSiNeSS PlAN - California Lottery

Fixed PrizesThe CSL is the only lottery in the United States that cannot pay out fixedprizes without limitation. This restriction was an outgrowth of a 1996California Supreme Court decision which stated that the CSL mustalways have a predetermined prize liability for draw games. With theseunprecedented restrictions, the CSL cannot guarantee specific prizeamounts for specific winning outcomes in any draw game. This causesplayer confusion because wide swings in prize payout amounts are quitecommon. For example, in the CSL’s Daily 3 game, payouts for pickingthree correct numbers in sequence range from a low of about $300 toa high of over $800. A particularly troublesome aspect of this restrictionis the difficulty in marketing new draw games and attracting new players,as players cannot be told how much they can win.Prohibition Against Using New TechnologyIn October of 1993, the State Legislature passed legislation which providedthat: “no changes in the types of games or methods of delivery of thesegames that incorporate technologies or mediums that did not exist, werenot widely available, or were not commercially feasible at the time ofthe enactment of this chapter in 1984 shall be made” without advancelegislative approval [Lottery Act Subsection 8880.28(b)]. This legislationeffectively keeps the CSL in the “dark ages” of technology. The CSL cannot:offer either subscription play or interactive play through the Internet,permit cell phone wagering, or take advantage of a number of other newand emerging technologies that could otherwise be leveraged to attractnew players and increase CSL sales and contributions to education. Dueto the 1993 restrictions players must continue to visit “brick and mortar”stores to make purchases despite the fact that there is a growing trendtowards online shopping.Due to the 1993 restrictionsplayers must continue tovisit “brick and mortar”stores to make purchasesdespite the fact that thereis a growing trend towardsonline shopping.Prohibition on Certain Game ThemesThe CSL’s enabling legislation contains a number of game themerestrictions which inhibit the CSL’s ability to offer attractive games tothe public. While some of these restrictions have been removed (e.g.,bingo and horse racing), theme restrictions covering “roulette, dice,baccarat, blackjack, Lucky 7s, draw poker, slot machines, or dog racing”still remain (Lottery Act Subsection 8880.28(a)(1)). Of these restrictions,the dice, blackjack, Lucky 7s, and slot machine restrictions pose themost problems, as these themes are successfully used by other statelotteries, especially for Scratchers games.California Lottery 2007–2010 Business Plan – 69 –