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Small but Mighty in the Ocean State

Now celebrating 50 years, the Rhode Island Lottery has been an early adopter of new forms of gaming while keeping to its roots of responsibly raising money for good causes.

 


By Patricia McQueen

May 27, 2024

NASPL Insights Online

 



Browse a list of major product categories that American lotteries might offer these days, and you’ll find that the Rhode Island Lottery checks just about all the boxes. Draw games. Instant games. Pull tabs (for charities only). Monitor games. Casino gaming (video lottery terminals and table games). Sports betting. iLottery. iGaming. All of that is packed into a land area of only 1,034 square miles, by far the smallest of any U.S. state, with a total population of just under 1.1 million. 


It’s all managed by a staff of about 100 Rhode Island Lottery employees, who are hands-on not only in traditional lottery operations, but in all the newer product lines as well, going far beyond simply regulation. “I have to give a shout out to the quality of the team here,” says Director Mark Furcolo, who has been at the helm since June 2020. “They are super professional, super committed, and they make my job quite easy!”




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Working together since 1974, they have sent $8.8 billion and counting to the Rhode Island General Fund, which supports almost every aspect of life in the state, from education and health care to public safety and the environment. The Lottery is the largest voluntary source of income for Rhode Island, and the benefits go well beyond that. As lottery revenues have grown over the years, so have prizes awarded to players and commissions paid to retailers, all in support of business in Rhode Island.

 

One unusual area in which the Lottery plays a direct role – at least compared to its peers across the United States – is problem gambling treatment. Like most lotteries, the Lottery provides responsible gambling information to educate players, and its online product offerings in particular have various tools and limits to help with healthy play. Unlike most lotteries, however, Rhode Island operates its own 24-hour help line (877-9GAMBLE) and has a licensed counselor on staff who oversees and monitors a network of approved behavioral health professionals to which clients are referred. The Lottery also has two peer counselors on retainer.

 

“We endeavor to get people linked to a behavioral health specialist within 24 hours of their call to our help line,” says Furcolo. “I’m very sensitive to the fact that there’s always a small percentage of the population with gambling issues, so while we try to maximize revenues, we make sure we help people who need and want help.”





Early Development and Key Milestones

After voters approved a constitutional amendment authorizing a state lottery in November 1973, legislation the following spring paved way for the Rhode Island Lottery’s launch on May 21, 1974. The first game was a 50-cent weekly passive game simply called The Lot. That name stuck, and to this day it is still part of the official logo.

 

The Numbers Game was introduced in February 1976, followed by the first instant game, Play On, in May that same year. A computerized gaming system made its debut in February 1978, doubling sales of the Numbers Game. In 1981, the first lotto-style game offered was 4/40 JACKPOT, and later that decade the Rhode Island Lottery was a founding member of the Multi-State Lottery Association. The original Lotto*America was launched in 1988, and replaced by Powerball in 1992.

 



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Other key milestones in the tiny state included the 1992 launches of Keno (statewide) and video lottery terminals at what were then two pari-mutuel facilities, Lincoln Park (greyhound racing) and Newport Jai-Alai. While both live racing and jai-alai were eventually discontinued, simulcasting and VLTs continued operations. Lincoln Park changed ownership in 2005 and became Twin River; local voters approved the addition of table games in 2012 and they opened for business at the casino in 2013. Newport voters rejected the idea of table games, however, so the search was on for a new location. In 2015, voters in Tiverton approved VLTs and table games, so Twin River purchased the Newport property and transferred its license to a new casino in Tiverton, which opened in 2018. Both casinos were rebranded as Bally’s in 2020 after the Twin River ownership group purchased the Bally’s brand from Caesars Entertainment.



All that’s a lot for any lottery, especially a small one, but Rhode Island wasn’t done. After the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act in May 2018, Rhode Island became the third lottery to launch sports betting in late November that year. First at the two casinos, followed by online/mobile betting in September 2019. And in April 2020, iLottery made its debut with eInstants and Keno; nearly four years later, iGaming arrived on March 1. More on all these later.

