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N.C. Education Lottery Takes Journey to a New Way To Play

June 25, 2024

NASPL Insights Online



The N.C. Education Lottery expects to complete fiscal year 2024 – its 18th year of operations – by again setting a new record for sales and by setting a new record for the amount of money raised for education. It is fortunate to have set new sales records for each of its first 18 years. These milestones this year result in no small part from the popularity of its new digital instant games.

 

North Carolinians certainly are enjoying playing digital instants. Since Nov. 15, 2023, when North Carolina became the ninth state to introduce digital instants, the N.C. Education Lottery has executed the most successful launch of digital instant games so far in U.S. lottery industry. As of May 31, digital instants have generated over $940 million in wagers and $122 million in gross gaming revenue since launch. Current projections are that digital instant games will make up 35% of revenues in fiscal year 2025, becoming the second most popular game category, second only to scratch-offs.

 

Behind that successful launch was a journey to digital instants that was 11 years in the making. Randy Spielman, Deputy Executive Director for Product Development and Digital Gaming, discusses that journey in a Q&A with Insights Editor Patricia McQueen.

 


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Why did the journey take 11 years? You appeared very cautious about a launch, biding your time.

We launched our Lucke-Rewards Loyalty Program in 2012 followed by an online subscription program for draw games in 2013. During the next 11 years, the key thing driving the Lottery’s journey was ensuring our players, our business partners, our stakeholders, and the general public wanted to begin playing lottery games online and would support lottery games being played that way. Adding a new online play platform and a new sales channel for some of our draw games was one thing. But before launch, we needed to build a player base for the new games, bring our retailer partners on board, and make sure all stakeholders understood what the Lottery was doing and why. You say cautious. Sure. We like to think we were deliberate and strategic.

 



What circumstances finally allowed you to move forward?

Our launch in November 2023 resulted from more than six years of making the case and preparing for a digital instant launch. One key milestone included the building of a successful loyalty program. At launch, our Lucke-Reward program had 720,000 active members. Another milestone occurred with the start of draw game sales online, first with Powerball, Mega Millions, Lucky for Life, and our in-state Cash 5 game in 2016. In November 2019, we converted to new iLottery and loyalty programs, creating the platform that would eventually be used for the play of digital instants. We kept building our Online Play player base, adding the numbers games, Pick 3 and Pick 4, in February 2023. At the launch of digital instant games, we had 470,000 active players in our Online Play program. One thing built on the other until we had everything in place to launch this major new way of play.

 


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Can you share how you plan to support sales at traditional retail locations?

The Lottery expects sales at traditional brick-and-mortar to stay strong and we are taking steps to make that happen. Our sales team prides itself on achieving 98%, and sometimes 99%, penetration of new scratch-off launches in stores each month. That’s dedication to retail for you.

 

We’re committed to making the retail store experience the best that it can be and supporting our retail partners with new ways to grow sales at their stores. For example, we launched an initiative that gave online instant players a high dollar value coupon ($5) for a free Fast Play ticket redeemable at retail. In FY25, the lottery plans to:


  • Invest more than half a million dollars in new dispensers for retail stores.

  • Invest more than $5 million in digital menu boards for 2,000 retail locations along with new Fast Play signs, Keno kits, and new vending machines for other retail locations.

  • Introduce a new draw game, Cash Pop, that will only be sold at stores.

  • Design promotions such as Instant Cash for Pick 3 and Pick 4 players that only applies to ticket purchased at stores.

  • Offer cross-promotional promos in which online players receive coupons that can be redeemed at retail.

 

As the most recent adopter of digital instants, what were the key things you learned from other lotteries?

Lotteries are great at sharing and helping each other. That is even more true for the lotteries that are currently selling games online, since there aren’t too many currently doing that. We benefited greatly from studying the experience of the eight U.S. lotteries who launched a version of digital instants before us. Each digital instant program launch has gotten progressively better than the previous launches because of the establishment of best practices and lessons learned with each launch. For example, we learned setting the right prize payout for the digital instant experience was crucial to a strong digital instant program, especially when introducing this brand-new category of games to players. We learned the diversity of game play mechanics and the crucial need to launch with a mobile app. The Virginia Lottery’s launch taught us that digital instants could be more than just an investment in the future, they could have immediate impact on money raised for good causes. This proposition only strengthened our business case for moving forward with the introduction of the program.

