Questionnaire answers on the effects of the COVID-19 pandemic lockdown on the lottery and sports betting sectors from:
Stéphane Pallez, President and CEO of la Française des Jeux (FDJ), France
How has the pandemic and the resulting lockdown affected the lottery and sports betting sector?
While many economic sectors have slowed downed during the lockdown, there were some specific consequences on our lottery activity. First, we stopped our express draw game Amigo early in the lockdown, to avoid point of sale stationing, and as the crisis is evolving, the game is yet to resume. Second, the closure of some points of sale and the decline in customer traffic has led to a decline in sales for scratchcards and other draw games. Third, our online sales experienced extraordinary growth. In this context, we had to adapt our commercial plan, postponing several scratchcard launches, draw games events, and cancelling some promotional campaigns. We focused our efforts on our digital plan to increase subscriptions and retain these new customers.
The sports betting sector was more seriously affected, with up to 95% of competitions cancelled during the lockdown. Despite this very limited offer our teams did their best to make some of the few remaining active leagues available for our retail and online players to bet on. Our regulator also authorized bets on new sports and competitions. The future of sports betting will heavily rely on the recovery of the sports industry as a whole, and considering the impact that this crisis has had on many clubs and athletes, FDJ will more than ever continue its support program for promising professional athletes. There are reasons to be optimistic, as some professional leagues resume and since mid-May we have been able to offer bets on at least one match a day.
What do you believe will permanently change in the lottery and sports betting sector once the pandemic lockdown has been lifted?
At this time, we have to assess if and how consumption behaviors have changed and we are currently analyzing how the economic downturn will have a long-term impact on the market. We anticipate many changes, but with no guarantee on the real structural challenges, that is why we are talking about the “next normal” instead of “back to the past”.
On a mid-term vision, our main projects are to : think about the future of express draw games by digitizing the customer journey and challenging the mechanics of the offer, revising the scratchcard journey to modernize it and take into account the lessons from this period, and finally to build on the online sales growth momentum.
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?
Severe lockdown restrictions on transport and offices have affected many businesses. FDJ anticipated government measures by extending its remote working policy whenever this was possible. Fortunately, continuous investment in digital tools over the past years have made it possible for 95% of employees to work from home. Remote management of our operations was effective within days, and within weeks we could conduct electronic draws of our games Keno and Joker+.
Full remote working is not foreseen as a long-term dynamic but has proven to be an effective solution in period of crisis, with strong employee engagement delivering good results. Nevertheless, the experience of these new working methods will be beneficial, with the reduction of commuting having a positive impact on quality of life and the environment. Reconsidering the way we travel and work, our society will definitely be more digital than before.
Has the lottery sector's fundamental mission of raising funds for good causes been affected by the lockdown?
The lottery industry, particularly in times of crisis, is expected to uphold its solidarity commitments regardless of commercial performance. FDJ has naturally continued to support its main stakeholders affected by the pandemic. Masks were purchased for nursing homes run by veteran associations, our historical shareholders which initiated the national lottery 90 years ago. Protections were also distributed to retailers, and they received a financial boost with the suspension or scalability of financial levies on points of sale, depending on their capacity to stay open.
Given the sanitary and social emergency facing many communities, FDJ dedicated EUR 1 million to a nationwide initiative “United against the virus” to support health workers, research, but also those hardest hit by the crisis. The FDJ Corporate Foundation donated EUR 200,000 to the French “Secours Populaire” in a vast campaign to provide assistance to the most vulnerable. Employees also demonstrated their sense of solidarity, after an agreement with social partners paved the way for voluntary donations of leave days to help finance health and social actions. They donated over 1,400 leave days, which correspond to an amount of EUR 300,000, in favor of the medical staff and those in need.
In addition to these initiatives implemented as a response to the emergency situation, FDJ is mobilized to safely resume all its gaming activities which contribute to raise funds for the benefit of society. The next edition of our games in favor of the renovation of national heritage sites will be particularly important to raise some much needed funds for a sector which has been hardly hit by the lockdown.
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?