 

One common element helped the Lottery work through all these developments – its long-term relationship with IGT. The company recently announced it is separating its businesses, and the Global Lottery division, yet to be renamed, will keep its lottery headquarters in Rhode Island.




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While most American lotteries now have fairly long systems contracts, often reaching 10 years, Rhode Island has held 20-year contracts with IGT. “We have a very strong relationship with IGT,” notes Furcolo.  “There are times when we can try things out and have input into how their products are developed. I tend to be very data-driven and willing to take risks, and that works really well.” He points to the rapid deployment of sports betting as a recent benefit of that great working relationship.

 

Written into the new contract, which began last year, is a complete technology refresh after 10 years, and that’s a comfortable timeframe for Furcolo, whose background is with a technology company. He knows that technology tends not to move very fast in the lottery industry, in large part due to the complex regulatory environment. The new contract also allows for the immediate expansion of iLottery.




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Lottery Product Lines

The Lottery’s current traditional lottery portfolio consists of the venerable Numbers Game (with 2-, 3- and 4-digit options), drawn twice daily; Keno and a companion monitor game Bingo; Wild Money; the multi-state games Powerball, Mega Millions and Lucky for Life; and a portfolio of instant tickets ranging from $1 to $50.


As in most American jurisdictions, instant games generate the most sales across the traditional product line. Rhode Island’s first $50 game, $2 Million Royale, launched last December. Noting that the game has done extremely well, Furcolo expects to introduce more games at higher price points – $25, $30 and $50 tickets. The challenge for a small state is generating top prizes worthy of those price points. “We can’t do a big print run and have a game in the market for years.” Instead, Rhode Island is bringing back annuity prizes in some games. “They hadn’t been done here for quite a while, and they allow a higher prize structure for us.”


For example, the $2 Million Royale prize structure has two top prizes, and each winner can choose from a $2 million annuity or a $1.4 million cash prize. Similarly, the $20 Loteria Grande’s two top prizes can be claimed as either a $1 million annuity or $750,000 cash.

 



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Among draw games, Keno generates the most sales – more than $88 million in FY23 at retail locations (the game is also available through the iLottery platform). It is drawn every four minutes. A second monitor game, Bingo, was added in 2012 and is drawn every eight minutes. Sales are a tiny fraction of what Keno generates, but Bingo produces incremental revenue without any advertising support. “It just stays out there, and surprisingly it is up 39% this year,” says Furcolo.

 

Powerball is generally the next-largest revenue producer, with the Numbers Game and Mega Millions next in line. Of course, relative sales in any given year depends on the jackpot performance of the big multi-state games. Finally, the Rhode Island-only cash lotto game Wild Money is popular with local players, and Lucky for Life, with New England roots, rounds out the draw portfolio.





Furcolo is looking forward to the upcoming changes to Mega Millions, which will help differentiate the two big national games. “They are really going to be very different games, and I think that’s healthy for the industry.”


With their sales dependent on jackpot performance, those big games can have big impacts on small lottery jurisdictions. Rhode Island has a lot of success with various promotions for all games, but especially for Powerball and Mega Millions, with the goal of smoothing out some of the ups and downs. A recent Powerball promotion, for example, did quite well (buy five and get one free).




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Online Success

The launch of iGaming on March 1 means that Rhode Island now offers three major product lines online, as iGaming joined iLottery and sports betting.

 

As noted earlier, the new contract with IGT brings in a new iLottery platform this summer. “We’re excited about selling draw tickets online for the first time,” says Furcolo. In addition to adding the rest of the Lottery’s game portfolio, the new platform includes a new player management module and other key enhancements.


For sports betting, while the two casinos each have an onsite sports book, online/mobile betting dominates. In calendar 2023, about 73% of sports betting wagers (dollar value of wagers) were made through digital channels. Rhode Island took advantage of being an early adopter, but was impacted when Massachusetts launched sports betting at the beginning of 2023. Based on monthly reporting, net sports book revenues were down 18% in calendar 2023.