 


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Were there any unique aspects of the N.C. Education Lottery’s implementation?

When we look back at launch, two unique aspects stand out. The first is the popularity of our loyalty program, Lucke Rewards, where for years players had earned points to win cash and other prizes in weekly and monthly drawings. The second is the continuous improvement of our Online Play program from a subscription service to allowing single ticket sales on the same day of drawings, to the addition of popular numbers games, and to the inclusion and expansion of CRM capabilities. Each step along the way built the foundation to a successful digital instants program launch.

 

How did you incorporate digital instants into your iLottery portfolio? Were there incentives for existing online players and/or any cross-marketing and promotions between draw games and digital instants?

We introduced digital instants to our players focusing the first 30 days on general awareness of the new game category and playing online. For the first couple of weeks, we utilized CRM and other in-house methods for getting the word out about digital instants. We transitioned to a broader awareness campaign with paid media after two weeks, using all of our channels to communicate the new way to play lottery online. We also utilized fairly robust promotional tactics after the first couple of weeks, incentivizing both players that have played online before and ones that had not to try the digital instant games with various free game and deposit match offers.



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What impacts have you seen on any other products after the launch of digital instants?

As with most other U.S. lotteries, we have seen a decline in year-over-year sales of traditional games this year. At this time, the Lottery attributes general economic factors in the U.S. as the primary driver of the sales performance we see in traditional lottery games. Other factors included jackpot fatigue, the impact of sports wagering which began in North Carolina in March, and the Lottery’s new digital instant games. We’ll be studying all those trends and making decisions on how best to adjust our games, but it’s too early to say how significant a role digital instants play in the new sales trends we are seeing, as most of these trends were visible prior to launching digital instant games. We are confident that without our launch of digital instants last November, it would have been difficult for the Lottery to produce record sales and profits for our beneficiary this year.

What digital instant games have been the most successful?

Based on sales since launch, as of June 5, our most popular games so far are The Lamp, $252.7 million in sales; Big Crush Multiplier, $127.6 million; and Mighty Mustang, $90.8 million. More recently, new games featuring a progressive jackpot have been consistently in the top three performing games each week.



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Are you doing any omnichannel games?

Absolutely. Digital instants give lotteries a great opportunity to put multiple sales channels to work, supported by advertising and marketing campaigns. In May, for example, we introduced three different ways our players could have fun playing lottery games with a theme from the classic arcade game, SKEE-BALL. A new $3 SKEE-BALL scratch-off provided loads of cash prizes including four top prizes of $75,000. At the same time, we launched a $5 Fast Play SKEE-BALL game. In the digital instant game, if a player revealed three SKEE-BALL Bonus symbols, they got a shot at the bullseye rings during the SKEE-BALL Bonus Game for prizes up to $150,000. Then we tied it all together with a Lucke-Rewards promotion that offered 5X the Lucke-Rewards points on all three SKEE-BALL games for the month of May. We plan to expand our omnichannel offerings in fiscal year 2025. We also leveraged the SKEE-BALL brand with a play for fun social contest and on-site SKEE-BALL themed activations at festivals and other community events in the Spring.



After the first seven months, how do you feel about the launch and the integration of digital instants with other lottery games?

The launching of digital instants was a strategic decision to ensure the sustainability of the Lottery over time. The goal should be to grow sales and to raise more money each year, not less. If not for digital instants, it would be much harder for the Lottery to sustain its record of increasing sales every year or producing another year of record profit for education. As player interest and purchasing habits change, it’s important to evolve and provide entertaining games where our customers are, just as other successful companies and brands are doing, from Amazon to Walmart. Consumers want conveniences with lottery play just as they do with other retail products. Digital instants create the sales channel to provide that convenience to those who want it and at the same time attract new players to lottery games.



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