Questionnaire answers on the effects of the COVID-19 pandemic lockdown on the lottery and sports betting sectors from:
Gordon Medenica, Director of the Maryland Lottery and Gaming Control Agency, USA
How has the pandemic and the resulting lockdown affected the lottery and sports betting sector?
The pandemic has had a predictable impact on sales, which declined by as much as 30% in the first few weeks of Maryland’s stay-at-home directive. We’re beginning to see an uptick in sales in recent days, particularly in our daily number games. With an incremental easing of restrictions over time, and people eager for entertainment options, we are cautiously optimistic that sales will continue to recover.
What do you believe will permanently change in the lottery and sports betting sector once the pandemic lockdown has been lifted?
The lockdown spurred many questions from our players about online sales. The Maryland General Assembly passed a law in 2017 that specifically prohibits us from selling online, but it’s possible that the loss of revenue during the pandemic will reduce the political resistance from both lawmakers and our retailers, many of whom still believe, against all evidence, that on-line lottery sales would hurt traditional brick-and-mortar businesses. The average consumer expects to be able to access everything online, especially during times like these when stay-at-home directives have made it difficult for our players to purchase lottery games.
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?
Maryland Lottery Headquarters have been closed since March 30, in accordance with a state-of-emergency directive from our governor. Since that time, the MLGCA has had to adapt to a new way of doing business, with the majority of our employees teleworking. Sales reps stay in touch with their retailers via phone, email and online webinars. Teleconferencing, virtual meetings and other distance-communications tools have been used with much success. While there have been many adjustments during this new normal, critical work has continued without interruption. Moving forward, we may find that aspects of our work can be done just as efficiently, if not more so, through teleworking and other alternative work styles.
Has the lottery sector's fundamental mission of raising funds for good causes been affected by the lockdown?
Of course we’ve been affected by the lockdown, but our commitment to responsibly generate revenue for Maryland’s good causes remains unchanged. That said, we did suspend all of our advertising beginning in mid-March and continuing through the end of May. It would have appeared “tone-deaf” to be advertising our products and promotions during a public health crisis. In its place, we created messaging to encourage safe play. The messaging was displayed on in-store video monitors to encourage social distancing and safety. We also published a list of steps that players could take to reduce the duration and frequency of their lottery transactions. These include advance-play options; filling out playslips in advance; using the quick-pick option instead of taking the time to select specific numbers; and subscriptions that can be purchased from home.
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?
The pandemic may have accelerated the trend away from retail for certain products, but brick-and-mortar retailers will survive this crisis and continue to play a critical role in lottery sales. Even if lotteries are allowed to sell more broadly through online as well, retail will remain dominant for the foreseeable future.
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?
The slowdown in sales that we have seen with Mega Millions and Powerball began well before the pandemic. As an industry, we have been grappling with the long-term impact of jackpot fatigue for years. An important aspect of jackpot fatigue may well be media fatigue, as the games receive much less free media coverage at lower jackpot levels than before. We are learning the importance of marketing and advertising to the continued success of the games. Nevertheless, we know the games attract infrequent players who seem to need ever-higher jackpots to excite people to play. And while we are experiencing softness in sales right now, the next huge jackpot is sure to bring players back.
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?
Not at all; when real sports return, so will the sports-betting sector. In fact, if future live events have fewer in-stadium spectators, broadcast and streaming coverage will become more important than ever. And with so much of sports betting taking place via mobile devices, watching and betting on sports will thrive. As for smaller, even fringe sports (drone racing?), they will take some market share of betting activity in line with their interest level among fans.
Have illegal gaming operators been able to capitalize on the lockdown?
I doubt very much that the illegal operators have had any better experience during the pandemic. There is simply no product to bet on, whether legally or illegally.
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?
Depending on the nature of future crises, the industry has learned much during the current pandemic on how to react to constraints on sales channels and product distribution. Also, casinos, when they reopen, will have much different operating protocols that will continue for some time. But sports betting is fundamentally linked to the underlying sports, and will rise and fall along with sporting activity.
How do you feel the WLA can best help its members in the event of a future lockdown?
The WLA has done an excellent job in re-aligning its activities in response to the pandemic. Its fundamental mission of informing and communicating critical insights and best practices for its membership remains highly relevant.