That wasn’t surprising. “We knew that a lot of our retail customers were from Massachusetts, and we also had a sizable number of mobile customers from Massachusetts, so we knew we were going to lose a material amount of business.” To help compensate, Rhode Island has ramped up its sports betting promotions.

 

The development of iGaming shows just what is possible with a dedicated team. The enabling legislation was passed in late June 2023, with an implementation date set for March 1. Furcolo noted that there was no additional lottery staffing, “so it was a really big sprint on behalf of the lottery team, and certainly others as well.” The “others” include Bally’s, which provides the platform and player account management system through a partnership with White Hat, and a joint venture between Bally’s and IGT that provides the games. “There were a lot of different logistical challenges to manage, so it was a complex implementation. From a project standpoint, it was kind of fun!”

 

iGaming had a four-day soft launch as scheduled on March 1, gradually scaling up to ensure there were no issues that hadn’t surfaced in extensive customer acceptance and third-party testing. The system went fully public on March 5. The platform initially includes about 170 slot games, many based on popular games in the casinos. Blackjack and roulette table games feature a live dealer with whom online guests may ask questions of (via a chat tool) and may interact with other players as well. And of course, there are numerous responsible gambling tools to help players manage their time and financial activity.




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Anniversary Plans

Throughout 2024, the Rhode Island Lottery is celebrating its 50th anniversary in a number of ways. On the game front, a family of 50 Years scratch games includes $2, $5 and $10 tickets. The same brand is offered as an eInstant game, with wagers from 50 cents to $20. Both versions are part of a second-chance promotion that culminates in an event on the Lighthouse Stage at Bally’s Twin River Casino on December 19, where five players (four drawn from the scratch games and one drawn from the eInstant game) will play a fun game to determine if they win a second-chance prize of $10,000, $50,000, $100,000, $500,000 or $1 million. If one of the highest two prizes are won, the winning players can choose between an annuity or its cash value. Instant game players enter the promotion with non-winning instant tickets, while eInstant players get one entry for each 50 Years online game played.





Another second-chance promotion will award bonus prizes equal to the top prize in each of the three 50 Years scratch games. These prizes will be awarded on December 3.

 

The Lottery is keeping the 50th anniversary fresh throughout the year, with other promotions and giveaways on a regular basis. For example, during May, an extra $50,000 is added to each Wild Money jackpot hit; the promo’s tagline is “It’s like extra icing on a birthday cake, making Wild Money even wilder!”

 



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What the Future Holds

For most lotteries, Rhode Island included, FY23 was a strong sales and revenue year driven by multiple large jackpots in Powerball and Mega Millions – highly unpredictable outcomes. Yet economic conditions are taking their toll – lotteries are not immune to inflation and general consumer pressures. In Rhode Island, for example, instant ticket sales are down during the current fiscal year. So, the crystal ball is as cloudy as it has ever been, and the waters are muddy when it comes to fully assessing the impacts of iGaming and the upcoming expansion of iLottery.


 


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Furcolo knows that lotteries can’t change consumer trends indicating that purchases of any product or service are increasingly managed online. While scratch tickets may be more satisfying to an existing lottery player from sensory and anticipation standpoints, lotteries need to broaden the player base and attract new players. By offering lottery games, sports betting and now casino gaming online, “we will capture demographics that are not going into retail stores.”

 

In addition, the Lottery may soon be advertising on gas pumps, which also has the potential to capture new players. Whether or not a consumer buys most other products online, for the vast majority of people who still have internal combustion vehicles, they still need to purchase fuel.

 

The extensive product portfolio across multiple channels potentially put the Rhode Island Lottery in a better position than many lotteries, and Furcolo and his team are focused on keeping the business growing in a responsible manner for the benefit of all Rhode Islanders.




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