Even if bars and restaurants were forced to close, many distributors who sell our games such as news agents and tobacconists were considered as essential economic sectors and allowed to pursue their activity. This highlights the relevance of our distribution network, the largest in France, as a proximity network. Distributors’ revenue was impacted by limited opening hours and the decline in foot traffic and consumption, and as customers are coming back to the stores, they are facing new challenges to enforce new hygiene and social distancing rules. As a long-standing partner, FDJ will continue to adapt its games and services to ensure a sustainable business in this particular location that is the point of sale, distributing games to a wide public with the highest level of safety for both the distributor and customers. Digital tools will become essential in the distributor’s relationship with customers, but also with the lottery sales force to enable a more interactive cooperation. Our instore digital screens and dedicated distributors’ website have been very helpful during this crisis to provide information to both our players and distributors.
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?
Looking at our experience with EuroMillions, we can say that pan-jurisdictional games were particularly challenged during the lockdown, as all participating countries were impacted by this pandemic, and it was impossible to predict the intensity and duration of the lockdown in a given territory. Nevertheless, the game was maintained without amending its prize structure and the draws were all carried-on without downgrading any integrity requirement. This illustrates the robustness of the game and a collective effort and engagement of all partner lotteries. It was also an opportunity to test and improve contingency procedures with the help of digital solutions. I am convinced that these learnings will reinforce our operations and cooperation in the future. Moreover, pan-jurisdictional games are important driver towards our digital platforms, and have contributed to the extraordinary rise in online stakes during the lockdown.
Have illegal gaming operators been able to capitalize on the lockdown?
Everyone has been able to note that all the online gambling sector have actually been taking advantage of the lockdown which took place to the detriment of the retail activities. The pandemic may in this respect entail important changes in the players’ habits and consumption patterns that will probably not spare the gambling sector, and of which we should all take stock. Those evolutions are still ongoing, and they can end up in opportunities for both the illegal and the legal online gambling operators. By the way, we are monitoring whether illegal operators have gained particular advantages during this period.
For these very reasons, it is crucial that the legal ones, and notably lotteries, are given the possibility and the conditions to develop their online offerings and to promote them in a responsible way, in accordance with their common values. This is the precondition for the achievement of the primary mission lotteries are entrusted with, which consists in channeling the demand for gambling towards a regulated and controlled offer.
On the other hand, it is of utmost importance, now more than ever given the particular context, that national authorities take efficient enforcement measures against illegal online gambling offerings, with the aim not only to protect consumers but also to ensure a level-playing field for lotteries. Lotteries should act in this respect and aim to raise awareness about the threats and the unfair competition arising from illegal operators, and I have no doubt the WLA taskforce can assist them in doing so.
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 would like to focus on the sports betting sector, as the suspension of many sports competitions has made it more important than ever to take the right measures to protect the integrity of both remaining sport events and of our betting activity. In this context, the Global Lottery Monitoring System (GLMS) enabled an international cooperation which has been very helpful for its members. GLMS knowledge and expertise can actually help us all to secure our betting activity and we must continue to support this very operational sport integrity association. It will be even more important when our activities will soon resume as Interpol is already sending warnings about the risks associated with sports organizations that were financially fragilized by the pandemic.
How do you feel the WLA can best help its members in the event of a future lockdown?
The WLA has an important role to play in such situations, where its members across all continents face simultaneous sanitary and economic challenges and can learn from each other’s experience. In this specific situation the WLA made a lot, sharing a dedicated Covid-19 newsletter, regularly taking care of its members and exceptionally reducing its membership fees by 50% as a gesture of solidarity. Moreover, the WLA acting as a forum for exchange is very appreciated and should continue even if physical meetings are not possible in a near future. As the global gambling market will continue to evolve, it is important that WLA members defend their values and vision of the industry. Compliance with the highest standards and adoption of best practices are essential to meet the expectations of modern customers looking for a safe and sustainable gaming environment. Finally, WLA support to the operational development and broadening of the membership base of GLMS will also be key to secure the sports betting operations of its members.