Questionnaire answers on the effects of the COVID-19 pandemic lockdown on the lottery and sports betting sectors from:
Rebecca Hargrove, President and CEO Tennessee Education Lottery Corporation, USA
How has the pandemic and the resulting lockdown affected the lottery and sports betting sector?
I think that answer is quite different depending on where in the world you live. Globally, we see that Spain, France and Italy have been impacted far differently than Australia and New Zealand. In the United States, we see that New York is impacted quite differently than Wyoming. The impacts of the virus have differed, and corresponding responses of city, state, and national governments have differed. We know that lottery sales in some U.S. states have increased while many decreased. And while the varying degrees of restrictions impacts sales, the relationship between the severity of the virus, the degree of safer-at-home initiatives, and the sales of lottery tickets is not nearly as consistent as you might think.
In our current circumstances, lotteries are performing better than games-of-chance sectors like casinos and sports betting, which have been shut down completely. But I would caution us to not make the leap from that happenstance to being overly confident in lotteries’ resilience in the face of economic downturn. We want our audiences – the public as well as lottery players and stakeholders – to know that we stand shoulder to shoulder with them because we are all in this together and that lotteries are not somehow immune to the pain of economic recession.
What do you believe will permanently change in the lottery and sports betting sector once the pandemic lockdown has been lifted?
Two behaviors that affect our industry and will clearly be impacted by the crisis are how we shop and how we gather together. Since the 1990s, purchasing has migrated online. Given the life-altering circumstances of the last three months, I would expect that market-share has increased as consumers minimize the time they spend in public spaces like grocery stores, bars, and restaurants. I’m sure that some people who never ordered online quickly learned how and began making more online purchases. Others, who were already online shoppers, probably increased the number and variety of items they buy online. The longer we are in safer-at-home mode, the more likely it is that activities adopted during this crisis will become habits that continue after the crisis abates.
What will the “new normal” look like? That will vary widely. Italy, Spain, together with New York and some other US states have been so severely impacted that the road to recovery will be arduous. Their “new normal” may be quite different than the pre-COVID environment. Social distancing, increased online purchasing and other lifestyle changes may be a bigger part of their new normal than in jurisdictions where the crisis was not so severe.
How has the pandemic lockdown affected the working environment of your operation? Do you foresee any permanent changes in how staff will work once the lockdown has been lifted?
The impetus to change and innovate is lowest when everything is going well. So, a crisis becomes the catalyst to take more aggressive action. We have to figure out how to streamline operations and workflows to adjust to leaner staffs and work-at-home environments. Sales reps may need to service their retailers without visiting the stores or with fewer in-store visits. And who knew that so much work could be done so well from home? One result of these crisis management adjustments is that the freedom – and the requirement – to innovate unlocks the creative energy that leads to new solutions and more efficient and effective ways to operate. Then, as we return to full-service operations, business processes can be adjusted and fine-tuned, and resources can be re-allocated to deliver a far higher level of quality and service to our retail partners. That leads to more funding for good causes and more value to all our stakeholders.
At the Tennessee Lottery, we have all found ways to be productive while working at home and staggering shifts so that we have a lower number of staff in the building at any one point in time. My team and I miss working together in person-to-person groups, and I suspect everyone feels the same way. We need social interaction, and I think the in-person collaboration contributes to the effectiveness of the enterprise. It is making those adjustments that can help any organization, but especially a lottery, survive during disruptive times.
If the cautious re-opening being pursued in my state of Tennessee goes according to plan, it is my hope we will return to the shopping and lifestyle behaviors of pre-pandemic days. Outside of that hope, I know all of us at the Tennessee Lottery focus on what we can do: making the necessary adjustments and innovations so we continue to fulfill our mission and raise money to support higher education for Tennessee students.
Has the lottery sector's fundamental mission of raising funds for good causes been affected by the lockdown?
I don’t see how it couldn’t be affected, but I think every market is different. Some may be significantly impacted by the pandemic while others may see only a minimal impact. There are multiple factors outside of our control that may affect our abilities to fulfill our missions.
Lottery retail points of sale have been among those hardest hit by the lockdown. Even operators with a well-established online presence rely heavily on retail channels to drive sales and acquire new customers. Do lottery leaders need to redefine how their retail points of sale operate?
We can be confident that brick-and-mortar retail is not going to sit idly as customers spend more online. Since their survival depends on an effective response to this competitive threat from the online marketplace, we can expect the rate of retail modernization, digitization, and innovation in general to increase. That’s a great opportunity for lotteries to carve out a role for itself as trusted partners and resourceful innovators who provide solutions and help them serve and retain their customers.
Pan-jurisdictional lottery games such as Powerball and EuroMillions, which were once viewed as robust gaming products, have also suffered as a result of the lockdown. What do lottery leaders around the world need to do to protect pan-jurisdictional games in the event of another lockdown?
A global pandemic is going to affect any game and its performance no matter what. The most powerful protection we can offer pan-jurisdictional games is really the most powerful protection we can offer any game: making the product and its brand the strongest they can possibly be for players. Any downturn is going to expose weaknesses, but as I mentioned earlier, it’s also a time for innovation and creativity.
However, we also have to be creative and innovative during good economic times. I think Powerball and EuroMillions serve as a reminder to all of us to look around corners during good and bad times and make the necessary adjustments.
The cancellation of major sporting events has been devastating for the sports betting sector. Going forward, do you see sports betting operators embracing new products such as eSports or virtual sports to lessen their reliance on live events?
I think this disruption has made everyone evaluate their products and look at potential new products. It will be interesting to see how the sector responds.
Have illegal gaming operators been able to capitalize on the lockdown?
Because of the lack of transparency and reporting, there’s no way to know for sure. However, we can assume that they’ve tried.
What regulatory and contingency measures should be put in place in order to protect the lottery and sports betting sector as a whole in the event of a future crisis?
I think you have to go back and look at the enabling legislation in each jurisdiction. The legislation may lay out a structure to give regulators and operators more flexibility to adapt to a changing economic environment. Some entities have to budget even detailed line items two years out and are not allowed to adjust when the whole world is sick. Others have an overly politicized management structure that changes too frequently. Multiple factors drive success and even more impede progress and positive action.
The enabling legislation that prescribes the terms and conditions under which a lottery or regulatory body operates can have a profound effect on the agency’s ability to pivot in times of crisis.
How do you feel the WLA can best help its members in the event of a future lockdown?
Our WLA and regional association conferences are sorely missed. Zoom or Microsoft Meetings or conference calls are incredibly helpful, but I still believe that working together in-person provides us with the most meaningful platform to share ideas, learn from each other and come up with the best solutions.
I think during a future lockdown the WLA’s primary role will be lifting up and sharing best practices from around the world. While certain tactics or practices may not translate exactly from one jurisdiction to another, exchanging ideas of what worked and what didn’t is always valuable, especially during times of crisis and afterward.