BuSiNeSS PlAN - California Lottery

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Unfortunately, increasing jackpot sizes invariably comes at the expenseof worse odds and longer periods between what are perceived to beattractive jackpots. This further feeds into the belief that no one winsanymore, so jackpot fatigue combines with poorer odds to result indeclining sales. The CSL may be the most vulnerable lottery in thecountry because, of the ten most populous states, we rely the mostheavily on sales from our large lotto games.As we have seen in recent years, MEGA Millions has cannibalizedSuperLOTTO Plus sales more than expected. These games were poorlypositioned within our portfolio because they are essentially the same gamewith the same play style. Our billboards display jackpots amounts forboth games side-by-side and invite consumers to make comparisons andchoose between the two games. SuperLOTTO Plus sales were on a slightdownward trend before the introduction of MEGA Millions, and a changeor replacement game was certainly worth consideration. However, theintroduction of MEGA Millions has dramatically hastened the decline ofSuperLOTTO Plus to the point where it has become critical to begin theresearch and development effort to change or replace SuperLOTTO Plusbefore it is overwhelmed by the much larger jackpots of MEGA Millions.We must implement a strategyto rely less and less on largejackpot games. Shifting thejackpot paradigm entails lessfocus on large jackpot gamesand providing consumerswith fun, entertaining gamesthat are conducive to moreregular play, and providemore winning experiencesat smaller but meaningfulprize levels.In assessing the sales of our daily draw games and Hot SPOT monitorgame, it is apparent that there is room for significant growth. Thesegames provide more regular play and more winning experiences than eitherSuperLOTTO Plus or MEGA Millions. There has been little to no marketingof our daily games due to their disparate personalities and relatively smallplayer bases. By aligning these products into a single portfolio and creatingsynergy between these currently disparate products, we can begin tomore effectively and efficiently market these games and build a strongerplayer base. Aligning this portfolio also allows us to cross-promote andcross-sell these games as a suite of games. This portfolio of games mustalso be analyzed to determine if prize funds are optimally distributed toenhance players’ experiences and maximize sales.We must implement a strategy to rely less and less on large jackpotgames. Shifting the jackpot paradigm entails less focus on large jackpotgames and providing consumers with fun, entertaining games that areconducive to more regular play, and provide more winning experiencesat smaller but meaningful prize levels.5.4 Modernize OperationsOur goal is to implement a modern infrastructure that minimizes our relianceon manual processes so that we are in a better position to take advantageof new business opportunities as they arise. These improvements will alsohelp the CSL keep up with changing consumer and retail trends.California Lottery 2007–2010 Business Plan – 73 –
Our goal is to implement amodern infrastructure thatminimizes our reliance onmanual processes so thatwe are in a better positionto take advantage of newbusiness opportunities asthey arise. These improvementswill also helpthe CSL keep up withchanging consumer andretail trends.The CSL has been primarily focused on investing available administrativefunds to increase Scratchers prize payouts. As a result, the CSL has notinvested the resources necessary to improve and modernize its operations.The CSL can no longer ignore investing in modernizing its operations.The last concerted effort to modernize operations occurred in 2002 whenthe CSL swapped out its legacy gaming systems and retailer terminalswith more modern and efficient systems and terminals. Implementationof this new technology resulted in administrative savings of around $30million per year. Since 2002, even better gaming system technologieshave emerged that address some of the issues we still face such asconsolidating fragmented system components, reducing communicationscomplexities and stabilizing applications. The CSL must take advantageof these new technologies if it wants to be able to adapt to a rapidlychanging marketplace.Increased Scratchers sales over the last several years have caused usto outgrow our distribution warehouses. These warehouses are no longeroptimally sized to keep up with the demand for inventory space. We mustalso improve the automated systems that we now use to distribute themillions of packs of Scratchers tickets we sell each year. Our goal is toimprove our ability to get this product to retail in the most expedient andcost effective manner possible.In order to make good business decisions, management must haveimmediate access to accurate and timely information and data. The CSLwill focus on modernizing management information systems that havelimited reporting capabilities. For example, the CSL will develop andimplement a dashboard information system that allows managers tonavigate to, and extract, desired sales and retailer data in real time.Some of the other systems that we will modernize include accountingsystems and business processes that are still based on essentially thesame model that we used in the 1980s. These systems and processeswill be improved to offer us more flexibility and efficiency.Modernizing operations will also encompass our efforts to establish asuccession plan for our aging workforce, including our peace officersand long-time senior managers, and upgrading employee skill sets withimproved training programs.Finally, modernizing operations will include looking at ways that we canprovide better services to our customers by improving their ability toaccess information about the Lottery and its products and services.– 74 –California Lottery 2007–2010 Business Plan
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CommissionersJOHN MASS, of Los Ange
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Introduction
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IntroductionIn order to fulfill the
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focus on huge jackpots and more foc
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Figure 1.2 - 2004-05 K-12 Percent o
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1.1% General Operating ExpensesGene
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SupermarketsAlthough supermarkets h
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handles all Spanish language advert
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Fantasy 5Value Proposition: The bet
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1.6 Organizational Structureof the
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ITSD consists of four offices and t
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Integrity,Security,Honesty,and Fair
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The CSL not only employsinternal au
Page 35 and 36: Since its inception, the CSL has wo
Page 37 and 38: Last year, the California Problem G
Page 39 and 40: Marketanalysis
Page 41 and 42: EthnicityThe following charts show
Page 43 and 44: GenderThe household incomeof past m
Page 45 and 46: 3.2 Consumer ProductSales Compariso
Page 47 and 48: Technology TrendsAll of these techn
Page 49 and 50: are large, to maintain sales in lot
Page 51 and 52: IntroductionIn FY 05/06, the CSL re
Page 53 and 54: Figure 4.2 is a list of some of the
Page 55 and 56: Figure 4.4 - Overall PRIZE PAYOUTS
Page 57 and 58: Figure 4.5 shows that in terms of p
Page 59 and 60: Raffle GamesRaffle-style games are
Page 61 and 62: Pursuant to section 8880.64 of the
Page 63 and 64: Fig. 5.12 CSL Scratchers Game Growt
Page 65 and 66: As shown in Figure 5.13, the lotter
Page 67 and 68: Fig. 5.15 Sales per RetailerFigure
Page 69 and 70: etailers with special “Check-a-Ti
Page 71 and 72: Gaming System ComplexityThe CSL’s
Page 73 and 74: Fig. 5.19 Budgeted Per Capita Adver
Page 75 and 76: There is an opportunity to reverse
Page 77: Public Relations and OutreachOur fr
Page 80 and 81: Ticket Dispenser RestrictionsThe re
Page 82 and 83: IntroductionA careful analysis of o
Page 86 and 87: Key StrategicInitiatives
Page 88 and 89: Shift the Jackpot ParadigmOur strat
Page 90 and 91: 12. Recruit Non-traditional Retaile
Page 92: www.calottery.com600 North 10th Str
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BuSiNeSS PlAN - California Lottery

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