I have written this text initially for http://www.lotterydaily.com, and Charlie Horner has partly edited it.
In the last three years, the world has suffered from significant problems. First, Covid-19 messed up the world, and when we were getting over it, Russia started a war in Ukraine. The war continues and causes great harm in Ukraine and other parts of the world. The world economy is threatened by a particularly embarrassing problem, stagflation, against which no effective “medicine” has been developed. In any case, inflation is at an exceptionally high level, and on top of that, there is a risk that the economy will plunge into recession.
Along with others, the gambling industry has also suffered from these global problems. The Covid-19 pandemic caused the biggest problems for gambling companies operating in the retail channel and for operators focused on sports betting. The retail channel still makes up a substantial share of the lotteries’ business, so lotteries were in big trouble in 2020 and 2021. Due to competition law reasons, the lotteries’ financial data for 2021 will be published now, and we have to wait for the data for 2022 until the end of 2023. So, unfortunately, accurate information about the lottery business’s current state is unavailable.
In any case, it seems that lotteries have recovered from the effects of Covid-19 and gotten their business back on track for growth. The difficulties in the retail business have accelerated the transition to digital sales, which will certainly increase the companies’ competitiveness. In this case, adversity has ultimately been beneficial.
In these lottery columns, I have tried to highlight areas of development where lotteries should invest more than they currently do. Recently, it has been great to notice that lotteries have been ready to change their operations and invest in finding new innovative solutions. The basis of the operation is still lottery games and highly responsible operations, but these things have been managed to be implemented even better by utilizing modern technologies.
However, there are new challenges ahead. The difficulties of the world economy cause problems for everyone. In addition, lotteries have found themselves in a situation where people’s attitudes towards gambling have turned in a more negative direction. As a result, politicians and regulators limit the visibility and marketing of gambling more than before. The risk might even be a total marketing ban on gambling, as has already happened in Italy. In any case, gambling companies, including lotteries, must find new ways to maintain and increase customer interest in gambling without the support of mass media marketing.
Lotteries face more and more competition not only from other gambling operators but also from other gaming companies. Because of this, lotteries must keep up with development and utilize the possibilities of technology better than at present. We have to be present in the devices that customers use anyway. Although the transition from the retail channel to digital sales has started at a good pace, it is no longer enough because digital development is moving forward rapidly and brings new ways of playing and entertainment to the market, which lotteries must also respond to.
The key to future success is understanding the competitive situation through the eyes of the customer. So what options are available, i.e., who are the lotteries competing against for the popularity of their customers? Companies must know the most significant consumer trends for this understanding to emerge. So it’s no longer enough to know where the development is at the moment; we also have to know how to look ahead. This still requires a significant change in the lotteries’ way of thinking, which was based on their “own bubble” and defending their own position for a long time. A successful company must constantly be able to develop its products and services to maintain customer interest.
Lotteries still have the challenge of arousing the interest of young consumers in lottery games, and why not also in other gambling products. The social importance of lotteries is probably no longer as familiar to young people as it is to us, who are a little older and hardly faced any other gambling companies besides lotteries in our youth. In addition to emphasizing the social role, supporting beneficiaries, and running responsible activities, lotteries must also be present in young people’s everyday lives. Therefore, monitoring and utilizing consumption trends is critical from a business perspective.
Being at the forefront of technological development usually costs a lot. Because of this, it probably makes economic sense for lotteries not to try to develop new solutions first. Instead, a good course of action is to monitor developments actively and acquire technology partners who can react quickly enough when a new technology begins to reach a level considered to be something of general use. The utilization of machine learning and AI is already starting to be at this level, so they should already be at least on the active planning table of lotteries. Virtual reality and metaverse are emerging technology trends we must prepare for soon. However, it must be remembered that simply offering technology is not enough; the content must also be relevant and exciting to customers.
In my own “crystal ball”, 2023 seems to be full of possibilities from lotteries’ perspective. The companies have sufficient resources and know-how to succeed in the ever-increasing competition for customers’ money and interest. Now you need to increase your understanding and courage to join the competition. It is excellent to note that, for example, European Lotteries actively organizes development-oriented seminars for its member companies, with well-known speakers from other business sectors as well. This kind of information sharing certainly promotes the development and improvement of member lotteries’ business.
Good luck and success in the upcoming challenges to all my lottery friends!