- U.S. state lotteries seeing 15-20 percent drop in traditional lottery sales
- Oregon decimated by loss of VLT revenues
- Lotteries hit hard across the globe
While lotteries continue to operate in many U.S. states where casinos have shut down, the impact of the coronavirus response has already begun to show itself in decreased sales and extra steps to keep America’s largest multi-state lottery games running.
In Maryland, for example, lottery sales have already decreased about 20 percent, with about 900 of the state’s 4,500 retailers closed as part of an executive order to shut all bars and restaurants.
The drop-off in sales was “not unexpected,” said Gordon Medenica, director of the Maryland Lottery. “My guess is that will probably become worse the longer this situation goes on, and I really think this will go on for some amount of time.”
A good chunk of lottery retailers, Medenica pointed out, are in locations that are still deemed essential even as stricter “stay-at-home” orders are mandated by state governors, including gas stations, convenience stores and grocery stores.
That being said, Medenica said that in conversations with other state lottery directors, there is consensus that sales could ultimately decrease about 30 to 50 percent within a couple of months.
“[There’s] no hard basis for this, but I think this is unprecedented, uncharted waters for everybody,” he told VIXIO GamblingCompliance.
As more states, including Maryland, impose the same kind of orders as California and New York, the half-dozen states with legal online lottery sales could at least mitigate some of the lost revenues.
New Hampshire Lottery executive director Charlie McIntyre said the state has seen about a 15 percent decline in overall lottery sales since the outbreak of the coronavirus crisis, but it has seen a slight uptick in iLottery sales.
“It’s not commensurate,” McIntyre said. “But there, we’ve been selling more than we normally would at this time.”
Still, McIntyre dismissed the idea that the New Hampshire Lottery could start marketing its iLottery program more during a period where customers may be more inclined to use it.
“I don’t want to upset our retail network,” he said. “What is already going to be a difficult economy for them, I don’t want to make it worse.”
McIntyre also said he would be hesitant to give the appearance of trying to take advantage of the situation, a sentiment shared by Medenica, who said all Maryland Lottery advertising would be pulled from all marketing channels.
“The primary reason for that frankly was to avoid any appearance of insensitivity given what’s going on in the world,” he said. “We thought it was not a time to promote the lottery.”
For the key U.S. multi-state games such as Powerball and Mega Millions, the challenge has been making sure that each state that participates in the games has the necessary personnel to complete required functions.
“We were very concerned that a disorderly shutdown would actually hurt all of us; we’re all incredibly intertwined on the multi-jurisdictional games,” said Medenica, who also serves as lead director for the Mega Millions Consortium.
To that end, the consortium and the Multi-State Lottery Association (MUSL), which facilitates the operation of Powerball, issued joint guidance to member lotteries last week asking them to designate certain positions, including drawings, finance and IT personnel, as essential state employees, to complete the needed balancing of a multi-state draw game.
“Any state, if they can’t balance after a draw, would essentially halt sales of the game until we can balance,” Medenica said. “It’s very important that we obviously maintain that level of integrity for the national games.”
“This is one of those areas where we all have agreed to contracts and agreements where we all say we’ll do these things,” added McIntyre, who is also president of the MUSL board. “We just hope that they do them; it’s a sovereign state.”
“I’m hoping it never gets to a point where the game is shut down,” he said.
Oregon VLTs Suspended
One state lottery that has been hit particularly hard by the response to the virus is the Oregon Lottery, which in fiscal year 2019 brought in about $966m of its $1.3bn in revenues from video lottery terminals (VLTs) that were shut off last week.
“These are difficult times for all of us; it’s particularly difficult for our business facing the loss of 70 percent of our revenue here for the indefinite future,” said Barry Pack, director of the Oregon Lottery, during a lottery commission meeting on Friday.
“We have a lot of retailers who may not survive this shutdown,” Pack added.
Pack said retailers are already reporting to the lottery that they will not have sufficient funds to make required payments to winners.
“They’re all generally devastated, as you can imagine,” Pack said. “They are laying off employees, they’re uncertain if they’ll be able to survive, they have a lot of questions that we can’t always answer.”
The relationship between the Oregon Lottery and its retailers, however, remains strong.
“Even the retailers who are calling in saying ‘I don’t have sufficient funds’, they’re not asking that we waive those fees, they’re just asking for some grace to figure out how to pay it back, which we are definitely giving them.”
When asked about the lottery’s short- and long-term prognosis given its inability as a state agency to borrow money, Pack said the challenge lies in the uncertainty of the timeline for when VLT operations can be reactivated.
“There are a lot of assumptions we can and will have to make as we do this analysis in terms of short-term financial position and cash, longer-term revenue loss, and on recovery, how many retailers survive and come back,” Pack said.
“Short-term, through the end of the fiscal year, we’re probably going to be in an okay position,” he said. “I think it’s the longer-term question where we’re going to have to do some modeling about best-, medium-, and worst-case scenario.”
Oregon Lottery Commission chair MardiLyn Saathoff pointed out that, ultimately, the distribution of lottery dollars to state programs should give the state government every reason to help keep its lottery solvent.
“The state’s going to have to find a way to help us remain viable, even in the long run,” she said. “They just will need us.”
Lotteries Hit Hard Across The Globe
The U.S. is far from the only part of the world where government-run lotteries have been hit hard by the COVID-19 pandemic.
In the Canadian province of Quebec, all retail sales of lottery products were suspended last Friday, with all kiosks and terminals deactivated and only digital sales remaining active.
On Sunday, Brazil’s national lottery operator, Caixa Economica Federal, announced it would suspend certain lottery drawings for the next three months “to reduce impacts brought by the spread of the COVID-19 virus.”
In Europe, Spain’s Loterias y Apuestas del Estado (LAE) has similarly suspended all national lottery games, as has a companion lottery run by charity ONCE, in one of the European countries hardest hit by the coronavirus.
However, in the UK, Camelot’s National Lottery draws continue, with tickets still available at grocery stores that remain open under a new nationwide lockdown announced on Monday night.
In France, a country also currently in lockdown, lottery operator FDJ said it expected to take a €120m hit to its sports-betting revenue, but that 80 percent of its lottery points of sale remain open.
Czech Republic-based Sazka Group, which runs national lottery games across Europe, said that its lotteries in Austria, Italy and its home Czech market were continuing to function.